India currently ranks second after the United States when it comes to the country with the most number of FinTech companies. One might wonder how our country was able to rise to that level. Well, the answer is pretty simple.
Do you remember the demonetization wave that hit our nation in Q4 2016? Over the last three years, the FinTech industry has witnessed a significant rise in its consumer base not only in metro cities but also in the Tier II and Tier II cities as well.
With the smartphone userbase improving in the rural areas, FinTech startups are coming up with innovative and user-friendly online platforms to make banking easier. Imagine travelling kilometres to visit the bank or an institution to make a payment.
It is a tiring process which also requires you to spend your hard-earned money. Why go through the trouble of visiting a bank when you can make a payment with a few clicks on your phone? This is precisely where fintech startups have set their focus on now – making rural life easier.
Financial Inclusion – A Turning Point for Consumers
When the Unique Payments Interface (UPI)-based payment was introduced, people in Tier II and Tier III cities were concerned about making payments through an online platform. However, the concerns have subsided now with individuals and merchants being able to make secure transactions only with a few clicks on their phone.
We, as human beings, always look for things that can make our lives easier. If we find an online platform can facilitate our banking process, we would most likely go for it. This human behaviour is what drives the fintech companies.
Firing on All Cylinders
The payment segment has always been one of the major focal points for the FinTech sector. The evolving mindset and ever-increasing userbase in rural India have led to FinTech companies coming up with online platforms every other day.
Companies also offer other financial services such as instant loans, insurance, and online shopping to help consumers enjoy the benefits of financial inclusion in rural areas.
FinTech plays a significant role in breaking the so-called status barrier between rural and urban areas by offering the best services, improving the way of life in rural areas. Furthermore, these digital platforms also come in different languages to discard the language barrier.
Financial inclusion of small-scale businesses in rural areas will allow innovative entrepreneurs to expand their business. Most of the small-scale business in the country takes place in rural India. FinTech companies play a huge role in this sector. Small loans offered to micro-enterprises can help the industry improve considerably while contributing to the country’s GDP.
However, the primary concern for fintech companies in India is the lack of awareness of financial inclusion in rural areas. Most Tier II and Tier III have little knowledge of the digital world. Companies are conducting campaigns around the country to educate the rural Indian about financial inclusion and how it can make his life more comfortable.
According to a recent report by NASSCOM-KPMG, the FinTech software and services market in India is expected to grow by 1.7 times by 2020 over the $8m billion the country had achieved in 2016. Furthermore, the Indian FinTech software market is also expected to hit $2.4 billion by 2020. With the e-commerce wave spreading across the country, I feel that FinTech companies will serve as an economic powerhouse for the country and digitise rural India in the coming years.