Financial Technology registered an impressive impact on the economy in the year, 2015. As per the KPMG report, total FinTech companies amounted for over USD 19 billion in the same year. 2016 further started in the favour of the sector, with Reserve Bank of India granting as many as 11 entities licenses to establish Payments Banks. Customers further showed agility in adopting the FinTech model and its myriad services. With the support from the Government of India, RBI and NPCI, FinTech sector is slated to further intensify and diversify its impact across the nation. Here’s discussing the upcoming trends to watch out for in the FinTech domain in the New Year.
1. Emergence of Crypto Currency
2017 might just be the year for crypto-currencies, for instance Bitcoin. We have already discussed the increasing security concerns for digital transactions. Crypto-currency is the latest disruption in the e-currency landscape, and by far is immune to most of the challenges faced by other modes of transactions. Quite young as a concept in Indian subcontinent, Bitcoins have already started attracting interests from users for the purpose of both, investment and savings. FinTech sector is quickly grabbing hold of this highly evolved and evolved alternative to money. Government has set up a panel to come up with set of recommendations before end Q3 2017. I believe that usage of crypto currency will expand beyond of travel tickets and website services in end 2017 and beginning of 2018 .
2. The Rise of Micro Payments
Three major developments of 2016 have created the field for more micro payments and P2P lending to transpire in 2017. For one, National Payments Corporation of India (NPCI) launching Unified Payment Interface (UPI) followed by smartphones becoming easily affordable and improvement in the internet infrastructure. Besides, following the demonetization drive, Indian Government has also pioneered a digital literacy campaign, spreading awareness and actually imparting the knowledge in the rural India, on how to make payments using Aadhaar, e-wallets and the likes. The recent announcement to covert 30 million Kisan cards to RuPay cards will enable farmers not to go to banks branches and foster digital transactions. At a time when people are growing more uncertain about the use of cash, micro payments will surely observe a boast, now that there is ready infrastructure for the same.
3. Expect More Consolidation in E-Wallets
2016 witnessed some of the most significant consolidations, mergers and acquisitions in the wallet space. For instance, Amazon acquired Emvantage, the online payment gateway, while Flipkart acquired PhonePe, the payment app and Shopclues got the mobile wallet for offline stores, Momoe. In fact, one of the biggest acquisitions in the FinTech space was PayU’s USD 130 million acquisition of Citrus Pay.
The buyers amongst these consolidations happened to be ecommerce portals and consumer internet companies. Besides, the intention behind these consolidations seems clear – ecommerce sites, FinTech and Consumer Internet Companies are dedicated to providing their customers a well-rounded experience. With the increasing emphasis on cashless economy and consumers becoming the epicenter of such companies, we should expect further smashing consolidations in the e-wallets space.
4. Anticipate Newer Lending Models
Traditional banks leave a number of loopholes when it comes to financial inclusion and making lending services available to all. In his December 31 address to the entire, PM Narendra Modi enhanced the credit scheme for SMEs, in order to offer them an easier access to funds. The new change qualifies SMEs to funds worth 2 crore, in place of 1 crore which was the previous norm.
FinTech enterprises have covered giant strides so far in filling up these loopholes, accounting for nearly 40% of the lending happening this year. With RBI further easing is regulations for the FinTech sector, only motivated the sector to come into its full bloom. Motivated with the intention of democratizing financial services, while aiming for exponential growth, these FinTech startups will come up with newer models for lending, especially in the P2P Lending space.
5. Advent of Smarter and More Secured Solutions
The rise in digital payments and online lending also makes the sector an apple pie for the hackers, who are always on the prowl to feed on vulnerable security. There seems to be a tug of war between the hackers and the FinTech service providers. Hence, the sector is always innovating and utilizing the best of technology to ensure bullet-proof security of sensitive customer data and information. Biometric technology in ensuring security of customer’s data has already been introduced in 2016. The same technology will gain mainstream acceptance in 2017. In addition to biometric technology, there are other disruptions in the sector as well, including Face Scan, Iris Scan and more.
6. FinTech to Adopt Artificial Intelligence
Artificial Intelligence has had one of the most successful runs in 2016 – in fact, it has been one of the most buzzing trends all throughout the year. Although the adoption of AI has been limited to the Fashion and Ecommerce sector thus far, 2017 is going to witness AI expanding in its scope and utility and assisting banks and FinTech sector to speed up the processes. In both, traditional and non-traditional banking and financial sector, there is heightened need for quick processes.
The sectors need to go through an extensive range of structured and unstructured data, process the same for making key decisions. Banks and other non banking financial institutions have tons of data that still is not used for decision making purposes. With Big Data Analytics and superior AI capabilities, the sector can be made quick, intuitive and smart, ready to work in real-time. Futuristic FinTech players, in their bit to stay ahead of the edge, shall be prompt in either collaborating with AI startups or developing such functionalities in-house.
Listing the top predictions for the sector surely feels exciting for the upcoming year. It still remains to be seen how the sector will manifest these forecasts, evolving with the perpetually changing needs of the present times.