How FinTech revolution reshaped the Indian Economy

The entire world is striving to gradually go back to normal after the economic collapse brought on by the COVID-19 epidemic.  The financial services industry is evolving rapidly as a consequence of Fintech solution evolution. Significant companies in the financial sector are increasingly converting from manual to digital processes, as is the case in most industries. The industry has seen a wide adoption of technologies including electronic payments, paperless loans, mobile banking, e-wallets, and wealth management because to continual technical improvements. India has one of the largest adoption rates of fintech among emerging countries worldwide, at 87% versus the global average of 64%. Today, more Fintech manufacturers are working to increase financial inclusion, which will enhance the standard of living for underbanked communities. By 2025, the Indian Fintech market, which is currently worth $31 billion, is anticipated to grow to $150 billion.

FinTech is the path to economic expansion

Modernity is increasingly reliant on technology in all of its manifestations. The way conventional financial services organisations function has undergone a substantial transformation as a result of technological advancements. The pandemic and numerous government initiatives that have been put in place over the years have caused the traditionally cash-driven Indian economy to seize the opportunity presented by new technologies. When businesses are being essentially forced to move their operations online by the new "Low-Touch, High-Tech" economy, fintech is expected to experience a growth in the ensuing years. As the digital transaction mode develops rapidly, traditional businesses and uncommitted customers who had concerns about adopting innovations like digital banking, for instance, will swiftly come off the fence.

There is a growing connection between NBFCs and the FinTech ecosystem. Financial services companies are using technology more than ever across their entire process loop right from the lead generation, customer on-boarding, underwriting, disbursements and collections. This deployment phase has greatly improved the customer's digital experience. This movement is mostly driven by new technologies like ML, IoT, AI, Blockchain, and Cloud computing, and organizations who use them will succeed far more than those that do not.

The substantial Indian consumer base, which has generally been particularly hesitant to use technology for financial transactions, requires FinTechs to strive toward increasing consumer confidence. The availability of Internet, smart phones, and consistent electricity to power tech devices for the vast majority of Indians across the nation is another issue that continues to impede the quick growth of FinTechs. The potential for further improving the entire value chain and integrating the unbanked and up until now underserved segments of the Indian people exists as the fintech sector expands and changes. In the upcoming years, FinTech applications should continue to emphasise more accessibility, quicker processing times, and novel payment ways.

Implementation of Fintech solutions

Growth of Fintech in India is driven by various macroeconomic factors. By fostering a more client-centric and interactive approach to financial and banking services, fintech is significantly altering the experience and expectations of customers. Its innovation has emerged outside of the financial sector and has been predominantly driven by non-bank organisations, including emerging enterprises and startups with fintech backing from venture capital. These non-bank businesses are free to experiment in an uncontrolled setting and frequently concentrate their operations solely on offering a certain set of novel financial and banking services. It increasingly offer a variety of financial products to established financial institutions, often in the form of software that can be easily incorporated through APIs into their back-end systems. These services provide a way of successfully and efficiently delivering financial goods and services. Because of the numerous technological and automated tools available to developers, creating apps now takes ages, for improving the user experience.

In January 2022, the RBI formed an internal FinTech section as part of its initiative to promote financial inclusion. As a result, UPI and mobile banking usage increased and the FinTech sector operated more efficiently. The adoption rate of fintech in India last year was 87%, higher than the worldwide average of 64% and second only to China, according to Commerce Minister Piyush Goyal. The current state of the world economy is exceedingly insecure. Despite enormous obstacles, the Indian economy has made some progress. I want to make it clear to the banks and companies that they should continue to grow and satisfy customer demand while keeping their attention on boosting their resilience. They should work to preserve healthy levels of capital and other buffers while also regularly assessing risk buildup, if any, sharpening governance, and improving governance.

Surmise Note

In the modern world, the development of the financial services industry depends heavily on the clever solutions provided by Fintech firms. Technological advances offer data-driven solutions to the expanding tech-savvy audience with an understanding of industry trends and customer behaviour. Additionally, the revolution is setting the pace for the sector by extending its services across all industries and encouraging financial inclusion, setting itself towards future economic growth.

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