Paper money has been slowly but steadily giving way to innovative payment solutions. Two diverse industries, namely finance and Technology were married together to form the new amalgamation of “Fintech”. These disruptive innovations have given way to a new financial climate where digital transactions like cryptocurrency, contactless payment tools and digital wallets are the order of the day. These are also the main trends that the industry foresees for 2019.
The global economic crises of 2008-9 saw many large financial organizations falter, making the general population more conducive to accepting technology as a trend in financial transactions. Technology helps in reducing costs and turnaround time. This is the way forward as it is inclusive and relies more on leveraging technology than finance.
Platforms as a service or PaaS are one of the biggest trends to look out for in the Fintech space. This will allow solutioning to go beyond the cloud computing arena. The companies can extend solutions out of the box and add smart customization to satisfy diverse industry needs. Diverse functions like Sending and receiving payments, advanced payment services, infrastructure building and enhancement, unconventional and new user experiences are the future of new collaborations in the Fintech Industry.
According to data sourced in late 2018 from the World Bank, India houses the second largest unbanked population in the world. This is a clear indication that the Government needs to look at non-traditional channels that have the ability to drive change and impact the economy favourably. Indian Fintech companies have been instrumental in creating lean cloud-based solutions to reach out to the masses.
The Budgetary sops that allow a larger disposable income in the hands of the middle class will give an extra fillip to the Fintech services which are largely accessed by this diaspora through a robust smart telephone usage. It will fast track the economy and also increase the returns on savings and investments.
The Budget has aimed at bolstering the growth of Digitization and there are many sops in the interim budget that will allow the diverse consumer segments across socio-economic and geographic boundaries to access financial and banking services. This is why the focus has been placed on easing KYC (Know Your Customer) and consumer onboarding norms.
The Aadhaar stack has been considered as a centralized financial database that can be used as an easier norm to mandate on Fintech platforms. There are many opinions regarding this but it does seem the most feasible option once data security has been mandated and ensured.
Peer to Peer or P2P lending platforms has been given priority as the economy gears up to cross double digit numbers. This will enable private players to take digital financial services to underserved demographics. The consideration of P2P lending has been recognized as an alternative lending class altogether. The investment cap of Rs 10 lakh will attract consumers with higher disposable incomes(thanks to the taxable threshold being raised to Rs 5 lakh). This will help break barriers of traditional banking norms and create a new class of creditworthy businesses and individuals (read MSME’s and students) more empowered towards growth and development.
Angel investors have been frustrated with the 30% levy of tax on profits and that has led to a dearth in funding for many a Fin-tech start-up. Solutions have been discussed but it remains a hot topic of discussion in the power corridors of the Finance Ministry. The new Government to take charge will have to make an informed and wise decision to promote growth in this space.
These practices and innovations have the power to fuel economic growth, promote financial inclusiveness and propel India to greater heights. With the Interim budget laying down useful recommendations, it remains for the next Government to improve existing systems and encourage innovative solutions to create new avenues of disruption. Fin-techs is the way forward to ensure the burgeoning of the economy in the next few years.
-- Mr Varun Burman, Founder, zipNACH