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Introduction to Fintech companies in India

Introduction to Fintech companies in India

With the rapid appearance of “digital” in India since from the past few years, it has increasingly become easier to approach the financial services. A widely used term in the new digital age, fintech, has come up to the changing patterns of consumer banking. In the year 2015, India booms in technology acquired in financial services.

Even at an early stage of adoption, fintech in India covers the way for financial inclusion for the huge sector of unbanked and underbanked population by pulling out the challenges like the high cost of traditional banking services. As a catalyst, it is serving in the payments network, which is proving powerful for small borrowers, SMEs, MSMEs, entrepreneurs from rural areas, self-help groups, and end-users. Fintech plays a critical role to help in breaking barriers to high-cost traditional banking.

The Fintech Ecosystem:

Let us discuss the various players in a fintech ecosystem and how they are inter-connected to Fintech solution providers.

  • Investors :
  • Venture Capitals, angel investors, and private equity houses as the next golden goose are considering as the fintech providers.

  • Traditional financial institutions :
  • Banks and financial service providers have multiple ways to merge with fintechs to leverage the technological advantages as well as to reduce the cost of operations

  • Government and regulators :
  • Suitable laws protect the end-users as well as set the guidelines for fintech to perform the operation within the set parameters

  • Universities and research institutions :
  • The severe insufficiency of the talented and equipped workforce is being met by institutes with a modules that focus on fintech companies in India

  • Incubators :
  • Several developed companies are setting up incubators for fintechs in India to investigate and develop their services.

  • Users :
  • The end user plays the most important role in the fintech. The increased assumption and acceptance by Indians are facilitating the way for more fintech companies in India.

While the population in the rural area has some difficulties accepting fintech services due to lack of exposure, urban India is aggressively ready to adopt it. However, in the last few years, there have been initiatives by the Government like Aadhaar eKYC, payments from UPI, e-wallets for transactions, for rural consumers sound-wave-based payments which help to bridge a huge gap. The acceptance of these new technology highlights the reality that India is building a cost-effective, large-value, fintech-driven ecosystem that is focused on urban as well as rural segments. Fintechs companies in India have been transforming the narrative for financial inclusion by targetting on the cost of financial services, authorization of services, information incongruence, and lack of verifiable ID.

FinTech Innovations in India:
  • Payment Services –
  • Now payments can be done very easily. You can have multiple options of payment wallets without going through the lengthy procedure of opening a bank account. For this, the basic things are required that are a smartphone and a mobile sim and you can buy almost everything within your limit of the wallet. Players like Paytm, Freecharge, and MobiKwik have completely distributed all Indian payment scenarios. There is no necessity for physical wallets when you go out. Just needs to carry your phone and scan away!

  • Digital Lending –
  • Fintech technology is being used to create a place in lending. Usually, customers need to go through long cycles and paperwork to get a loan. Leading companies like Union Bank of India, Profectus Capital, Bank of India, UCO Bank, SIDBI, etc. are changing the age-old method. Now customers without steady employment, bank account statements can also avail of loans. Fintech opens a host of lending models such as flow-based, vertical-based, and ecosystem-based lending.

  • Insurance -
  • Insurance is another sector going through the paperless way. Aggregators like Policybazaar and Coverfox have merged which helps the consumers to choose among a host of service providers by differentiate their offerings and purchase the most satisfactory one.

  • Savings & Wealth Management –
  • Fintechs like Scripbox and Funds India helps individuals to save and invest their money. These platforms give comparable options to choose from.

  • Remittances -
  • Oxigen and Payworld are among the important payment platforms which have made inward and outward payments simple and cost-effective.

  • Point-of-Sale –
  • Fintechs in this section give swiping machines for a card to enable the cashless payments. Demonetization has given stand up to new players like Mswipe, PineLabs, ICICI Merchant Services in this section which has made the market more competitive.

  • Regtech -
  • Providers in this section help the firms to meet industry compliance rules like Anti-Money Laundering and Know Your Customer rules to fight against fraud. Notable players IDfy, Avantis, FixNix, Signzy are increasing the regulatory processes.

How FinTechs companies in India are reshaping the financial services landscape?

1. The topmost hurdle of traditional banking is a high cost which has left the larger piece of the population unbanked or underbanked. Fintechs are here to discompose that by removing the most expensive physical networks, outdated legacy operations, IT systems and developing a new lean operating model.

2. The traditional banking ecosystem has been equivalent with almost the same offers and service charges. Fintechs gives a scope of increasing the services and personalizing to cater to all strata.

3. The fintech companies in India have implemented advanced technology methods for risk assessment leveraging emerging technologies such as Blockchain, Artificial Intelligence, and Big Data Analytics.

4. Fintech innovation has focused on creating superior financial products, boosting the experience of the customer and increasing transparency.

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