The Indian FinTech sector has been playing a key role in creating a cashless society in the country. What are the challenges the sector is facing? What are the learnings from the pandemic? What’s the way forward for the sector? StashFin co-founder Shruti Aggarwal speaks to Autofintechs.
Indian FinTech companies have been becoming a key driver of the country’s lending market through their mixture of the new age financial solutions and technology. In comparison to the traditional banking procedure, the Indian FinTech companies have brought a parallel lending solution for the borrowers.
According to research, as of March 2020, India alongside China accounted for the highest FinTech adoption rate at 87%, among all the emerging markets in the world, while the global average adoption rate for FinTech was 64%. As the study further projected, Indian FinTech market value is expected to grow to Rs 6,207.41 billion by 2025, from Rs 1,920.16 billion in 2019, expanding at a CAGR of approximately 22.7% between 2020-2025.
Since demonetisation of November 2016, the Narendra Modi government has been promoting the ambitious idea of creating a ‘cashless’ society through its multiple financial institutions and initiatives. The Indian FinTech companies have been playing a key role in that strategy. So far, the Indian FinTech companies, driven by Indian tech entrepreneurs have been reshaping the Indian economy with their innovations.
Emergence of technology driven solutions like payment gateways, digital currencies, internet banking etc., the Indian FinTech firms are revolutionizing the Indian economy and offering personalized service to the customers.
According to the National Association of Software and Services Companies (NASSCOM), more than 400 FinTech firms currently operate in India, largely funded by foreign investments in FinTech-focused startup accelerators and incubators.
However, the two-years of economic meltdown and the Covid-19 pandemic induced crisis have crated havoc for the Indian economy. The entire parallel banking system too was heavily impacted due these, resulting in liquidity crisis for several industries.
Autofintechs spoke to Shruti Aggarwal, Co-founder of Stashfin, a Delhi-based FinTech company to learn about the current scenario in the sector, the challenges and way forward.
Edited excerpts below.
Q. Two years of economic meltdown and lately the Covid-19 pandemic have massively disrupted the NBFC sector. How the Indian Fintech/NBFC sector is reviving (if at all) from this crisis?
Several FinTech companies and experts have felt powerful impacts on our ecosystem ever since ILFS crisis. A series of factors contribute to this, such as the lack of liquidity from November 2018, combined with the effect of the recent moratorium on personal loans, and now ex gratia payments.
There is a heavy and noticeable strain, especially on lenders, that has been prevalent for some time now. They face this pressure while wanting to be successful and profitable, which can be quite challenging.
Q. Is the Indian government and financial regulatory authority’s stance adequate for the NBFC sector’s revival? What should be the government’s stance to make the sector future-proof in a case similar situations arise?
The stance of the Indian Government and financial regulatory authority is adequate only if ex-gratia payments from RBI through SBI happen on time. This is imperative because this will provide extra liquidity. Moreover, rewarding good customers can further boost the NBFC sector.
Q. How the non-PSU personal lending/borrowing ecosystem has been impacted by the economic meltdown and Covid-19 pandemic?
Digital lending platforms such as StashFin have been growing disruptively and consistently, and even during the economic meltdown and the Covid-19 pandemic, they have thrived pretty well. The Economic Times positively predicted that the non-PSU personal lending/ borrowing ecosystem would survive all the adversities of the pandemic to emerge as a viable credit source, especially for the Indian population.
We at StashFin are determined to offer alternate and easy sources of instant credit with benefits that traditional loan and lending systems might not provide. Moreover, the high level of customer connections, limited loan amount, and frequent and timely repayments ensure a high collection efficiency which contributes towards strengthening the microfinancing or instant loans sector even further.
Q. What is the way forward for the Indian FinTech sector, especially in light of the devastating Coronavirus impact?
The Indian FinTech has undergone an impressive digital makeover these past couple of years, and with a booming and innovative IT sector that provides relevant solutions to a young population utilizing these technologies, we believe we have a bright future ahead.
The coronavirus pandemic has undoubtedly impacted the sector, however, it is steadily recovering and even providing counter solutions to the problems that have emerged in the wake of this pandemic.
For example, cashless digital payments that minimize physical contact and therefore reduce the transmission of fomites and the risk of potential infection are being widely used even by local vendors and shopkeepers. And that’s honestly great to see.
Similarly, superior security when it comes to digital payments, cloud banking, enhanced personalization, neo banking, and of course, instant money and loans are paving way for the Indian FinTech sector and its growth.
Q. How AI is helping the FinTech sector?
Artificial Intelligence is helping the FinTech sector in ways that were unimaginable even in the recent past. From improving customer experience through interactive and effective chatbots to extensive personalization for maximum customer satisfaction, AI is one of the key factors that has contributed to the growth, development, and betterment of the FinTech sector in general.
It’s a disruptive technology that has aided the FinTech sector ever since its conception and is enhancing efficiency by resolving human problems. Plus, we have assistance in fraud detection and claim management, predictive analysis for financial decisions and investments, and so much more that AI has to offer.
Q. There are several key trends that are changing the FinTech sector. How the Indian FinTech industry is trying to take the leverage from it?
We believe that our country is no longer holding back and is certainly leveraging the latest FinTech technology and trends to simplify processes in this sector as well as make it more accessible and profitable for the stakeholders. For example, UPI or Unified Payments Interface has not only taken our digital payments by storm but has also garnered global praise. Innovations like these are assisting the FinTech sector in the country accelerate and advance to new heights.
As for the current key trends, we have invisible payments, increased consumer financial literacy, multi-service platforms that serve as a one-stop solution for a plethora of services, and of course, blockchain. These are heavily influential and the Indian FinTech industry has undergone several changes, especially with the lift of the RBI crypto ban and other restrictions.
Even personal loans come under the wide spectrum of key trends that are being leveraged by the country’s FinTech sector, and we at StashFin are working hard to make the concept of instant loans and instant money more accessible and acceptable to the general public.
Q. What is your expansion strategy?
We at StashFin want to grow rapidly by December 2021. Our expansion strategy will focus on passing on the benefit of the lower cost of funds available, and also underwriting customers throughout the curve.
Moreover, educating consumers and spreading and inculcating financial literacy especially about this sector is something that is close to our hearts, and something we are truly passionate about, after all, it ensures financial inclusion, which is absolutely important in the current economic scenario.
Also Read: NBFCs facing massive confusion due to moratorium: Finway CEO