Here’s a look at what lies ahead for India’s fintech roadmap

Rapid advances in technology with state-of-the-art innovation emerging every day has ensured that the global financial industry, and fintech in particular, is seeing exponential growth. This is true even in India, where the fintech landscape has never looked better.

EY reports that India leads the world in the race to adopt fintech with a rate of 87 percent, over 20 percent higher than the global average of 64 percent. At this rate, it comes as no surprise that the Indian fintech market is expected to reach $200 billion by 2030. What are the next steps fintech companies need to take to get closer to this projection?

“Before we even answer the question [what’s next in the financial journey]where are we in the financial journey, as far as the country is concerned?“ traces Sanjay Aggarwal, co-founder and CTO, Money View. Sanjay spoke at the final panel discussion in the Fintech track on Day 3 of TechSparks 2022 moderated by Bhagwan Chowdhryprofessor of finance and faculty director, I-Venture @ ISB.

By Indians, for Indians

India is deeply underserved in terms of financial services, especially credit, he said, adding that despite India being among the top five economies in the world, India’s household debt-to-GDP ratio is not in the top 50.

“Fintech only ensures that financial services and products become more accessible to a greater number of Indians,” he said, adding that this work involves heavy use of technology and data, and it has just begun to lay a foundation for fintech companies to build on to ensure services reach every corner of the country,

Sanjay cited an example of how nearly 80 percent of Money View’s customers come from Tier II and Tier III cities to explain the growing demand in such smaller cities and towns.

Solutions for reach and depth of services

A lot has been on the infrastructure side of things, as in the case of the India stack and digital currency, said Souparno Bagchi, COO, Balancehero. Looking at issues of scale and depth, Souparno believes that while fintech companies have “Very good“ at scale there is work to be done in terms of accessibility, awareness and leading indicators.

“What will also be very interesting in the next 2-3 years is how we will solve the deeper problems,“ he said, pointing out how Balancehero guarantees alternative data. There is a whole universe to explore to identify solutions that include both scale and depth, which is going to be an important driver in the sector, he added.

Regulators as partners for startups

Sandhya VasudevanMD – Deutsche Bank and member, Indian Angels Network noted that the bank is starting a series to communicate with and help fintechs understand that regulators are their partners.

She highlighted how regulators deal with country risk and individuals who don’t understand finance, which is important, because “you see a lot of companies that have done extremely well and yet they finally get caught up in a regulatory issue“. In Sandhya’s view, it is important to look after the ecosystem to prevent one failure from contaminating the whole society.

Souparno agreed that while regulators are partners with fintech companies, the two can seem binary sometimes. Given the number of sub-sectors in fintech, there is a huge need for self-regulatory organizations (SROs) within the space in India, he said, adding that there are steps being taken by regulators in this regard. “More and more intermediate interfaces like the SROs can be a big leap in terms of cooperation,“ he said.

Can private devices record surveillance?

Sanjay said a regulator’s job is fantastic and probably the most difficult as it needs to ensure responsible innovation happens where customers are protected. “That job must be managed by an independent entity. It cannot be given to the established, the large private players, because they only want to stand up for their interests,“ he added.

“We must be very clear – both from the regulators’ and the players’ point of view – whether it is a question of compliance, and therefore it is 0 or 1, or is it a question of risk,“ Souparno said.

Address customers’ fears and reach

On the issue of people fearing fintech devices, Sanjay highlighted government initiatives to push digital payments, such as real-time text messaging after every transaction, adding that communicating to people in regional languages ​​and using voice instead of text could help to reach a larger audience.

He noted that Money View has conducted successful experiments with voice such as replacing customer service managers in their call centers with a voice bot, which saw a huge increase in response rates.

The development within fintech

Sandhya cited the example of how blockchain can be used differently in India compared to other countries and wondered what decentralized and automated organizations could be created from this. The question that arises then is how much regulation is needed if digital currency plays in, for example, the social sector, she added. “Can we be a leader in driving these dialogues?“ she asked.

One development Sandhya hopes to see is quantum computing in the fintech space in India. Speaking about cyber security, she noted that the fintech space can be vulnerable if not properly safeguarded. “Every startup needs to have a basic level of cyber security in place or it could be a serious disruption,“ she said.

Sandhya asked the question – how do we collaborate fintech with other major verticals such as mobility, agritech or the creative economy? She noted that this is something they are working on, and also highlighted that there is no database for fintech startups – which limits how much they can be supported.

She highlighted the support of RBI to a project to increase rural women entrepreneurship among 500,000 women in Karnataka where they are being trained in digital and financial literacy through an interactive medium. She also pointed to developments regarding a cyber security perimeter and ‘Meghraj‘an Indian cloud.

Sandhya noted that while the government is not doing nearly enough on climate fintech, various groups are working to influence lending, procurement and other elements of fintech.

ISB’s work

Bhagwan highlighted the various initiatives and projects ISB is working on, one of which is a voice solution for bank balances. “We convince the government to give us a number, 222 and BBB – Bank Balance Batao – and it’s a one-trick pony, it only does one thing,“ he said, adding that if a customer calls BBB, the service will call them back and report their bank balance. This can allay consumers’ fears about whether their transactions have occurred securely.

Bhagwan also thinks so “we must bring man back“, adding that they are publishing a book called Hum Tech – Human technology. This would be an attempt to help vulnerable people with their transactions. Having what he calls digital didis to help can also ease the recovery process.