By Mona Singh, Co-founder, India Accelerator
Fintech has come a long way in automating and transforming the delivery of financial services. The sector has refurnished other business sectors with the adoption of digital methods that helps organisations strategically achieve a position in the market. Considering the pace at which the digital revolution is taking place, the fintech market is continuing to expand rapidly even in the wake of the COVID-19 pandemic. According to the estimates, the Indian fintech market was valued at around Rs 1,92,016 crore in 2019 which is projected to reach Rs 6,20,741 crore by 2025 at a CAGR of 22.7 per cent.
With the COVID-19 pandemic taking a toll on the human and financial health of the country, the growth of the sector is not clearly visible till the second wave of the pandemic is completely over. It shook the nation with its exacerbating impact and the market is expected to witness severe challenges in terms of finances during the recovery. Given the various opportunities that the pandemic has presented, there will be new avenues of innovation for fintech companies that will ultimately lead to the overall growth of businesses.
The opportunities driving fintech growth
With COVID-19 sweeping the world, there is a paradigm shift in customer priorities and delivery of business services. This has led to an increased need for digital transformation across all sectors. For instance, the lockdown announcements and social distancing have resulted in tremendous growth of digital financial services backed by e-commerce growth. This will create more space for fintech companies to innovate and generate transformative solutions for customers. On the other hand, business companies will capitalise on the opportunity of investing in mobile apps, e-commerce stores and other methods for an enhanced customer experience.
In the past few years, the government has launched several initiatives rolled out at the national level to centralise digital payment modes. One of the biggest game-changers such as Unified Payment Interface (UPI) and Reserve Bank of India to regulate the digital payment landscape of India have pushed the business sectors towards advancement. Among all other forms, UPI is recognised as the most convenient method that companies are investing in. As customers can make zero charge payments, many business organisations have integrated UPI payment method across channels that make it hassle-free for customers to send or receive payments. Furthermore, such initiatives help the country move towards the goal of financial inclusion and keep pushing the business sectors forward.
Besides, India’s rising startup culture is bringing investments into the fintech sector. According to a report, India has witnessed the highest investment in the fintech segment with 33 deals valued at $647.5 million compared to China at $284.9 million during the quarter ending June 2020. Technologically sound workforce and integration of advanced technologies in financial services have accelerated the efforts of fintech startup entrepreneurs. Moreover, the use of technology for customer’s flexibility and benefit in using digital financial services have helped businesses make adjustments to their business models, accompanied by an unprecedented customer reach.
Efforts to enable business recovery and growth
The most immediate concern in today’s business environment is managing through the pandemic’s uncertainties. Fintech companies present several benefits that help businesses to pave for creating value and position themselves with resiliency in the market. Further, the integration of new-age technologies such as Artificial Intelligence, Machine Learning, Blockchain, IoT and Data Analytics in the financial world provides agility to businesses and rapidly delivers transformative experiences.
In view of strict social distancing norms, the customers’ use of online and mobile channels is accelerating at a rapid pace. This will enforce fintech companies to redesign their business models after the pandemic’s second wave is over. While leveraging the existing assets and seizing new market opportunities, fintech companies will benefit the business with the right context of transactions.
With businesses transitioning towards digitisation, fintech companies will capitalise on the opportunity to create new alliances with non-tech and non-digitised services. Extensive B2B and B2C partnerships with organisations belonging to banking, logistics, e-commerce and NBFCs are projected to create new business prospects.
With recent uncertainties prevailing in the country, every business sector has entered into a high-risk zone. Similarly, the fintech sector is also not fully immune from the impact of the virus which will require prioritisation of initiatives and various innovative ways to quickly recover from the market slowdown and return to profit generation phases.