EY’s Fintech Adoption Index (2017), a survey of more than 22,000 digitally active consumers, ranks India second (52%) behind China (69%) in terms of percentage of the digitally active population.
Digital payments reached 1,162 crore transactions between April and November and are expected to exceed 1,800 crore in the current fiscal. Coupled with cheaper mobile data rates and the technological ease of digital payments, these numbers boil largely down to the initiatives by the government to boost financial inclusion and promote a cashless society.
Keeping in mind the pace with which India’s payment landscape is developing, it won’t come as a surprise if India overtakes China in the not-so distant future.
2017 was indeed a revolutionary year in the fintech space and one can expect similar trends in 2018.
FinTech Trends To Watch Out For In 2018
Wallet Usage to Rise
2017 has been the year which saw e-wallets and digital payments come to the fore, placating the masses post demonetization. Come 2018, this trend will likely mature as more and more Indians turn to the digital side of things; becoming the payment mode of choice for a lot more users. Financial technology organizations and applications will make purchasing more seamless and stores will permit payments straight from your mobile.
The Government will continue to push digitisation of financial systems and the consumer will, more and more, be encouraged to shift to digital platforms for financial transactions.
More emphasis on Data Analytics and AI
It’s a perceivable fact that data analytics has made our lives simpler, faster and efficient. Whereas a few years ago a business would have gathered information, run analytics and unearthed information that could be used for future decisions, today that business can identify insights for immediate use with scrupulous precision. This practice will only blossom in the future as more specific data pools become available.
Today, consumers expect solutions that cater to their unique interests and requirements. To understand what customers require, businesses rely on predictive data technology which will likely be the norm in 2018.
Banks and fintech companies collaborating
Banks do not look at fintech companies as disruptors anymore. Today, they are more like partners that pair up to take on the challenges of a new digital India. This integration combines the strengths of both – the administration of fintech with the strength and reach of traditional banking.
A Secure Digital India
The rise in digital payments and online lending also makes the sector exposed to hackers who are always on the prowl to feed on vulnerable security. Hence, the sector is always innovating to ensure the security of sensitive customer data and information.
As most cybersecurity measures up till now have been reactive rather than preventive in nature, banks will now begin to adopt additional measures to ensure data security at all stages using a combination of encryption, OTPs, biometric authentication and more. This coming year, one can expect more investment in this space by the government.
Motivated by the intention of democratising financial services while aiming for exponential growth, these FinTech startups will come up with newer models for lending, especially in the P2P Lending space.
P2P platforms enables clients to seamlessly transfer cash to different accounts, fast and effortlessly. Open banking – With initiatives such as Unified Payments Interface (UPI) and Aadhaar Enabled Payment System (AEPS), banking will become more ‘open’ in 2018.
With more APIs exposed by banks, the process of carrying out payments and other banking transactions would be greatly quickened as well as simplified. Moreover, seamless interoperability among wallets would reshape the entire payments landscape.
Proliferation of Chatbots
Several major banks in India such as HDFC, ICICI, and YES Bank adopted chatbots for seamless customer interactions and query-solving in the year gone by. In 2018, we can expect more chatbots to be deployed with improved quality of interactions, the speed of responses and accuracy in decision-making. Moreover, 2018 might finally be the year where voice-based assistants come into play.
Consumers are now increasingly open to incorporating technological innovations in their daily lives, mobile data is getting cheaper, government regulations are leading the charge and private players are making major investments. As the Indian FinTech space grows to reach an expected $2.4 billion by 2020, 2018 will be a critical year in that journey.
This story is a part of our Predictions series where we bring to you the forecasts and predictions for the year 2018, hand-curated by the Inc42 editorial team and industry experts. You can read all the stories of Predictions 2018 series here.