Fintech Growth

Fintech Revolution

What is FinTech? 

• FinTech refers to new digital technology that aims to improve and automate the delivery and use of financial services. 
• FinTech is a combination of "financial technology" and "finance." 
• In the twenty-first century, the term FinTech was coined to describe the technology used in the back-end systems of established financial institutions. 

The Rise of FinTech in India 

• India's payments infrastructure has improved significantly in recent years, thanks to the introduction of new payment mechanisms and interfaces like the Immediate Payments Service (IMPS), Unified Payments Interface (UPI), Bharat Interface for Money (BHIM), and others. 
  
• The government's "Make in India" and "Digital India" initiatives also played a key role in accelerating Fintech adoption.
• The Reserve Bank of India (RBI) has pushed the growing use of electronic payments to establish a truly cashless society in recent years, which is commendable.
• Furthermore, government initiatives such as demonetization and the GST have created a significant growth opportunity for fintech projects across the country. 
• Digital payment systems have undeniably been the flag bearers of the Indian FinTech market, with the introduction of breakthrough platforms such as PayTM, PhonePe, MobiKwik, and others.
• Furthermore, the global partnership between Facebook and Reliance Jio is expected to have a significant impact on India's digital payments sector, with a particular focus on hyperlocal digital commerce that will reach tier 2 and 3 cities as well as rural areas. 

FinTech Trends for 2022 

In 2022, this growth is defined by several prevailing trends: 

Digital banking continues to grow: Digital banking is easier to access than ever before. Many consumers already manage their money, request and pay loans, and purchase insurance through digital-first banks. 

Blockchain: Blockchain technology that allows for decentralized transactions is likely to continue this trend in 2022 as more industries turn to advanced data encryption.

Artificial Intelligence (AI) and Machine Learning (ML): Client services have been redefined as a result of AI and machine learning technologies. AI and machine learning can help businesses cut costs, improve client value, and detect fraud

Covid-19 and Digital Payments 

• The Reserve Bank of India noted in its Annual Report 2020-21 that the Covid-19 pandemic fueled the proliferation of digital modes of payment. 
• FinTech's prospects in India's financial system in 2021-22 will be determined by the extent to which digital usage has become entrenched. 
• As a result of Covid's recent trend of remote working, the world has become smaller and financial as well as geographical borders have been broken. 
• In a world where boundaries are dissolving and the scope is vast, there are many opportunities for international expansion post-Covid. 

Way Forward: 

• In India, a large portion of the country remains unbanked, underserved and subject to a constantly changing regulatory environment. The Indian FinTech industry has received a much-needed boost as a result of the growing awareness of financial technology. All of these developments point to a positive shift toward FinTech, which has huge growth potential as the country moves toward widespread adoption.