The Moment of Fintech During Lockdown
The lockdown is hurting every industry. FinTech is no exception. However, its digital nature means many companies find themselves well positioned
Indian fintechs raised around $3.18 billion in equity funding in 2019-20 but the fundraising activity slowed after the spread of COVID-19 and the subsequent nationwide lockdown. In April- June of FY21, Indian fintechs have raised over $200 million.
The increasing popularity of fintech's can exacerbate concerns relating to data privacy, use and protection. Also, there is a need to ascertain the impact of fintech on financial stability, due to higher potential for system-wide risk with its expansion.
Why fintech got affected?
In September and October, there was a rise in overall GST collection and at pre-corporate levels very close to peak covered levels. As it is said that it is good to have a never expanding long book but fintech just got hit by due to its expanding loan book and due to high amount of lending, due to this reason fintech took a backseat.
There is a lot of stress among many of such startups and many startups have shut down even if they had gone very aggressive. Investors have started looking minutely.
According to Anup Jain of Orios Venture, many people have started using UPI as mode of their payment but still there are a lot of people who do not use all these modes. But in future there will be a rise in use of credit cards, debit cards, UPI, etc. Many people having credit cards and debit cards in their pockets but do not use them.
Jain believes that there is a big jump in the stock markets, government has held interest rates at a historic low over the last three or four years. “I can’t think of cheaper home loans available for the last five years,” he continues.
Areas to be concentrated
Nowadays many people are going for banking options such as mutual funds insurance and all. Earlier banking was considered just as a service but not now, because now its terms and meanings have expanded due to new policies and new concepts being introduced for helping people. These things have now turned up like a separate industry with more people getting involved in and showing interest.
Cyber security has gained a lot of importance these days because businesses have moved to the cloud. The increasing confidence into public, private and hybrid data cloud paves way for new challenges. Cloud-based security threats owing to misconfigured security measures give way for stricter security protocols and security testing features. The rise in cloud adoption means an increase in thrust in infrastructure security.
Data from sensors are making the Internet-of-Things (IoT) more worthwhile. Multiple research reports say that cyberattack traffic has seen a three-time increase to rise to 2.9 billion events. Things will get more and more serious over the years. Expect more of hardcoded passwords, non-encrypted personal data, updates of software and firmware form unverified sources, issues related to wireless communication security and more. All of these are actual threats connected with IoT devices placed at home, public place or enterprise.
These things are grabbing high attention these days and more and more investors and these things will progress a lot due to growth of technology, interest of people.
What people think about fintech?
Fintech should concentrate not on companies outside fintech but companies that are within it should also get more funds. As now fintech have faced a crisis due to lockdown so it should now concentrate on other various emerging sectors like e-commerce ones. Nowadays many apps which include digital payment methods such as the apps PhonePe, Amazon Pay, etc.
“These companies are large and the players in it are large, they can’t be small,” Jain said. He further continues that these companies only rely on transaction but still they have just been able to convert 20 per cent of India’s transactions into digital and 70 per cent of India’s population still transacts in cash, so that business is left untapped. But nowadays people have started using micro-payments as a mode. If these things start growing more and more than even there will be no need of banks. Banks these days have a problem with credit. This is where fintechs can come in and develop those automated underwriting models, having low cost of operations.