Fintech means financial technology. It is a technology merged with financial services. India is one of the emerging markets of fintech with great potential. It also faces a lot of challenges. The next decade is considered to be the decade of fintech.
Fintech in India is valued at $ 50-60 billion in FY20. Boston consulting group report, Indian fintech companies at $150-160 billion by 2025. It is considered to be the third-largest fintech ecosystem globally.
Fintech solutions can transform lending and investment in the country. With faster access to products such as crowdfunding and peer to peer lending. It has various use cases such as Pension, account aggregator service and trade finance. With the introduction of UPI, the volume of online transactions has an exponential growth rate.
Few major areas in fintech are digital lending, payments, blockchain and digital wealth management and trading services. More than 400 fintech firms operate in India. To promote fintech, the government launched schemes such as the National Payments Council of India (NPCI), Digital India Programme and Jhan Dan Yojana.
There are also some of the challenges faced by the industry. Data security and privacy risk, varied adoptions, rapidly changing regulations and lack of financial literacy and awareness.
Traditional financial service providers such as banks and NBFC will run out of business if they do not adopt fintech. Transfer of value and services are likely to be dominated by the fintech business in the coming decades. Recently Prime Minister Narendra Modi inaugurated Infinity Forum (a leadership forum on fintech) which was hosted by International Financial Services Centres Authority (IFSCA).
Therefore to take fintech to the next level, the government needs to strengthen foundational infrastructures, conducive policy framework, enhance understanding of the evolving financial system, global alliance for better retail mobile payments, adapt regulatory framework and safeguard the integrity of financial systems.
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