Future of FinTech Companies in Indian Perspective

Future of FinTech Companies in Indian Perspective. The term FinTech has evolved over the last several years from a buzzword among tech-savvy company leaders to an organized sector defined by rapid growth. Digital technology, and its financial avatar, is drastically reshaping the way business has historically been conducted.
FinTech is the combination of finance and technology. It refers to a new breed of organizations that use cutting-edge technology to create substantially more efficient and effective financial solutions than traditional financial institutions.
Is FinTech just another technological advancement?
Financial organizations (NBFC) have been using technology for more than a half-century. With the millennium's turn, technology began to play a more important role in the financial sector. In the absence of technology, modern banking and financial services would struggle to remain relevant. So, is FinTech any different, and why is it positioned as a distinct industry? Technology has "aided" traditional financial organizations during the last 50 years. However, there has been no significant change in the products offered or their target market.
FinTech companies are not a replacement for traditional financial services; rather, they are an outcome of the banking industry's inevitable growth. Banking services are now available with the convenience of technology. This is accomplished through the use of technical intelligence, complex algorithms, machine learning, and big data, which are rapidly replacing traditional banking processes. FinTech is radically transforming the corporate environment in numerous industries and changing the way organizations acquire access to financing, thanks to its formidable artillery.
Scope of FinTech in India
Accounting and innovation working together has resulted in a dramatic shift in banking, venture, trading, and digital money. This evolution has resulted in the use of the word "Fintech," which is an abbreviation for the term Financial Technology. With the rise of India's Fintech Market, the entire company sector has seen major changes in financial operations and budgetary installation successes. The Fintech business in India has seen an exponential increase in finance in recent years, with investments reaching more than $8 billion already reported across various stages of investment in 2021. You might be surprised to find that India has the highest FinTech adoption rate in the world, at 87 percent, significantly higher than the global average of 64 percent. India has the world's third-largest financial ecosystem, with over 2,100 FinTech companies. 67 percent of India's existing 2100+ financial technology companies were founded in the last five years. The last 65 years have been nothing short of spectacular for FinTech in India. Since the advent of credit cards in the 1950s, a lot has changed. ATMs changed bank cash withdrawals, and the internet's introduction in the 1990s drove the fintech business to new heights. Electronic payment structures, web-based business processes, mobile banking, and bank digitization have all had a significant impact.
Segments in the Indian fintech companies
The Indian Fintech business is currently focusing on lending to clients as well as MSMEs. Simultaneously, this market has expanded to cover more standard finance insurance services, personal finance, and gold lending. Let's take a look at a few FinTech India categories.
PayTech
Payment gateways, card networks, application programming interface (API), and payment security are some of the services offered by Indian fintech companies. Among the consumer-centric services provided are third-party application providers (TPAP), prepaid card/Wallet, bill payment, QR code payment, payment aggregator, and point of sale (POS). Business-centric services include corporate cards, B2B payments, and invoice payments. Paytm, PhonePe, MobikWik, and Google Pay are among the most prominent players in this space.
LendTech
Lenders and suppliers of Buy Now Pay Later (BNPL) services, Al and anti-fraud technologies, data interchanges, marketing, and insurance services like personal loans, salary loans, gold loans, vehicle loans, student loans, and peer-to-peer lending are all examples of lendtech. Google Pay, M-Swipe, and RazorPay are establishing themselves as important customer and store financing systems.
InsurTech
Insurtech is the use of technological breakthroughs to save money and increase efficiency in the current insurance business model. It does more than only provide digital communications. It enables carriers to manage schedules and boost the efficiency and efficacy of their adjusters, including those in mixed workforces composed of direct-hire workers and third-party contracts. Insurtech uses fintech to deliver services such as claims processing, a sales platform, underwriting risk management, insurance infrastructure API, and a policy administration system. In this category, Policy Bazaar is the market leader.
WealthTech
WealthTech brings money and technology together to create digital solutions that improve personal wealth management, investment, and portfolio management. The rise of digital payment methods, e-KYC via Aadhar, online money transactions, and online investment reporting has paved the way for the development of a completely automated asset management system. Advances include the use of Big Data, artificial intelligence, and deep learning to examine investment alternatives, optimize portfolios, and manage risks. Zerodha and Small Case are two notable WealthTech startups in the FinTech market.
RegTech
Regtech is a type of technology that is used to manage regulatory operations in the financial industry. Its main responsibilities include regulatory monitoring, reporting, and compliance. Because of the increased use of digital products, there has been an increase in data breaches, cyber-attacks, money laundering, and other fraudulent activities. It reduces the risk to the compliance department by delivering real-time data on money laundering operations conducted online by leveraging big data and machine learning technology.
Digital Payments
Currently, digital transactions account for 98.5 percent of total non-cash payments. According to Statista, in June 2021, UPI vendors in India reported 2.8 billion digital payment transactions totalling more than five trillion Indian rupees. Neo banks provide payment gateways, payment processing, cash delivery, internet payments, and a variety of other banking solutions easier and faster. API providers and aggregators, banks with open APIs, banking as a service, and core banking are a few examples of Fintech services used in digital banking. Paytm, PhonePe, RazorPay, and other top fintech companies in India are involved in digital payments.
India is catching up
In terms of the state of the FinTech sector, India is not far behind the rest of the world, however there is still plenty of space for expansion. According to Inc42's FinTech Market Report 2014-2016, the country recorded $1.77 billion in FinTech investments between 2014 and 2015 through 158 transactions. The average transaction size was $9.82 million. While these data illustrate the expansion of FinTech in India, various forces are at work that will enable extraordinary growth in the near future. Register your Private Limited Company today.
Factors Contributing to India's FinTech Growth
 1. Technology is widely used
India has already demonstrated its pro-technology stance. The penetration of smartphones demonstrates its rapid pace of technological adoption. According to Counterpoint Research, India has now surpassed the United States to become the world's second largest smartphone market, with over 220 million active unique smartphone users. When compared to a feet-on-the-street approach, high use of technology makes lending substantially easier because it helps reach a larger audience.
 2. Internet adoption
Although the United States has a greater internet penetration rate of 89 percent, the reach is limited to slightly fewer than 300 million people due to the relatively smaller population size. India, on the other hand, has a lower internet penetration rate of only 35%, but due to its large population, the reach is substantially higher, with about 500 million people having access to the internet. This demonstrates that internet penetration is not only fast increasing, but also has plenty of potential to expand.
 3. Policies of the government
The latest surprising demonetization step has given the FinTech sector a major boost. Government rules in India are rapidly shifting, creating a conducive environment for FinTech. The government has taken various steps to enhance the FinTech sector, including encouraging digitization, promoting universal and ubiquitous identification (Aadhaar Card), and offering bank account plans. In short, the FinTech ecosystem plays an important role in the digital economy.
 4. Expanding financial inclusion
Currently, financial inclusion penetration in India is extremely low, with up to 145 million households lacking access to banking services. However, the RBI's goal is for penetration to reach 90% by 2021. FinTech has the potential to play a critical role in financial inclusion. The government's aim for financial inclusion benefits FinTech lenders because digital lending platforms can reach previously underserved consumer categories.
 5. Investors are becoming more interested
FinTech is an appealing investment option for venture capitalists, angel investors, high net worth individuals, and private equity firms. According to a KPMG research, FinTech investment in India increased from $245 million in 2014 to more than $1.5 billion in 2015. Despite the fact that India has just approximately 1,800 angel investors (as opposed to roughly 300,000 in the US), there has been a spike in their interest in the FinTech Sector, as seen by an increase in deals from 370 in 2014 to 691 in 2015.
 6. The transition from 'data poor' to 'data rich'
India is currently ranked third among global startup ecosystems, with 4,750 firms set to close in 2016. According to NASSCOM, India is likely to have more than 10,500 startups by 2020, employing about 2.1 lakh people. The startup surge and massive investment (in excess of $5 billion in 2015) boost FinTech since this sector requires entrepreneurs that are open to innovation, willing to experiment, and not bound by established methods of doing things.
Huge working population
India has a population of about 1.3 billion people, with metropolitan areas accounting for one-third of the total. The median age in India is roughly 27 years, indicating that the majority of the population is employed and earning a living. Working folks often acquire technology far more quickly than retired seniors. These working folks are more likely to be interested in the FinTech sector's services. Because of their familiarity with technology and data-rich ecosystems with which they routinely interact, young individuals will find it much easier to obtain credit.
Top Fintech Companies to Watch in 2022
Several Indian Fintech companies have made headlines for their outstanding work, services, and significant success. The following are a few leading companies that will shape India's FinTech future.

RazorPay

Paytm

CRED

BharatPe

TurtleMint

Policy Bazaar

MoneyTap

Pine Labs

Shiksha Finance

CoinDCX

The future of FinTech Companies in India
The global FinTech sector is anticipated to be worth $45 billion by 2020, increasing at a CAGR of 7.1%. Given the favourable circumstances, India would play a significant role. By 2020, the Indian FinTech market is anticipated to be worth $2.4 billion. FinTech has a promising future. Partnerships between this innovative sector and the experienced traditional banking sector could be one driver that propels expansion even further. Collaborations between the two can bring the best of both worlds together, allowing them to offer unique items to a bigger number of people in India.
Recent collaborations between FinTech businesses and traditional banks demonstrate that two entities do not have to compete but can co-opt. While banks may lend large sums of money, FinTech firms bring technology skills, specialized loan solutions, and extensive data analytics to the table.
Young enterprises in the FinTech sector require assistance in realizing their full potential. Incubators and accelerators can mentor young businesses and help them compete against the larger players in India's fiercely competitive, cost-conscious industry.

The term FinTech has evolved over the last several years from a buzzword among tech-savvy company leaders to an organized sector defined by rapid growth. Digital technology, and its financial avatar, is drastically reshaping the way business has historically been conducted.

FinTech is the combination of finance and technology. It refers to a new breed of organizations that use cutting-edge technology to create substantially more efficient and effective financial solutions than traditional financial institutions.

Is FinTech just another technological advancement?

Financial organizations (NBFC) have been using technology for more than a half-century. With the millennium's turn, technology began to play a more important role in the financial sector. In the absence of technology, modern banking and financial services would struggle to remain relevant. So, is FinTech any different, and why is it positioned as a distinct industry? Technology has "aided" traditional financial organizations during the last 50 years. However, there has been no significant change in the products offered or their target market.

FinTech companies are not a replacement for traditional financial services; rather, they are an outcome of the banking industry's inevitable growth. Banking services are now available with the convenience of technology. This is accomplished through the use of technical intelligence, complex algorithms, machine learning, and big data, which are rapidly replacing traditional banking processes. FinTech is radically transforming the corporate environment in numerous industries and changing the way organizations acquire access to financing, thanks to its formidable artillery.

Scope of FinTech in India

Accounting and innovation working together has resulted in a dramatic shift in banking, venture, trading, and digital money. This evolution has resulted in the use of the word "Fintech," which is an abbreviation for the term Financial Technology. With the rise of India's Fintech Market, the entire company sector has seen major changes in financial operations and budgetary installation successes. The Fintech business in India has seen an exponential increase in finance in recent years, with investments reaching more than $8 billion already reported across various stages of investment in 2021. You might be surprised to find that India has the highest FinTech adoption rate in the world, at 87 percent, significantly higher than the global average of 64 percent. India has the world's third-largest financial ecosystem, with over 2,100 FinTech companies. 67 percent of India's existing 2100+ financial technology companies were founded in the last five years. The last 65 years have been nothing short of spectacular for FinTech in India. Since the advent of credit cards in the 1950s, a lot has changed. ATMs changed bank cash withdrawals, and the internet's introduction in the 1990s drove the fintech business to new heights. Electronic payment structures, web-based business processes, mobile banking, and bank digitization have all had a significant impact.

Segments in the Indian fintech companies

The Indian Fintech business is currently focusing on lending to clients as well as MSMEs. Simultaneously, this market has expanded to cover more standard finance insurance services, personal finance, and gold lending. Let's take a look at a few FinTech India categories.

PayTech

Payment gateways, card networks, application programming interface (API), and payment security are some of the services offered by Indian fintech companies. Among the consumer-centric services provided are third-party application providers (TPAP), prepaid card/Wallet, bill payment, QR code payment, payment aggregator, and point of sale (POS). Business-centric services include corporate cards, B2B payments, and invoice payments. Paytm, PhonePe, MobikWik, and Google Pay are among the most prominent players in this space.

LendTech

Lenders and suppliers of Buy Now Pay Later (BNPL) services, Al and anti-fraud technologies, data interchanges, marketing, and insurance services like personal loans, salary loans, gold loans, vehicle loans, student loans, and peer-to-peer lending are all examples of lendtech. Google Pay, M-Swipe, and RazorPay are establishing themselves as important customer and store financing systems.

InsurTech

Insurtech is the use of technological breakthroughs to save money and increase efficiency in the current insurance business model. It does more than only provide digital communications. It enables carriers to manage schedules and boost the efficiency and efficacy of their adjusters, including those in mixed workforces composed of direct-hire workers and third-party contracts. Insurtech uses fintech to deliver services such as claims processing, a sales platform, underwriting risk management, insurance infrastructure API, and a policy administration system. In this category, Policy Bazaar is the market leader.

WealthTech

WealthTech brings money and technology together to create digital solutions that improve personal wealth management, investment, and portfolio management. The rise of digital payment methods, e-KYC via Aadhar, online money transactions, and online investment reporting has paved the way for the development of a completely automated asset management system. Advances include the use of Big Data, artificial intelligence, and deep learning to examine investment alternatives, optimize portfolios, and manage risks. Zerodha and Small Case are two notable WealthTech startups in the FinTech market.

RegTech

Regtech is a type of technology that is used to manage regulatory operations in the financial industry. Its main responsibilities include regulatory monitoring, reporting, and compliance. Because of the increased use of digital products, there has been an increase in data breaches, cyber-attacks, money laundering, and other fraudulent activities. It reduces the risk to the compliance department by delivering real-time data on money laundering operations conducted online by leveraging big data and machine learning technology.

Digital Payments

Currently, digital transactions account for 98.5 percent of total non-cash payments. According to Statista, in June 2021, UPI vendors in India reported 2.8 billion digital payment transactions totalling more than five trillion Indian rupees. Neo banks provide payment gateways, payment processing, cash delivery, internet payments, and a variety of other banking solutions easier and faster. API providers and aggregators, banks with open APIs, banking as a service, and core banking are a few examples of Fintech services used in digital banking. Paytm, PhonePe, RazorPay, and other top fintech companies in India are involved in digital payments.

India is catching up

In terms of the state of the FinTech sector, India is not far behind the rest of the world, however there is still plenty of space for expansion. According to Inc42's FinTech Market Report 2014-2016, the country recorded $1.77 billion in FinTech investments between 2014 and 2015 through 158 transactions. The average transaction size was $9.82 million. While these data illustrate the expansion of FinTech in India, various forces are at work that will enable extraordinary growth in the near future. Register your Private Limited Company today.

Factors Contributing to India's FinTech Growth

1. Technology is widely used

India has already demonstrated its pro-technology stance. The penetration of smartphones demonstrates its rapid pace of technological adoption. According to Counterpoint Research, India has now surpassed the United States to become the world's second largest smartphone market, with over 220 million active unique smartphone users. When compared to a feet-on-the-street approach, high use of technology makes lending substantially easier because it helps reach a larger audience.

2. Internet adoption

Although the United States has a greater internet penetration rate of 89 percent, the reach is limited to slightly fewer than 300 million people due to the relatively smaller population size. India, on the other hand, has a lower internet penetration rate of only 35%, but due to its large population, the reach is substantially higher, with about 500 million people having access to the internet. This demonstrates that internet penetration is not only fast increasing, but also has plenty of potential to expand.

3. Policies of the government

The latest surprising demonetization step has given the FinTech sector a major boost. Government rules in India are rapidly shifting, creating a conducive environment for FinTech. The government has taken various steps to enhance the FinTech sector, including encouraging digitization, promoting universal and ubiquitous identification (Aadhaar Card), and offering bank account plans. In short, the FinTech ecosystem plays an important role in the digital economy.

4. Expanding financial inclusion

Currently, financial inclusion penetration in India is extremely low, with up to 145 million households lacking access to banking services. However, the RBI's goal is for penetration to reach 90% by 2021. FinTech has the potential to play a critical role in financial inclusion. The government's aim for financial inclusion benefits FinTech lenders because digital lending platforms can reach previously underserved consumer categories.

5. Investors are becoming more interested

FinTech is an appealing investment option for venture capitalists, angel investors, high net worth individuals, and private equity firms. According to a KPMG research, FinTech investment in India increased from $245 million in 2014 to more than $1.5 billion in 2015. Despite the fact that India has just approximately 1,800 angel investors (as opposed to roughly 300,000 in the US), there has been a spike in their interest in the FinTech Sector, as seen by an increase in deals from 370 in 2014 to 691 in 2015.

6. The transition from 'data poor' to 'data rich'

India is currently ranked third among global startup ecosystems, with 4,750 firms set to close in 2016. According to NASSCOM, India is likely to have more than 10,500 startups by 2020, employing about 2.1 lakh people. The startup surge and massive investment (in excess of $5 billion in 2015) boost FinTech since this sector requires entrepreneurs that are open to innovation, willing to experiment, and not bound by established methods of doing things.

Huge working population

India has a population of about 1.3 billion people, with metropolitan areas accounting for one-third of the total. The median age in India is roughly 27 years, indicating that the majority of the population is employed and earning a living. Working folks often acquire technology far more quickly than retired seniors. These working folks are more likely to be interested in the FinTech sector's services. Because of their familiarity with technology and data-rich ecosystems with which they routinely interact, young individuals will find it much easier to obtain credit.

Top Fintech Companies to Watch in 2022

Several Indian Fintech companies have made headlines for their outstanding work, services, and significant success. The following are a few leading companies that will shape India's FinTech future.

RazorPay
Paytm
CRED
BharatPe
TurtleMint
Policy Bazaar
MoneyTap
Pine Labs
Shiksha Finance
CoinDCX

The future of FinTech Companies in India

The global FinTech sector is anticipated to be worth $45 billion by 2020, increasing at a CAGR of 7.1%. Given the favourable circumstances, India would play a significant role. By 2020, the Indian FinTech market is anticipated to be worth $2.4 billion. FinTech has a promising future. Partnerships between this innovative sector and the experienced traditional banking sector could be one driver that propels expansion even further. Collaborations between the two can bring the best of both worlds together, allowing them to offer unique items to a bigger number of people in India.

Recent collaborations between FinTech businesses and traditional banks demonstrate that two entities do not have to compete but can co-opt. While banks may lend large sums of money, FinTech firms bring technology skills, specialized loan solutions, and extensive data analytics to the table.

Young enterprises in the FinTech sector require assistance in realizing their full potential. Incubators and accelerators can mentor young businesses and help them compete against the larger players in India's fiercely competitive, cost-conscious industry.

Future of FinTech Companies in Indian Perspective

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