The Bleeding Edge in Fintech

Minutes from NTLF 2019 Fintech Round table discussion – Authored by Pari Natarajan, Co-founder and CEO, Zinnov


FinTech innovations are helping unbanked individuals and small businesses gain access to finance. New applications are enhancing business processes such as clearing and settlement, compliance, risk management and fund administration. Technologies such as blockchain and artificial intelligence are helping financial service firms improve their efficiency and responsiveness to customer needs and much more. What will be the bleeding edge in FinTech over the next 2-3 years and how should we take advantage of this?

Discussion Summary: 

India’s Fintech ecosystem is in an era of massive scale innovations, creating opportunities for both global and Indian companies to drive innovation and growth in the India market. The Fintech Round table discussed the opportunities in the India market, the collaboration opportunities between large companies and start-ups and the areas NASSCOM should focus to be a catalyst for the growth of the ecosystem. Here are some of the highlights from the discussion

Current Fintech Ecosystem

  • Growth of UPI is one of the key reasons for India’s rapid innovation in payments. UPI is expected to cross over a billion transactions by 2019. Ability of UPI to allow banks to provide over-drafts providers meaningful competition to existing credit card infrastructure in the country
  • UPI is also making sure no one FinTech company can dominate the market by creating a network effort of customers and merchants. The open standard has created a level playing field for both global as well as Indian companies. This can be seen in the success of services from Google, Paytm and Government’s own BHIM app.
  • The monetization of Fintech companies is moving beyond payment to other services. “Flow based Credit” is expected to dominate the market as Fintech companies are expected to provide create to consumers and SMBs based on analysing their transaction data. Many companies are also looking to get into wealth management, insurance and other products to service the customers they have acquired on the back of their payment infrastructure.
  • We have some interesting companies like Power2SME, Capitalfloat who are driving innovative business models to solve the financial problems of SMBs
  • Insurance companies seem to be lagging banks and they also have massive opportunities in the India market
  • Large Indian companies are also driving significant innovation. Yes Bank, Bajaj Finserv are driving digital transformation initiatives internally to provide better customer experience, improve operational efficiency and launch new digitally enabled services to their customers. These companies are also actively seeking out and collaborating with startups.
  • Indian IT industry was built on the back of global outsourcing by US and other banks. Today companies such as JPmorgan are large employers in India – some of them spending over billion dollar each in running their India GCCs. The Domain expertise built by this industry is allowing the b2b Indian startups to participate in the digital transformation opportunity with large global banks. There are interesting global focused Fintech startups mushrooming in India in areas around customer experience, robotic process automation, lending platforms and so on.

Large enterprise and start-up collaboration

  • Most large banks are open to partner with start-ups for co-innovation, acquisition and joint go-to-market. They are looking for startups that are not just focused on India market but also driving innovation for the global market.
  • Large banks can support the start-ups in providing access to customer insights, compliance cover and data. If a Machine learning start-up collaborates with a large bank, they will be able to optimize their models using the data from the large banks. This will allow a mutually win-win partnership between the start-up and technology companies.
  • Cost of Piloting in India is substantially lower in India as compared to any other country. Large companies are looking to partner with startups to take advantage of lower cost of innovation

Challenges to be addressed

The Industry can further accelerate innovation and growth if some of the following challenges could be addressed.

  • Data Privacy is expected to impact new-age Fintech companies. Clear and consistent regulatory framework and policy is important. Stakeholder from across the industry needs to be included in reviewing and providing recommendations to data privacy frameworks
  • The quality of products from the start-ups needs to be architected so that they seamlessly scale. This is due to lack of deep technical expertise in the startups especially in start-up that are founded by x-bankers.
  • Startups ability to build new solutions especially using machine learning is limited by the data available to train their models.
  • Due to the size of the local market opportunities, most startups are focusing on India problems. There are not many start-ups that are building enterprise software platform/products for the global fintech industry.

Expectations from NASSCOM

  • Study the models of countries such as Singapore and provider recommendations to RBI. For example: Regulatory Sandbox by Monetary Authority of Singapore (MAS) can be very well replicated in India.
  • NASSCOM to work in collaboration with RBI to develop a consortium to invite banks & allow start-ups to address solutions.
  • NASSCOM to continue to bring various parts of the ecosystem together to drive discussions and collaboration between the constituents.

Fintech clearly is an area India will lead global innovation over the next decade. Structured collaboration can further accelerate the innovations from India.

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