Outlook 2021 For Fintech Industry Trends: Future Appears Bright For Fintech
The wealth of data that fintech is garnering will form the foundation on which fintech would build intelligent, intuitive and sharper solutions that find resonance in the market place quicker.
The Fintech industry in India is at the forefront disruption with the accelerated pace of innovation and tech adoption. The onset of pandemic witnessed the fintech industry standing at the forefront with solutions for the global financial inclusion. The advancement in technology coupled with the ever increasing need for market fluidity has boosted the investments in fintech technologies at an exponential rate.
Like it did last year as pandemic pushed technology to the fore in almost every sphere of life, and more so in financial products and services sector enabling faster fintech growth.The Fintech industry is expected to grow at a rate of of ~24.56% (CAGR) between 2021 and 2026 to reach ~INR 8.35 Trn by 2026. Moreover, during the 2nd Global Fintech Fest-2021, Union Commerce and Industry Minister Piyush Goyal, stated that the country has the highest fintech adoption rate in the world at 87% as compared the global average of 64%. The Indian Fintech market with more than 2,100 FinTechs, comprises of a lot of unicorns and stands at a valuation of $31Bn with an expectation of growth to $84 Bn by 2025. In fact, according Boston Consulting Group and FICCI, India is well-positioned to achieve a FinTech sector valuation of USD 150-160 billion by 2025, implying a USD 100 billion in incremental value creation potential.
With such immense adoption across the globe, there are few trends that will shape up the coming year and aid the growth of the sector.
- Blockchain Re-Inventing The Wheel Of Businesses
Blockchain has undoubtedly become the most significant innovation for the financial industry today. Blockchain has transformed the financial operations and processes into an ecosystem of agile and transparent procedures built in secure and highly efficient platforms. The technology willrevolutionise the methods of asset transfers, investments, and payments and eliminate errors and inefficiencies.Processing and use of data with the help of blockchain will further increase scale of operations.
- Relevance And Hyper Personalisation Of Services
The needs and wants of customers are changing at a rapid pace. According to a research by Martech Alliance, 66% of customers today expect companies to understand their needs and expectations which are unique to them. Fintech products are now being seen more as a necessity than a novelty. Whether it is payments, insurance, health, medical coverage or even loans, people are looking at fintech products with more seriousness. The new-age customers need a personalised approach with provision of tailored products and services.
- Growth of MSMEs
MSMEs are the new battleground for Fintech and the digital adoption has further disrupted the market. The Indian economy is largely MSME driven with this sector contributing upwards of 30% to the economy in GDP and employment generation. MSME lending is one area where fintech would move and grow. MSME lending retains business continuity and accelerated the flow of businesses. However, the biggest roadblock for the sector is predatory pricing targeted at the businesses that need the product but are unable to afford it. If fintech innovators can address the ongoing disparities, we will witness sustained growth of the sector
- Financial Literacy For Minors
Financial literacy comes as core life skill for the society. Studies suggested that we form our financial habits by the age of 7, hence inculpating financial literacy at a young age will empower the children to make basic financial decisions in their lives and further their ability to have successful financial future.
- Financial Protection Of Aging Population
The life expectancy of the world population is growing rapidly. By 2050, at least a quarter of the population will be over 60 years, in many regions of the world. Our elders have a disposal income at their helm, however their needs and challenges of financial services need to be met. The more longevity people enjoy, the more financial inclusion and planning they require.
The wealth of data that fintech is garnering will form the foundation on which fintech would build intelligent, intuitive and sharper solutions that find resonance in the market place quicker. All these indications point towards a bright future for the fintech next year as well.