With a staggering fintech adoption rate of 87%, well above the global average of 64%, India is leading the charge in embracing digital financial services. A study by EY further forecasts that by 2030, the Indian fintech market will generate an impressive $1 trillion in assets under management (AUM).
Speaking about AUM growth, Abhay Bhutada, MD, explained that Poonawalla Fincorp, the NBFC, expects growth between 8 and 10 percent. While India is witnessing a rise in many new trends in fintech, here are some that will contribute to its future.
Buy Now Pay Later
The emergence of Buy Now Pay Later (BNPL) services has transformed how consumers purchase. BNPL platforms allow customers to split their payments over time, interest-free or with nominal charges. According to Nitin Gupta, Founder & CEO of Uni Cards, BNPL contributes to increased affordability and convenience, partially due to the implementation of two-factor authentication.
This is a strategy used by many fintech companies to introduce the credit-based system to Indians that still have a negative perspective on credit cards. With an increasing number of Indian consumers opting for BNPL services, the future of fintech will see further innovation in this space, fostering partnerships between fintech firms, e-commerce platforms, and traditional financial institutions.
Banking as a Service (BaaS)
Empowering Non-Banking Entities Banking as a Service (BaaS) revolutionizes the financial landscape by enabling non-banking entities to offer banking services. With BaaS, fintech companies, e-commerce platforms, and other businesses can leverage the infrastructure and capabilities of traditional banks. This is to provide seamless financial services to their customers. BaaS is set to open up new avenues for collaboration, innovation, and customer-centric solutions.
In the future, it’s expected to empower a wide range of industries, including retail, technology, and healthcare, to embed financial services into their offerings, enhancing customer experience and expanding the reach of financial products.
This refers to integrating financial services into non-financial platforms or applications, creating a seamless and personalized consumer experience. For instance, ride-hailing apps provide drivers insurance or investment options, or e-commerce platforms offer instant loans at purchase.
This trend has gained momentum in India as fintech companies collaborate with various sectors to embed financial services into their existing ecosystems. Fintech companies such as Bajaj Finance, Razorpay, and Cashfree have already set new standards in terms of customer experience and transparency. In the future, embedded finance will continue to evolve, allowing consumers to access financial products and services effortlessly within their daily activities.
AI and ML
By harnessing AI and ML algorithms, fintech firms can analyze vast amounts of data to gain valuable insights into customer behavior, preferences, and financial patterns. This enables them to offer personalized financial solutions tailored to individual needs and preferences.
Abhay Bhutada, Poonawalla Fincorp’s MD, believes that the quick adoption of digital technologies like AI and ML and the ongoing digitization process can assist MSMEs in reaching areas lacking industrial development. On that note, it can facilitate the efficient distribution of their products and services to those regions.
In addition, AI and ML technologies can enable fintech companies to offer smarter and more accurate financial recommendations and predictions. For example, they can leverage historical data and market trends to provide insights on investment opportunities, risk management strategies, and financial planning advice. Such intelligent solutions empower individuals and businesses to make informed decisions, enhance financial well-being, and achieve financial goals.
The future of fintech in India is poised for significant advancements driven by technological innovation, policy support, and evolving consumer preferences. The industry’s potential to transform financial services, foster financial inclusion, and improve efficiency is immense.
As fintech companies continue to collaborate with traditional financial institutions, policymakers, and technology partners, the financial services landscape in India will witness remarkable changes, paving the way for a more inclusive and digitally empowered society.