Fintech 2.0: The New Era of Financial Inclusion for India

Fintech, the firms which use modern technology to compete with traditional financial methods in the delivery of financial services, are often known for their personalization techniques adapted to the customer’s needs. Since its emergence, Fintech has paved its way towards becoming a newly developed digital and online technology in the banking and financial services industries. With the advancing years, Fintech has risen and new-fangled the game to another level with the rise of new-age FinTech start-ups rolling out innovative solutions using low-cost technology and the launch of new digital products or digital-only banks by incumbents.

With strategic partnerships between incumbents and FinTechs, along with the governmental intervention through the creation and operationalisation of FinTech policies, the new era can be termed as Fintech 2.0 where we get to see the launch of initiatives such as smart cities, portals for quick approval of loans for small and medium scale enterprises (SMEs), etc. When the first wave of Fintech began, the main objective was to roll out the alternative, disruptive, tech-driven business models across multiple segments. Since 2018, the country has witnessed a new era of financial inclusion with a shifted objective towards focus on creation of a cost-effective, sustainable Fintech ecosystem.

While the government and the corporate sector aim to bring out the strength of the new era of financial inclusion for India – Fintech 2.0, they focus on reducing the cost of access to financial services for the rest of the population, who continues to remain on the other side of the bridge because of lack of affordability. Fintech 2.0 is the time to create a sustainable ecosystem to ensure a significant impact of FinTech on the country’s Gross Domestic Product. Targeting the merchants who are at the bottom of the economy, fintech startups aim to create a cashless economy.

Fintech 2.0 in India

In India, there are approximately 60 million micro-merchants and only 2% of them possess a credit/debit card machine to receive the payments. In such a case, fintech startups pave the way towards digitizing transactions. These days, they aim to provide a range of services varying from creating a platform to providing loans, enabling electronic payments or creating digital cash in the ecosystem. Since the land of India caters to a large population, there is a need for advanced technology to support the financial ecosystem of the country, the government and the citizens as well. According to Forbes, it is anticipated that India’s fintech industry will have an output of $1 trillion and generate $200 billion in revenue by 2030.

Fintech 2.0 – Why and How

But, why and how is the Fintech 2.0 revolution happening in India? This is because of a number of factors like a young population, government-led attempts to promote the industry, an innovation-driven startup scene, a highly favourable market, and improved smartphone and internet penetration levels. With the increased public awareness of financial technology, the companies are also working on their cyber security issues, real-time errors, and other issues faced by customers while working on their applications. In such an environment, the companies aim to provide an even more seamless user experience to the consumers.