Echnology segments like Artificial Intelligence and Machine Learning are all set to be the next high-growth area in the financial sector, with the new government likely to bet big on digital technologies to achieve its ambitious goals.
“The use of financial technology (Fintech) revolution for achieving greater financial and insurance inclusion, besides lifting people above the poverty line would be amongst the biggest agenda of the Narendra Modi 2.0 government,” NITI Aayog CEO, Amitabh Kant said last week. According to him, this focus will be matched by huge investments from the government in the area.
“India is the third largest and one of the fastest growing fintech markets globally, attracting about $6 billion in investments since 2014. Industry reports estimate that India’s total fintech software and services market is expected to grow to $13 billion with the software market alone set to touch $2.4 billion by 2020,” Kant added.
The NITI Aayog is already working on plans to engage Indian fintech companies and facilitating the growth of more start-ups in this area.The Aayog last month carried out brainstorming sessions with more than 250 thought leaders from banks, insurance companies, start-ups, investment community, central and state governments, ecosystem enablers and regulators. The sessions focused on five major areas: Financial Inclusion, Building Financial Products, fast tracking investments in fintech, and financial inclusion of MSMEs.
Kant also added that the digital payments market is expected to reach $1 trillion by 2023 from the current $200 billion. As much as $1 trillion, or 60 per cent of retail and SME credit, is expected to be digitally disbursed by 2029. The Indian fintech sector is also expected to see the value of transactions grow from $33 billion in 2016 to $73 billion by the end of 2020, growing at a five-year compound annual growth rate of 22 per cent.
As for start-ups, they believe that crypto-currencies will be one segment which is likely to record substantial growth.Sathvik Vishwanath, cofounder and CEO of Bengaluru-based Unocoin Technologies said, “From what I have seen in the last five years, crypto assets are not one of the technologies in India yet there has been a significant push on the digitization of payments. So, it is unlikely the stance would change for no reason and the best reason that could alter the stance is other countries adopting it and internally more and more people wanting it.”
There are challenges aplenty too, according to other start-up executives. V Balakrishnan, chairman, Exfinity Ventures, says, “The biggest challenge is the ease of doing business for start-ups. There is a lot of talk, but no action. We require a much faster regime on the regulatory front. There are too many regulations bugging start-ups.”