Disruptive Vs Collaborative Innovation- Fintech India’s Journey

Lately, we almost have a weekly dose (overdose) of various Challenger Vs Champion combatants – Bank Vs Wallets… Incumbents Vs Fintech Startups… and while the jury is still out, there are enough punches of disruption and innovation claims! Surely, the sheer size of the opportunity and the under-served financial services waiting to be untapped can’t be ignored by India’s aspirant startup ecosystem. Hence, it is vital to leave no strategy unexplored.

The India startup journey caught steam with the IT/ITES sectors and then the ecommerce space fuelled it into high gear. We saw the boom during 2012-13 with Bengaluru being named the Silicon Valley of India and close to 800 startups rising every month. There was exponential growth in food tech, QSR’s, connoisseur of services, hyperlocal delivery, logistics. And now, there is fintech buzz in the startup space – disrupting the payments or lending ecosystem.

Simply put, fintech is the use of modern technology to provide financial services with ease and convenience. As per a 2016 report, by Nasscom & KPMG, the Indian fintech market itself is forecasted around USD 2.4 billion by 2020 from current 1.2 billion.

There are many startups founded with the purpose of disrupting incumbent financial institutions in India. However, there are unanswered questions like are these solving a real need, scalability, compliance, security, and sustainable business models?

India is considered to have 21% of the world’s underbaked/unbanked population – combined with the recent developed platforms based on Aadhar, eKYC, esign, the nascent fintech industry is expected to only grow bigger. Also, fintech with all its different aspects – payments, PFM, lending, insurance, investment comprises only 10% of the space which is explored. With instant payments for cab rides, money transfers, retail and ecommerce transactions or instant loans; fintech startups are changing the way we dealt with financial transactions. And because of the seamless CX many of us who have used these services have got hooked on to it. Hence,

And because of the seamless CX many of us who have used these services have got hooked on to it. The India growth story is ripe with innovation. However, what is required is to identify the hurdles that come with the highly regulated industry, find ways past them and look at the vast opportunity that lies ahead.

Uphill Challenges?

Fintech is an emerging sector in Indian startup ecosystem with plenty of startups coming up in the space, they are yet to achieve scale and maturity.

This growth is not without challenges which includes lack of robust infrastructure, lack of awareness about financial technology, regulatory hurdles, threats to data privacy and lack of data sets for verification among others.

Awareness about the highly regulated body is required first which will help create a sustainable and scalable model. We need to solve a given problem keeping all regulations in mind, do a reality check and collaborate rather than compete. A major section of the society is unaware of the financial products and services where technology can pave a way for adopting the next gen payment methods. With the Government’s vision of “Cashless Digital Bharat” there will be an acceleration and it is the need of an hour to bring about right scalable fintech solutions.

Most importantly, we have to recognise that when it comes to money and financial services consumers are most resistant to change – the urge to experimenting is reduced.

Hence, while tech offers great disruption, innovation remains untested or under-utilised due to lack of adoption, trust or reach.

Collaborative Innovation Is Key

Fintech leveraging technology, can streamline the processes, increase transparency and see expansion. There are startups trying to grow individually and raise investments. However, collaborating with already established players on various aspects can provide scaling and early reach. This is the benefit of collaboration and this sh. With a combined vision of solving the problem for the society as a whole will provide the solution.

Technology is a blessing where technological readiness, open APIs, regulatory support and government incentives would provide the way to fintech companies to scale up and receive the large scale investments that would convert them into unicorns.

Another factor to consider is that Indian fintech companies are currently focussing on the local market alone and not tapping the developed markets which would allow them to gain visibility both in terms of customers and investments, which would catapult them into the league of more established firms globally. Instead of being independent entities trying to one up the space collaborating in terms of innovative ideas and solution approach will bring in a far better ecosystem from India.

We can easily compare it to the early smartphone adoption in India where the user group was not required to be created but they adapted. The privileges and benefits of having a smartphone paved its way into the users’ mind to own it and this is exactly what is required with fintech and the entire ecosystem.

Collaboration is key and spreading awareness will help these startups scale and grow not just in the domestic matter but globally. A mature, driven market approach will help for fintech growth. Action items related to India establishing itself as a global fintech player is required keeping the key growth levers in place.

Ultimately, while there is no clear one path to success, it is imperative to become cognisant of the fact that fintech is both ‘fin’ and ‘tech’ and that success lies in its equilibrium.