India’s and Fintech’s relationship might have started a little late, but it is surely blooming faster than any other economy. According to a recent report by CapGemini SE, a French multinational information technology consulting corporation, India has occupied the number two position in the list evaluating the strength of fintech movement all around the world. The list has been topped by US, and is followed by UAE at third, China at fourth, and Netherlands at fifth, after India at second.
The year 2015 was a formative year for the Indian fintech sector, which saw the emergence of numerous fintech start-ups, incubators and investments from public and private investors. Within just two years, the country has come to realise that a right mix of technical skills, capital investments, government policies, regulatory framework and entrepreneurial and innovative mind-set could be the driving force to establish fintech as a key enabler for financial services in India. And Indians seems to be adapting to it pretty well. About 53 per cent of Indians have acknowledged that they have had a positive customer experience with fintech. This percentage is only lower than US, where people have had 53.3 per cent satisfaction.
According to the World Retail Banking Report 2017 by CapGemini SE, Indians and Chinese are more open to trusting new companies when it comes to payments using mobile applications, e-wallets, etc; when compared to other countries around the world. The two countries have the highest percentage with 55-60% of users availing financial services from non-traditional firms (non-banks).
The CapGemini SE report also revealed that while Indians and Chinese are more welcoming of non-traditional firms, these firms have had a lesser impact when it comes to Europe, Middle East and Africa. According to statistics put forth in the report, only 33.2 per cent customers availed the services of new firms, compared to 35.7 per cent who transacted at the traditional banks in these regions. However, non-traditional firms in Turkey and the United Kingdom ended up bucking the trend by margins of a whopping 11.6 per cent and 8.8 per cent, respectively. This could be due to the growing popularity of fintech companies and digital banks in those countries.
Anirban Bose, head, global banking and financial services, Capgemini believes that the high percentage of fintech acceptance in India can be attributed to the increased interest taken by the country’s government for fintech innovation. The Modi government had recently launched a smartphone based money transfer system and several prominent banks in the country are also following the government’s course and are getting involved in partnering with fintechs. Bose gives the example of DBS Bank, which has launched the mobile-only Digibank that leverages biometrics and artificial intelligence; Yes bank, which has teamed up with dozens of startups through its accelerator program and is currently in the midst of pioneering a chat-based payments service and Axis bank, which has an in house incubator, an accelerator and a social networking space for startups. Even Public Service Units in the country are accepting of the fintech growth in the country. For example, State Bank of India was among the first banks in the country to get Aadhar Enabled Payment System on board, which enables customers to make transactions by just using their Aadhar number and finger print.
The CapGemini SE report also shared that more than half of gen-Y and tech-savvy citizens of the emerging economies like India and China are availing the services of non-banks, which is the highest globally. Another major positive takeaway for India from the report is that India is among the emerging centers of innovation for tech-driven financial services.