What's Next for Fintech: Emerging Trends to Watch Out for
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FinTech is the most used buzzword in the startup market in India right now. According to a PWC report this year, over 95% of financial services incumbents in the country seek to explore FinTech partnerships.
The payments segment of Fintech, has been the most funded within the Indian FinTech landscape, riding big on the demonetization wave. Expected return on investment on FinTech investments in India is 29% compared to a global average of 20%, reflecting the high growth potential the sector has.
But to avoid turning the sector into a clutter box, where copycats start to crowd the market, making it difficult for genuine ideas to gain momentum, the sector needs to look beyond the regular models and focus on what’s going to build the future. Here are some of emerging trends to watch out for in the FinTech sector:
Emergence of Crypto Currency
While globally, the trend of crypto currencies has caught on, India is still lagging behind in the sector. There have been a few companies in the domain like UnoCoin, ZebPay and CoinSecure who have established their hold, but a wider reach is needed.
It’s only a matter of time though, as the new mode of virtual currency is catching up fast owing to its advantages over other modes of transactions. Bitcoins have already started attracting interests from users for the purpose of both, investment and savings. The government has also set up a panel to come up with set of recommendations before end of Q3 2017.
Newer Lending Models
RBI’s ease of regulations for the FinTech sector has paved way for alternate credit models. While aiming for exponential growth, many FinTech startups are working on newer models for lending, especially in the P2P Lending space. An example of this can be seen with CASHe, a company that offers professionals credit on the lines of credit card, but with minimum documentation.
“Our target is mainly customers who have been denied by mainstream banks due to some lax or the other, even though they may have the paying capacity,” said V Raman Kumar, the founder of CASHe.
Some players in the market like Paytm have already incorporated a part of this initiative, by letting users sign in with their fingerprint on supported devices. But FinTech players are likely to go a step further by introducing advanced biometric check-in systems like retina scans in the coming days.
Payments in VR
The trend of VR has caught the fancy of many in the tech world and soon we could see mechanisms developed to facilitate payments throught his medium. Alibaba has already introduced VR Pay, a system that allows virtual reality shoppers to pay for items just by nodding. Amrish Rau, CEO of PayU India says he is positive a similar trend will follow in India, where such a mechanism will be adopted by FinTech players.
"VR related payments that will have negligible touch points is something that I see taking shape in the coming years," he said.
While chatbots have been limited to the customer care sector, a lot of companies have been working on whether, calculation-based jobs like much of lending involves, can be done by chatbots . Globally companies like Betterment and Wealthfront have already tried this but there is still a challenge of trust and relationships in this space, which will hopefully be overcome in time.
COD will be Dead
It is estimated that even today 80% of economic transactions in India still happen through cash, as opposed to around 21% for developed economies. While the use of cash of offline transactions are difficult to control, the online space, mainly e-commerce players will look to nib COD modes. Already a lot of websites do not accept COD for large amounts, and the trend may just die in the days to come.
"I believe COD as a n option for online market players will be completely dead in the coming years, as consumers will have an array of options to choose from for making their payments," said Rau.