On 8 November 2016, the Government of India announced the demonetization of all ₹500 and ₹1000 banknotes, it set off a wave of Fintech growth in India. Fintech is now mainstream and a critical segment for the future of India's economic growth.
Here are 10 reasons why Fintech is very important to India.
1. Economic Growth
The payment segment has been a major enabler of economic growth. Electronic payments systems added $300B to GDP in 70 countries between 2011-2015, which resulted in ~2.6Million Jobs/Yr
Each 1% increase in electronic payment produces ~$104 B in consumption of goods & services
2. Financial Inclusion
Fintech opens up opportunities for the previously unbanked population to access modern financial instruments. For people living in poverty or at the fringes of the economy, Fintech lowers costs of Financial transactions: Lower cost of credit and other banking services.
3. Speed & Quality of Innovation
Fintech drives improvements in traditional financial services – which will replace legacy systems. Eg: Peer-to-peer lending, Robo advisors, Hi-frequency trading
4. Business Sustainability & Scalability
Fintech has made businesses sustainable & Scalable. The entire e-commerce economy was built on e-payment systems and new business models such as Ridesharing: OLA, UBER, Metro Bikes, etc were developed on Fintech e-payment systems – which allows these businesses to scale and grow rapidly
5. Transparency & Audits
All digital transactions are inherently auditable hence bringing greater transparency into the system. Data sharing in real-time across banks & financial institution reduce fraud risks and reduces the cost of regulatory processes.
6. New Value Streams
New fintech technologies are creating new business opportunities. Bitcoin & other cryptocurrencies have spawned whole new businesses.
7. Market Curation & Structural Transformation
Fintech technologies are transforming other industries. For example, healthcare record management, Real estate, land registration with Blockchain, etc. This is bringing structural reforms to businesses that were on the fringes of the regulated economy into the mainstream economy.
8. Collaborative Culture
New Fintech businesses are built in collaboration with other businesses. For example, Blockchain is based on open collaboration between members who host the shared ledger.
9. The Scale of the Industry
Fintech has grown from being a niche to mainstream. Today Fintech companies are collectively worth more than $500Billion and directly employ millions of men.
10. Borderless Innovation
Technological innovations in Fintech can be quickly adapted across borders, creating new competition and new opportunities for existing players. This rapid innovation is bringing whole new financial hubs and opening new markets.
Here are 10 reasons why Fintech is very important to India.
1. Economic Growth
The payment segment has been a major enabler of economic growth. Electronic payments systems added $300B to GDP in 70 countries between 2011-2015, which resulted in ~2.6Million Jobs/Yr
Each 1% increase in electronic payment produces ~$104 B in consumption of goods & services
2. Financial Inclusion
Fintech opens up opportunities for the previously unbanked population to access modern financial instruments. For people living in poverty or at the fringes of the economy, Fintech lowers costs of Financial transactions: Lower cost of credit and other banking services.
3. Speed & Quality of Innovation
Fintech drives improvements in traditional financial services – which will replace legacy systems. Eg: Peer-to-peer lending, Robo advisors, Hi-frequency trading
4. Business Sustainability & Scalability
Fintech has made businesses sustainable & Scalable. The entire e-commerce economy was built on e-payment systems and new business models such as Ridesharing: OLA, UBER, Metro Bikes, etc were developed on Fintech e-payment systems – which allows these businesses to scale and grow rapidly
5. Transparency & Audits
All digital transactions are inherently auditable hence bringing greater transparency into the system. Data sharing in real-time across banks & financial institution reduce fraud risks and reduces the cost of regulatory processes.
6. New Value Streams
New fintech technologies are creating new business opportunities. Bitcoin & other cryptocurrencies have spawned whole new businesses.
7. Market Curation & Structural Transformation
Fintech technologies are transforming other industries. For example, healthcare record management, Real estate, land registration with Blockchain, etc. This is bringing structural reforms to businesses that were on the fringes of the regulated economy into the mainstream economy.
8. Collaborative Culture
New Fintech businesses are built in collaboration with other businesses. For example, Blockchain is based on open collaboration between members who host the shared ledger.
9. The Scale of the Industry
Fintech has grown from being a niche to mainstream. Today Fintech companies are collectively worth more than $500Billion and directly employ millions of men.
10. Borderless Innovation
Technological innovations in Fintech can be quickly adapted across borders, creating new competition and new opportunities for existing players. This rapid innovation is bringing whole new financial hubs and opening new markets.
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