This is one of the most exciting times for Indian banking and financial services industries. FinTech or financial technology companies have emerged as a new crop of firms which have a high growth potential and many opportunities for disruptive innovation. They can complement the traditional banking services and help in financial inclusion. In some quarters, they are seen as competition to the classical banks also. FinTech, a very trendy industry for start-ups, has the potential to take away 4.7 billion dollar of revenue from traditional financial services, according to a US-based Finance firm, Goldman Sachs. FinTech has evolved from startups that want to take on and compete with incumbents to a broader ecosystem of different businesses that are, in many cases, looking for partnerships. Bureaucracy Today analyses the pros and cons of this new financial phenomenon.
A CII-PwC report titled Inclusion 2.0: Leveraging technology disruptions to realise India’s digital economy highlights the role and importance of FinTech companies which are now enabling the mass adoption of technology by collaborating with various traditional banking and non-banking players and ensuring that services reach the rural strata of society quickly and efficiently. Such companies have been termed disruptors in the financial services space.
The scope of FinTech companies to co-exist with the traditional financial institutions (FIs) is immense since Indian banks face very structural challenges.
Inadequate infrastructure: People in the rural areas of India still have to travel miles to access a banking interface. Although ours is a vast country, it has only 2.3 lakh ATMs and 14 lakh point-of-sale terminals which are almost half the number of such facilities in other developing countries and one-fourth of that in the developed countries.
Financial literacy: According to a survey by Standard & Poor’s Financial Services LLC7, 76% of the Indian adults are unable to understand key financial concepts. Lack of adequate knowledge results in confusion, apprehensions and obstacles which prevent people from availing themselves of the many banking products and services.
This story is from the June 1 - 31, 2017 edition of Bureaucracy Today.
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This story is from the June 1 - 31, 2017 edition of Bureaucracy Today.
Start your 7-day Magzter GOLD free trial to access thousands of curated premium stories, and 9,000+ magazines and newspapers.
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