Harbinger of financial revolution in Maharashtra
Finance Technology, or FinTech, as it is called, has led to a whirlwind change in the way the financial industry sector operates. It is one of the fastest and most widely used technologies globally. Fintech started growing with banks going online in India and since then the Indian FinTech sector has seen phenomenal growth. According to the Ministry of Commerce and Industry, 40% of the world’s digital transactions take place in India. The high frequency of internet use and smartphones has multiplied the financial services sector.
The digital mode of transactions is prominent in India’s growing FinTech sector with the availability of multiple options i.e. digital lending, digital insurance, online KYC, digital microfinance, buy-now-pay-later and many other emerging digital transaction trends.
According to recent studies, India’s FinTech stood at $50 billion in 2021 and is projected to grow to $150 billion by 2025. There are currently more than 7,300 fintech startups backed by a combined funding volume of around $30.2 billion. Indian fintech adoption stands at 80% compared to a global average of 64%. Indian financial sector to grow at 31% CAGR 2021-2025. India houses 21 Fintech unicorns.
Maharashtra and the growth of the FinTech sector in India:
A giant leap in next-generation innovation will enable financial empowerment and technological progress. Therefore, the Government of Maharashtra initiated the Mumbai Fintech Hub (MFH). MFH was established with the sole purpose of executing the Maharashtra FinTech Policy and fostering a FinTech ecosystem in the state. It has actively engaged FinTech start-ups, institutions, regulatory bodies, government departments, accelerators and investors across Maharashtra to encourage the sector.
The Mumbai FinTech Hub is the first of its kind and Maharashtra has been the first state to implement the Maharashtra State FinTech Policy. The FinTech Policy was designed and developed to establish Mumbai as a Global FinTech Hub. It supports India’s FinTech sector to leverage technology innovation and collaborate with stakeholders globally. Under the policy, the government developed the entire ecosystem with smart centres, a FinTech registry, an API sandbox and a Rs 100 crore fund that empowered over 500 companies to consider this setup. The fund has attracted Rs. 1000 crores in investments and over Rs. 9000 crores in indirect investments since.
Key pillars of the MFH strategy:
The Government of Maharashtra is directing all efforts to achieve the vision and invest in the long-term strategy by nurturing globally competent talent, encouraging innovations and catalysing the financial ecosystem.
Objectives of the FinTech policy:
- Promote open banking platforms for faster innovation and integrations
- Increase financial access
- Encourage the building of a living ecosystem
- Strengthen and cultivate a pool of talent
- Digital engagement with citizens
- Promote the use case-driven approach to solving challenges
FinTech Technologies:
The financial services industry uses a wide range of technologies to power some of the most innovative technologies. Some of them currently used are –
- Data Analytics – Big data allows companies to know the financial behavior of their consumers. They can use this data for predictive analytics and keep it as a base to design their marketing strategies.
- Artificial Intelligence and Machine Learning – The applications are developed using AI and ML technologies that help with fraud detection, credit scoring, wealth management and regulatory compliance.
- Blockchain – Blockchain stores the transaction and data securely, reducing the chances of cyber attacks.
- Robotics – Robotic Process Automation helps streamline work flow in financial institutions. It includes statistics, transaction management and regulatory compliance.
The Indian FinTech market is expected to reach USD 1 trillion in AUM and USD 200 billion in revenue by 2030, as noted by Chiratae Ventures and EY in August 2022. FinTech in India has grown exponentially over the years. Global investors are looking forward to India as a hotspot destination to direct their fintech investments. With the liberal government policy, simple regulations and fast processes, more and more youngsters in India are looking forward to dig into this sector. Maharashtra is emerging as a forerunner in the FinTech revolution.
Disclaimer
The views above are the author’s own.
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