Ten years ago, the term ‘fintech’ didn’t exist in India. There were a handful of payment processors (or payment gateways) and no digital infrastructure, except card processing. Today, we are at the cusp of creating personalised financial services (PFS) for everyone; essentially an artificial intelligence (AI)-enabled bank robot that provides every service that a bank does, but faster, cheaper and better. How did we get here so fast?
Firstly, India has become the largest consumer of data bandwidth, with 450 million smartphone users (thanks to the rise of Jio and the world’s lowest tariffs). Secondly, advances in AI (processing and algorithms) have made it possible to understand consumer behaviour, lifestyle, income and hundreds of relevant variables. Application scorecards used by banks are slowly giving way to machine learning (ML) models like XGBoost, which aid in real-time, data-driven decision-making.
Thirdly, the ecosystem of capital (especially private), government machinery and regulators (Reserve Bank of India for payments/banking, Insurance Regulatory and Development Authority for insurance, and Securities and Exchange Board of India for investments) have evolved faster than the industry ever imagined. IndiaStack (stack of all technologies in financial world), led by Aadhaar, Unified Payments Interface (UPI), e-signatures, DigiLocker and several others, is unbundling every single financial service and making it possible for a 10-member startup to offer a digital app experience better than that of a bank.
Lastly, but most importantly, consumer penetration of payments, insurance and investments is among the lowest in the world, even though 800 million individuals in India now have bank accounts.
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