How Fintech Companies are Eyeing Huge Growth Opportunities After Budget 2018
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Fintech has been a constant focus area for the Government of India in the last 5-7 years. In the Union Budget 2018, the government iterated digitization of financial transactions as one of its key priorities. The government has also acknowledged the role that fintech is playing in driving the growth of MSMEs in India, as well as the economy at large, in its latest budget. Moreover, GoI has instituted a special group under the Ministry of Finance for designing policies and institutional measures to develop a more favourable atmosphere for this high-potential sector.
Taking cognizance of the state-of-the-art technologies including artificial intelligence, machine learning, and data mining as tools of financial enablement, the government has also reiterated its commitment to promote indigenous research and development through initiatives such as StartUp India, Digital India, and Make in India.
The focus is also on increasing the Aadhaar adoption and the centralization of payments and customer data in India. This development is believed to further decrease the turnaround time for credit approval, which has already been reduced to a few hours by innovation-driven fintech start-ups.
Infrastructural Development to Support the Digital Economy
According to Satyam Kumar -CEO and Co-founder, LoanTap, the biggest push, however, has come in terms of the infrastructural development that is going to support the digital economy.
“India has already completed the first phase of its BharatNet project, equipping one lakh gram panchayats with high-speed broadband connections. With digitization now almost ubiquitous across urban regions, the government intends to set up five lakh Wi-Fi hotspots to provide 5 crore rural Indians direct access to the digital world. This will help the isolated rural user to get acquainted with the advantages of fintech products and services,” shared Kumar who feels the budget indicates the victory of all the stakeholders including economy, fintech sector, and the citizens of India.
Fintech to Democratize Financial Services
Post demonetization, we have seen a paradigm shift in the lending space. As technologies develop further, these platforms or NBFCs have been enabled significantly with more transparency in existing financial space. This year's budget has also given a ray of hope to many MSMEs and service providers to MSMEs to flourish their businesses and scale to the next step.
We will see more innovative products, delivered efficiently through the use of technology. With growing demand and the government’s affinity towards fintech players, this segment is witnessing a massive growth. Hi-end technologies like Artificial Intelligence, Machine learning algorithm, Blockchain, IoT will be used in massive scale to identify potential target audience who till now were out of the banking radius.
Manish Khera, CEO and Co-Founder, Happy Loans, feels fintech start-ups will democratize financial services by reaching out to all those customers who are left out of the traditional financial system either due to lack of proper documentation, less awareness or lack of credit score.
“Things will revolutionize drastically and by 2020, more than 18% of the population from rural India will enjoy the benefits reaped now. While the central government has supported the start-ups for long, a strong effort is now seen from the government at the state level as well. Govt’s push towards digital infrastructure is commendable, including allocation of funds to promising start-ups who can contribute largely to the economic growth,” opined Khera.
Interestingly, Maharashtra fintech policy has budgeted for innovation in fintech, while Vizag a strong entity for fintech innovation has also started with its initiative to incubate fintechs in their state.
“These funds must be utilized for providing resources to Infrastructure for co-work, technology assistance, regulator assistance for compliance, spreading education about using technology for financial needs. This way, it will create more job opportunities and help in the establishment of incubation centres across the country which will intensify the growth driver largely,” he advocated.
Ensuring Ease of Doing Business and Incubating Disruptive Ideas
Post budget, the Government has formed a steering committee to make fintech regulations more flexible and business friendly so that the country receives more investments and attracts entrepreneurs to come up with new ideas in the space. Given that fintech has emerged as a multibillion-dollar opportunity in India, this steering committee will help the industry leapfrog and become an example for rest of the world, just like the Indian telecom industry.
According to Rajesh Gupta, Founder, Cash Suvidha, there is no dearth of business ideas to solve day to day problems through fintech. “However, a lot more needs to be done to ensure ease-of-doing-business in the country so that these disruptive ideas do not die in the need of regulatory clearances, lack of funds, weak infrastructure et al. Investments in fintech is a critical requirement to meet the objectives of digital India. Singapore, where the fintech ecosystem has grown by leaps and bounds in the last 5-7 years, can be a model for us,” he explained.
The allocations made in this year’s budget are clearly indicative of how integral new-age fintech start-ups have become to the Indian economy. With digital payments adoption already increasing at an exponential pace, the nation is moving towards achieving its goal of becoming a cashless economy. The fintech sector is catalyzing this development through innovative products and services. A new financial age is dawning!