If you are a small-business owner in India, you understand the importance of massive support that Fintech is giving you more than anyone else! Fintechs provide companies, irrespective of small, medium, or big, with all those services that a typical financial service provider cannot, such as digital lending, instant seed capital,  apt financial advice, digital financial solutions, digital transactions, etc. Fintech is all about innovation, as well as huge transformation in financial services. The industry owes greater chunks of all these transformed aspects to the one and only ‘digital transformation’ in the financial sector. Why Fintech is leading in India for digital transformation? Why not other industries are equally adopting it? Because of the dire urgency, financial services encompass all the other industries while it is not vice versa. You can say, necessity is not only now the mother of invention, but also the mother of adoption. The conventional financial services industry wore a traditional outlook, but, the current pandemic has redefined its entire structure. It has powerfully accelerated a drastic shift by essentializing a massive transition from the physical form to digital form. This has required the Fintech industry in India to rise above par by empowering businesses with digitalization drives. Worth mentioning, this drastic shift can be greatly attributed to consumer behaviors that are rapidly changing, emerging newer patterns dictated by cashless & contactless operations, and so on. Let’s get into a deeper analysis of the fact why Fintech in India is leading for digital transformation :

Fintech Digitalized Landscape

In India, the Fintech industry is divided into four major categories,i.e., Payments, Wealthtech, Insuretech, and Lending segments. With the outbreak of COVID-19, the fintech sector has come out as the most significant lending and transaction platform, reshaping the traditional model of banking services and customer’s end-to-end journey. Not only the banking sector but all other segments that the Fintech industry in India covers under its wing. Fintech or Financial Technology allows digitalization of the business operations, improvement in production capabilities,employee-efficiency as well as resource management, to name a few. It guarantees an enhanced customer experience, as the role of AI-ML predictive analytics is immense for retrieving behavioral insights thus allowing a better decision-making process and transparency in the system.No  industries match this quantum of digital transformation other than Fintech is doing in India.

As per Adroit Market Research, the Global Fintech market is expected to hit a huge $460 billion by the year 2025. As per another published report prepared by  BCG and FICCI, the Fintech industry in India will touch a huge 150-160 billion USD by the year 2025, as well. You can now estimate the development quotient of the Fintech industry in India if compared with the global estimate!

Fintech replaces Legacy Lending Models

If you are a Start-Up, SMB, or SME in India, you are now aware of the limitations of the legacy financial systems and how Fintech is proving to be a cost-effective model for you! For example, traditional lending models. They are so inefficient as they are not scalable, and, would rather pose a barrier for you to access finance. Contrarily, the Fintech model allows you to cut down on your costs due to the lean operating model. And, Fintech is just accelerating the pace of digital transformation making operations smooth, seamless, paperless, automated in the ecosystem. However, anywhere in the world including India, transitioning from a legacy system to a digital ecosystem is not a walk in the park. For example, instead of going for a cloud-based lending mechanism, think of an alternative. Building an API architecture to seamlessly integrate with legacy systems, and then provide some sustainable, scalable digital model to facilitate an optimized lending solution. This would be an apt idea. So this amounts to one of the big reasons why Fintech is leading in India for digital transformation across industries.

Digital Fintech Platform for Varied Channels

As described earlier, the present COVID crisis has only triggered the growth of Fintech solutions in India. There’s a greater rise in the adoption of the digital platform during the pandemic; there’s been a spike in the demand for digital payment platforms, digital wallets, credit cards, etc. In short, the pandemic has revolutionized the pattern of digital payments in India. People are alert for their lives, preferring financial transactions contactless and online mode. So, if you are SMEs or StartUps, going for leveraging the massive scope of Fintech Solutions can fetch you greater returns, like, digital lending, is an easy way to avail of loans.No hassle, No tension.

Data Analytics for Operational Efficiency

Fintech Industry in India is faster than other industries for digital transformation because people need money, and loans for business and personal needs, too. And, these people hail from just any industry. The present platforms for digital lending are equipped with innovative digital tools and features, viz. Video-based KYC & personal identity, Social security basis for KYC, all these can be utilized by the account aggregators who can quickly access required customer data and get their consent as well. Not only this, Predictive analytics, data analytics help understand customer portfolio thus enabling loan processing an efficient task. Fintech in collaboration with Big Data Analytics can get useful insights into prospective customer’s credit history. Their preferences are also extracted out of the analytics and fraud detection becomes easy.

The Final Take

The fact that Fintech Industry in India is leading for digital transformation, we can also notice how other industries are also following a similar trajectory. For instance, the healthcare industry is adopting digital transformation introducing telemedicine, remote patient monitoring. Moreover, in some way or the other, every industry is adopting digital mode wherever possible. With the rise of consumer awareness, many SMEs and businesses are looking for adopting Fintech Solutions to accelerate their financial operations, and digital transformation is the straight way to that goal. Fintech has opened up an easy and transparent digital ecosystem through user-friendly applications and solutions.No doubt, digital transformation in the finance sector is very crucial to thriving in this competitive world. This makes Fintech the most charming Industry for digital transformation in India.

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Fintech stands for Financial Technology. Today, India is a leading hub for Fintech Startups in the world. As per a recent report prepared by  Boston Consulting Group (BCG) in collaboration with FICCI, India’s Fintech industry is set to reach a massive 150-160 billion USD by the year 2025, and that will result in a 100 billion USD value creation opportunity in the sector. The reasons behind the big growth of the Fintech industry in India are varied deep-rooted demands from customers, substantial tech- talent, diversity in the capital flows, and policy framework that is truly enabled.

What is Fintech?

As mentioned, Fintech means Financial Technology. It is a fine convergence of financial services with digital technologies. Empowered with advanced data & analytics capabilities, zero-processing costs, asset-light-platforms, fintech companies are providing a better, advanced form of financial solutions to their varied clients across industries. These financial solutions happen to be in the form of digital transactions, digital payments, and the likes. The advent of the Fintech industry has led to the adoption of digital technologies in the business models of financial providers, replacing the traditional modes of payments with ace, digital solutions. In short, it is a one-click service to the end-users.

India’s Fintech Scenario

In the coming 5 years, the Fintech industry in India is supposed to carry on with its robust, upward trajectory. The dynamic Fintech industry in India today consists of around 2100+ Fintechs. 67% of these many Fintechs are set up in the last 5 years alone! That’s what gives this industry big motivating push-ups. What else, this positive growth of the industry has not been deterred by the COVID-led pandemic, and as per the current data, since the last  January 2020, three new Unicorns, as well as 5 new Soonicorns (valued worth 500+Millions USD ) have emerged in the country. The estimation stands at $50 to $60 Billions value worth for the Fintech industry in India, today.

India’s 5 Fintech Business Models

The word ‘Demonetization’ is a word one can recall very easily. Most of the Fintech companies in India got a digital kickstart thanks to the famous demonetization drive in the year 2016. Moreover, the grand launch of the ‘Digital India Initiative’ has a big contribution to the transformed landscape of the payment interface of India. Today, people want convenient and seamless online, digital payment modes like e-wallet system, credit/debit card payment, touchless payment system, and so on. The top  Fintech Startups and companies in India today are making a big wave in the way people are performing digital payments over the last few years! Let’s see, how these top models of fintech companies in India, right from payment platforms to the ever growing insurance platforms, are achieving fames around the world.

1.Digital Wallets

You must have heard about Paytm, a popular mobile app-based digital wallet now utilized every corner, equally popular in all types of businesses in India. Paytm is a Fintech, digital wallet company based in Noida, and there are 150 million active, monthly users. This form of the digital wallet has garnered many tractions just after the demonetization drive in 2016 and has never looked back, only increasing its user base. It is the growth in the ‘Digital-Payment’ space that has made this model processed around  1.2 bn payment transactions so far!

This model involves an application-based mechanism wherein a user preloads or puts virtual money into wallets for online transactions with businesses who accept this form of digital wallet as their payment mechanism. Other examples from digital wallets that you may be knowing are Google Wallet or GPay, SquareCash, Venmo, etc. However, Paytm is India based business model that the whole world has acknowledged with open arms. Another notable Indian Fintech company from this model is PhonePE.This platform is also used to transfer money, pay bills, buying from local vendors, recharges, shop online, etc. And know what? This app-based digital wallet is available in 11 distinct Indian Languages.

2. Digital Insurance

Indian Fintech companies like Policy Bazaar have set trends in the insurance sector as well. These companies are changing the landscape of the insurance industry by bringing their traditional mode of insurance services directly to the digital world. Policy bazaar has given people choice-based buying insurance policies all on their own. What do people do? They make in-depth comparative analyses of varied insurances using this platform. Policy Bazaar is a living Indian Fintech example that acts as an insurance aggregator platform providing transparent and accurate information regarding insurance policies and other matters to customers from around the world. Also, this business model offers varied kinds of life insurance, health insurance with a lot better underwriting practices, and, along with some personalized marketing plans, has a massive potential to create business possibilities across the boundaries.

3. Digital Lending

Indian Banks have shown immense resilience in the wake of the COVID crisis . for example, Bank of Baroda, a public sector Indian bank, decided to digitalize the entire lending operations for agriculture loans, home loans, auto loans, personal loans, MSME loans, thus reshaped a traditional lending system into digital lending. The very bank reached out to BCG, McKinsey for consultation regarding establishing a digital version of the lending department on its own. And even instant digital credits could be possible now. This Indian Fintech model has shown the world that a vast country like India, with diverse languages and cultural backgrounds, and with such a huge population, can provide a seamless and smooth experience to customers and businesses alike with digital means of banking operations at all levels, departments. Digital Lending is a striking business model under digital banking where open banking, alternative data, AI technology are disrupting the entire landscape.

4. Digital Banking

Indian Fintech model facilitating digital banking is the incorporation of digital tools and technologies for attending banking chores and activities, day-to-day operations becoming easier and smarter. Under this model, Indian banks do collaborate with Fintech companies for providing an improved, advanced form of financial services for a greater reach of customers. The Fintech companies are equipping these banks with digital tools for efficient and productive outcomes. Digital banking offers so many options, such as AI-NLP chatbots that greatly enhance customer experience, real-time experience using a mobile application (where customer can have a quick look into a bank account on mobile only), as well as Machine Learning(ML) that works for securing against any fraud! In short, this Fintech business model turns the entire banking network, just from a limited & small branch phase, into a vast network spanning web,  mobile, virtual & interactive interfaces. This facilitates banks having a reduced dependency on their branches and a huge cost-reduction that’d otherwise involve a greater degree of real estate and manpower.

5. Payment Gateways

Under this model, Fintech companies integrate varied payment methods into the convenient form of applications or apps. These applications are adopted by online merchants, online businesses like e-commerce, and are easily affordable and seamlessly integrated on their respective websites. Thus, the payment gateways are the convenient platforms that allow shoppers, consumers to pay for their shopping for a service/product, directly on the websites of e-stores or shops they are buying from, in the virtual-mode. Multiple payment methods include credit-cards, debit-cards, cryptocurrencies, digital wallets, etc. Here, banks are not involved which would otherwise charge a big transaction fee for these payment methods. Rather, Fintech companies allow payment gateways to work on the line of varied payment applications where businesses sell their products and services directly to the end-users. As a shopper, you are directed to some online payment gateway, and you can make an online transaction for payment. The Indian model on this line is BillDesk.It is a prominent Indian firm for payment gateway, and it serves as a digital payment interface for more than 20 years. Today, it stands valued at over $1 billion, and received $257.5 Million of funding so far!

Conclusion

Fintech companies in India are seeing a massive surge and their value creation opportunity now stands at an enormous  100 billion USD. This is quite an impressive figure, and this explains why some of the Indian fintech business models are creating worldwide ripples in the financial sector. The ever-growing financial sector, the very Fintech ecosystem, has generated these innovative business models that are being emulated by major firms. These innovative models have increasingly assisted in decreasing the financial loads, pressures over individuals, businesses, by providing them direct, on the app, finance solutions.

Are you an Aspiring Fintech who wish leverage the latest in technology which enables you to set a new business model or you wish to accelerate your fin-tech business? Feel free to reach us and take our industry experts guidance.

Digital Transformation is the transformation of industries using ace digital technologies like AI, ML, Blockchain, Robotics, IoT, Clouds, etc., and integrating them with their respective structures, as per specific company requirements. New platforms and applications are integrated to fetch that ultimate seamless experience for the end-users and customers. The fintech industry does not take much time for a complete digital transformation/makeover as compared to other industries like retail, healthcare, or education. The reason is that financial services are mostly dealing with structured, quantitative data that facilitate easier digitizing and automating of varied processes involved. Fintech brings innovation, transformation in all sorts of financial services. The massive surge in demand for mobile apps, digital payment systems such as cashless, e-wallet, mobile-banking, chatbots handling customer financial inquiries, all have led to the rapid shift in consumers’ demand and preferences. Whereas if we compare the quantum of digital drive in other aforementioned industries, it is not as fast as that in the fintech. Rather, fintech has some inevitable roles within the integrated functioning of other industries like retail , education or healthcare.

State of Digital Transformation for Key Industries

1. Retail

The Retail global digital transformation market stood at 143.55 billion USD in the year 2020. It is expected to touch 388.51 billion USD by the year 2026 (source – Mordor Intelligence report).

In the retail industry, digital transformation covers three major aspects –

• Customer- Experience
• Supply-Chain
• Enterprise-Agility

As per PWC’s study, just one bad experience would cause  32% of customers to stop interacting with a brand. According to  Business Insider, due to a shift in consumer behavior and several other challenges, the retail industry saw  70% failure of digital transformation projects in the year 2017. On the other hand, Gartner says that  77% of retailers would like to consider adopting AI while 87% indicated that Robotics for warehouses will be the top use case by 2021.

2. Education

COVID-19 has changed the face of the education industry. The learning and development have taken a complete digital makeover. However, the digital transformation process has not been a smoother and easy one for the industry. Widespread virtual mode of learning, teaching with no access to real-life libraries, have created a frustration-led environment for teachers, educators, students, staff, and the entire industry. In fact, students are unwilling to pay the whole fees, and higher education seeing partial refunding of fees, too. This is just an example of several challenges in the sector where digital transformation is facing tough to take-off.

As per GPE report–

• Due to the pandemic effect, 126 million children have been cut-off from their schools in lower-income countries.
• GPE supporting partner countries by US$500million on the sector as a response to the pandemic crisis. Digital means remain the viable options, too!

3. Healthcare

This year, a significant revelation in healthcare has been about consumers’ priorities –better and convenient access to all the healthcare services, and, more price transparency.

One notable impact of technology in the healthcare sector is the scope of digital transformation as follows-

• Telemedicine
• AI-enabled medical devices
• Blockchain-Electronic health records
• Web and mobile apps and solutions
• Streamlining physicians’ jobs
• Improvement of patients’ outcomes
• Optimization of systems
• Reduced cost operations
• Low human-error

Medtech firms having specific consumer-focused products & services are likely to create a foothold post-pandemic. Moreover, as per the recent 9^th annual Industry Pulse survey, the valuable insights from 185 healthcare leaders for  2021, 32.2% said that retail companies, the big tech will greatly impact the current business models deployed by the healthcare industry.AI and ML were the preferred choices of the healthcare industry respondents while  RPA was the highest chorus among them for ‘NO’. Once the pandemic effect abates, it’s expected that there’d be a greater level of demand for testing equipment as well as online pharmacy use. Contrarily, the demand for elective procedures that are hospital-based and shifting to outpatient settings, will see a permanent lower side. As per Digital Authority Partners insights, the US healthcare market is going to see $5.7 trillion in national health spending by the year 2026.

How Fintech is Shaping Other Industries

The Healthcare industry is though undergoing a slow pace of digital transformation, the role of fintech within its business models is unparalleled. Fintech serves this industry by revitalizing and modernizing healthcare networks as it brings some improved, digitally oriented, financial service-models into the very sector! Several fintech solutions such as digital payments, do simplify varied payment processes for patients, as well as processing volumes of healthcare-related data on a much faster scale and speed. The retail industry is equally impacted by fintech, viz. role of digital capabilities like websites and mobile applications are mostly catering to the payment stream because customers are preferring digital payment modes and carry digital wallets in their mobiles 24*7. So, we can see the ubiquity of fintech in almost every industry as finance as a service plays a major integrated role.

Why Fintech is leading in Digital Transformation?

• High Investment from all businesses
• Fastest digital adoption
• Diversified projects at pilot and advanced level in Innovation

As per a recent IBM study, engaging unique customers with smarter experiences anytime and anywhere is the need of the hour. A massive 84% of customers consider the overall experience provided by a company is as valuable as its products and services. Hence, to meet this kind of rising customer-expectations, a company needs to digitally transform all the lines of customer services for delivering a better-unified experience. Not just customer-centric approaches but companies need to intensify approaches towards smooth relations between business partners and employees.

Conclusion

Fintech is impacting industries such as retail, education, and healthcare where consumers want convenient transaction solutions in every financial interaction within the structured systems. As per the Global Fintech Adoption Index, before the pandemic, fintech was doubling every two years. The industry grew from 16 percent in 2015 to a striking 64 percent in 2019. The reason behind this growth is not just the fintech’s agility but it has become an essential survival tool for businesses across the industries , especially from 2020 onward. Acting as a core enabler for the fast migration to digital payment, it has become a mandatory part of everyone’s life – consumers and businesses, alike. While 2020 was merely about survival, 2021 and beyond will see convenience, structured inclusion as well as sustainability factors leading to the adoption of financial technologies.

Whether you belong to FinTech or any other Industry, digital transformation is here to stay and evolve into new dimensions. Connect us to explore the new possibilities for your Industry.