India’s financial technology sector is younger, but it is moving at a pacing rate The fintech sector although creating a technological revolution in the finance industry, does not fail to stumble upon its set of challenges. In this blog, we’ll see what these challenges are and how to overcome them.
Fintech refers to the scope of good economic offerings on virtual platforms. This new disruptive technology, has had an extensive impact on the financial sector.
NASSCOM pronounced that around 400 Fintech companies started operating in India and predicts that India’s fintech software market would ought to touch somewhere around US$ 2.4 billion by the end of 2020.
Fintech means a lot to the contribution in the industry, but in a broader sense, it comes up with a lot of uncertainty and risks.
There are certain challenges that are faced by FINTECH in India. Some of them are: –
- Lack of Indulgence – Until now, consumers are not able to trust these tech practices, and they dedicatedly follow conservative practices only.
- Adoption – It’s not easy for every type of businesses to adopt fintech, which may cause harm to their productivity. It is complicated for an economy like that of India’s which is dominated by MSMEs. Going digital for payments can be complicated.
- Uncertainty in Regulation – There is a requirement of full-fledged regulatory frameworks which can contain the risks. To mitigate the potential risks, there is a need to formulate policies.
- Discovery and Distribution of Content – There are over 600 fintech startups in India alone, where I am not even including the Fintech giants. Creating a reputation among all the herd, to stand out, is a big challenge.
- Data Security and Privacy Risk – As we already know, DATA is the new oil. In Fintech there’s a Big Data involved, and everything is done virtually, there’s a lot of risk of data theft, frauds and other security issues.
- Lack of awareness– More than 70% population of India live in the villages and use of these digital payment platforms are done by most of the urban people. This sector needs to make its way through awareness in rural India.
THE QUESTION ARISES WHAT CAN BE DONE TO MITIGATE THESE RISKS?
If one wants to run a FinTech company, then one must know the market needs and research for the factors which can influence financial behavior, the consumer behavior. The most crucial aspect of building great customer relationships is providing quality service.
As regard to the potential risks and their mitigation, RegTech and SupTech have an important role. RegTech is an application which makes compliances efficient through the automated processes and focuses on technologies that facilitate regulatory requirements. On the other hand, SupTech is a technology that is used by the regulators to support supervision, and monitors things like KYC, AML, CFT etc. Examples are – IDPMS (Import Data Processing and Monitoring System. There can be many software’s which can detect frauds and thefts. While its advancements are disruptive, the focus of any Fintech company should be about educating people about the concept.
FinTechs are the future, it’s not a question of ‘if’ but ‘when’. This is planned to transform Financial services industry the way Smart Phones did to Nokia. India has made a good start and now is moving in the right direction.
But Let’s see how the FinTech revolution is going to change the habit and behavior of Indians.
So , the question still arises CAN FINTECH become the future in India ?
Think about it .
Palak Bhatnagar is a student , pursuing PGDM in Finance and Business Analytics at New Delhi Institute of Management , New Delhi . She is a finance enthusiast , a versatile person who likes to explore . She is a keen learner with an objective to learn and grow.