At 87%, India Has The Highest Fintech Adoption Rate In The World: Piyush Goyal

Over the years, India has seen a gradual transformation of the fintech ecosystem. From the surging acceptance of digital payments across all cities and towns – Tier 1 to Tier 4 — to mobile wallets, contactless, RFID and UPI-based transactions becoming the most preferred payment option for many amid the pandemic.

Testament to the hype, Union Minister of Commerce & Industry, Piyush Goyal addressing the 2nd Global Fintech Fest stated that India is poised to become one of the largest digital markets in the world, citing the availability of high-speed internet.

Stating that the power of the internet can be leveraged to make India a fintech innovation hub, he added, “At 87%, India has the highest financial technological (fintech) adoption rate in the world against the global average of 64%.”

In the payments ecosystem, fintech is taking over the traditional channels, witnessing a three-fold growth in the number of startups between 2014 and 2021 — rising from a count of 737 in 2014 to over 2400 startups now. 

Not only that, while the Indian startup funding hit an all-time high with $26 Bn raised in the first eight months of 2021, the fintech startup ecosystem saw 5.8x higher capital inflow to reach $4.6 Bn funding across 160 deals as compared to the same timeframe last year.

Within fintech, segments like lending and neobanking, insurance, and personal finance management hold the maximum share, and topping the list is payments. 

Goyal stated that the UPI banking interface recorded 3.6 Bn transactions in August 2021, the highest-ever so far. He also added that over 2 Tn transactions were processed using the AePS (Aadhar-enabled payment system) in FY20.

Some key takeaways from the speech:

• More than 2 Cr accounts were opened under the Jan Dhan Account Scheme
• Under the National Broadband Mission soon every village in India will have high-speed internet, to augment the fintech innovation hub
• Investment inflow in the fintech sector has gone up to $10 Bn 
• The emergence of embedded finance is an interesting development,
• Non-financial service sectors are also proactively adopting fintech solutions for credit, payments, accounting & tax filing
• Currently valued at $31 Bn, the Indian fintech market is expected to grow to $84 Bn by 2025
• Under AtmaNirbhar Bharat, Indian entrepreneurs should use local talent to produce globally marketable solutions in the segment

Goyal also shed light on the Open Credit Enablement Network (OCEN) & Account Aggregator (AA) framework, stating, “These enable formal credit flow to the most vulnerable segments, especially particularly small businesses, brings ease for financial institutions to reach large segments, by lowering distribution costs and now institutions can give smaller loans, with short repayment cycles.”

According to an Inc42 Plus report, given the current rise in fintech across the country, especially the disadvantages that come with it such as fraud & lower awareness, the government is likely to bring in more regulations in this fintech subsector. 

Yet, as the Covid-19 pandemic has forced both consumers and enterprises to adopt digital payment solutions, the rise in demand will create new opportunities for entrepreneurs in all of the subsectors under fintech — digital lending, consumer lending, B2B-lending, fintech SaaS and insurance tech.

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