A push by the government to promote digital payment and reluctance of traditional banks to cater to all section of consumers has led to the growth of fin-tech industry so much so that India is now the second-largest hub for fin-tech players in the world. According to a report, there has been threefold growth, from 737 to 2,050, in the number of fin-tech start-ups in the country during 2015-2018.
Industry players expect structural and regulatory changes that took place in the sector to foster the growth of the ecosystem in 2020 and beyond. "This has been a very active year for fin-tech players.
There have been some major changes in the regulations as well as policy which have had an impact on the sector ... In 2020, we expect the fin-tech industry to build on from what has been done in 2019," said Abhishek Gandhi, co-founder and CFO, RupeeCircle.
According to him, the government is doing away with charges on digital transactions, push for NEFT and RTGS to be active on Sundays, the Reserve Bank of India allowing financial institutions and fin-tech to set up Regulatory Sandbox and providing opportunity for large established companies and fintech to collaborate on solving problems like digital KYC, wealth management and payments. Akshat Saxena, co-founder, ePayLater hopes that the government will continue incentivising digital payments in order to continue the momentum and to further strengthen the payment infrastructure thereby substituting cash as a mass scale.
"The proposal in this year's budget to digitize one lakh villages over the course of the next five years will further help improve the digital infrastructure of rural and semi-urban areas," Saxena said, adding there could be further encouragement for enhancement of UPI rails including QR codes push for retailers, introduction of mandate features, digital invoicing on UPI.
From providing mere digital payment solutions to disbursing loans in minutes, India's fin-tech ecosystem has seen drastic changes in the past few years. Some of the major players, such as Paytm, now operate on a traditional bank scale. One of the segments, which has seen a boom in recent times is that of the instant loan segment. "For the fast and instant loan segment there is promise of much growth in 2020 than in 2019. This is primarily because the slowdown in the economy has become all-pervasive, and in the new year the segment that we cater to will find it more difficult to manage their finances.
We at Loanwalle, therefore, have plans to take our branch tally to 50 by mid-2020," said Sachin Mittal, CEO, founder, Loanwalle.com. He said banks in 2020 will be more occupied in bringing down their NPAs and will be more circumspect in giving out loans. "This should help our loan segment to grow at a faster rate than before." The robust growth of the segment also attracted attention of investors. Tech start-ups raised $14.5 billion in 2019, beating their previous best of $10.6 billion.
Tech start-ups raised $14.5 bn in 2019
According to Tracxn, tech startups in India raised $14.5 billion in 2019, beating their previous best of $10.6 billion last year. Fin-tech startups raised $3.2 billion this year, more than startups operating in any other category