Scopes That Fintech can Offer in Forex Domain
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In past few years Indian Fintech space has drastically evolved with the advent of new technologies and innovations. A young brigade of entrepreneurs and startups are working hard to take it to the next level. Fintech sector in India is offering plethora of opportunities for service providers to expand their horizons. Favourable policy framework, start-up revolution and digitization are also supporting the enhancement of financial services for seamless user experiences with more transparency.
Indian Fintech Industry on Global Map
According to recent insights shared by PWC, the fintech industry in India is expected to generate 29% ROI wherein the same industry in the rest of the world would be generating a ROI of 20%. The insight clearly puts the Indian fintech industry on the global map as the front runner.
Segments that will Be Benefitted
The rise of the industry has thrown up opportunities in the segment of Mobile Wallets, lending, crypto currencies, insurance & wealth management. But even being the largest financial market in the world, Forex is an area which is relatively unfamiliar terrain for individuals as well as business communities across the world. For majority of us foreign exchange seems to be a complicated process with a lot of fear involved considering low awareness level and the perception of complexity.
Within my market experience, I have realised that when the entire asset classes namely Debt, Equities, and Commodities have numerous players and transparent ecosystem, FX remains a highly closely held and regulated market with dearth of knowledge. On the contrary, FX as a market risk is audience agnostic. It’s amongst the biggest risk which affects the entire spectrum of market participants. From billion- dollar defence payments to carrying currency for your first international travel, it affects the commercials of transactions significantly.
Forex Ignored by India’s Startup Revolution
Unfortunately this promising segment of Indian Fintech space was even ignored by India’s startup revolution. There were a large number of people who needed FX services, but had to contend with what the banks offered. Forex is one such area where money vanishes in air without writing a cheque. A simple mark-up of 20 paisa on export process of $400,000 makes you poorer by INR 80, 000 without separately debiting your bank account.
Forex Can Open Pandora Box of Opportunities
While being consistently generating returns for its investors and disrupting the segment through technological innovation, FX is yet to witness new entrants and adoption of more disruptive technologies. By riding on these disruptive technologies, Forex domain in India can open the Pandora box of opportunities for players as well as users in both B2B and B2C spaces.
Innovative ideas and disruptive innovation in Fintech is challenging the traditional business model and consumers/customers are looking for more advanced solutions. The industry potential for Foreign exchange is huge with 1 million Small & Medium Enterprises and 20 million individual customers using banking services to transact in foreign exchange market. Better profit margins of clients are under risk due to information arbitrage by intermediaries, lack of transparency and reliable platforms. There are cases were the business community in international trade realised the losses due to over charged forex spreads but the voices were never raised so as to continue good relationships with favourite banks.
As per Nasscom's 2017 incubator report, four out of six major industry-incubator-accelerator partnerships have partial, if not complete, focus on fintech services. A recent McKinsey report on impact investment noted a similar trend with most finances going to fintech start-ups. There is immense pressure on new players to introduce advance technologies in this space.
From government to industries the expectations are huge from these innovators so as to make India the global hub for Fintech Disruption. With Superior collaboration models, Disruptive technologies like AI, machine learning, IOT etc, In-depth understanding of fast evolving ecosystem requirements and Growth of fintech investments, the future of this space is extremely bright in the country. Certainly with better fintech ecosystem, FX is going to rapidly evolve with more reliable platforms for operations and transactions in today’s digital world.