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Despite the problems caused by the pandemic and its onset in 2020 and beyond, Fintech in India has recovered and is developing at an incredible rate that we never expected. You could also call the pandemic a booster dose.
A key reason for the pandemic being a booster dose is that it pushed Fintech to overcome the problems that arose in the usage of traditional banking systems with its technological integrations and customer-centric policies based on user accessibility and well-being at a time when we were not allowed to leave our places and everything was shut.
Due to the advent of Fintech, information and financial assistance coupled with loan procurement have become more straightforward and accessible, posing a challenge to traditional banking and retail systems, which we shall address further in this article.
However, before we move further, let's analyze the most innovative fintech startups in India and their solutions burgeoning financial industry.
Fintech Startups in India: Transforming Financial Landscape in India
There have been several innovative fintech startups in India, but here are some trending and impactful startups demonstrating upskilling efforts by entrepreneurs in the industry, defining 2023 as an era of Fintech in India.
LendingKart is a digital lending fintech startup in India that helps small businesses and entrepreneurs obtain funding by using its proprietary algorithm to evaluate creditworthiness quickly. So far, the portal has distributed $1.5 billion in loans to a million customers.
BankSathi is a digital advisory fintech startup in India that works with financial advisers to help enterprises, startups, and entrepreneurs develop a digital footprint and start selling financial products online.
Biz2X India is a lending fintech startup in India that helps banks enhance their lending operations and services through improved loan administration, risk analytics, and customizable client journey servicing with its AI-drive analytics.
Axio is a lending fintech startup in India that provides its users with pay later, credit, and personal finance management services, creating a seamless brand experience by employing technology to bring unique financial products to millions of people across the country. So far, it has disbursed loans of INR 15,000 crores to 7 million borrowers.
Niyo is a digital banking fintech startup in India that provides various digital services, such as savings accounts, forex cards, and credit cards. Thanks to its user-friendly interface and committed customer support, it has serviced over 1.5 million consumers and has worked with 10 banks.
Arthan Finance is a lending fintech startup in India that promises to transform small business operations by providing a customized, unique business concept of "Fit to Purpose" financial products such as loans, consulting, and so on, based on and focused on AI and Deep Learning implications for tier 2 and below cities in central India.
CASHe is a lending fintech startup in India that uses a patented credit rating algorithm to provide a broad spectrum of consumers with credit-enabled financial services and products, focusing on millennials, facilitating transfer services, transaction execution, BNPL, personal loans, etc.
Lentra is a cloud-based SaaS startup in India. It assists banks in reducing time-consuming sections of identifying borrowers and their prior transaction behavior and history and easily creating a rule-based and computerized service that handles 95% of loan applications.
Revfin is a lending fintech startup in India that uses traditional underwriting procedures reinforced with cutting-edge technologies such as psychometrics, biometrics, and gamification to assist individuals in obtaining loans more easily, particularly for the financially disadvantaged.
GroMo financial advisory fintech startup that provides the finest financial product recommendations to its consumers and partners through its software, empowering thousands of micro-entrepreneurs to make a decent startup or business livelihood by referring to top-notch financial items.
KYC Hub is an AML-focused fintech startup in India that leverages Artificial Intelligence and data insights to automate anti-laundering compliances and customer due diligence, including PEP and restrictions, customer profiling, blacklist screening, etc.
Progcap is a collateral-free lending fintech startup in India. Its dedicated technology and delivery method facilitates access to financial services for obtaining working capital in underserved segments of the Indian retail market by underwriting credit for under-banked semi-urban and rural shops.
Burgeoning Fintech Trends in India 2023: The impact on traditional banking & financial services
Fintech is the combination of technology-enhanced financial services. Fintech in India is burgeoning, with several innovative startup launches using technology to improve financial services such as lending, operations, insurance, budgeting, etc.
Today, there are estimated 2,200 fintech companies in India, with the payment industry contributing approximately 19%, backed by lending and sub-sectors that comprise the entire fintech market of India.
So, let's now advance to comprehend the burgeoning fintech solutions and their impact on traditional banking and financial services, which today is defined as the fintech trend in India in 2023.
Biometric sensors for authenticating without physical cards
Fintech solutions in banking have given rise to various developments, and biometrics is something we never anticipated but is now an essential part of our routine, along with Iris scanners and other tech-enhanced systems for unlocking banking solutions that we see today.
Biometric solutions are a technical breakthrough that eliminates the need for physical identity cards and traditional "PINs" for accessing a bank account. It is accomplished through a single fingerprint or eye-enhanced sensor that recognizes the individual.
Apart from convenience, these innovations make transactions and banking safer. Since your card or mobile-only unlocks via your biometrics rather than your pin, biometric technology soothes everyone concerned about losing an ATM card or another similar service.
AI-enhanced chatbots for customer support
With the recent Chatbot spike, Fintech with Artificial Intelligence has become highly popular. Chatbots are software that uses machine learning and natural speech processing to constantly learn and adapt from human interaction, making it hard to identify whether it's a human or a bot interacting.
Chatbots are extremely efficient since they automate client interactions such as inquiry processing and routing customers to the appropriate departments, much like human customer service. You'd be surprised at how advanced these are, owing to their personalized responses.
Chatbots have become an essential aspect of all banks since they not only save expenses and improve customer satisfaction by instant reaction but also allow call center operators to focus on value addition rather than client interactions.
This is all the magic of AI in Fintech that has elevated banking services to new heights. Not only chatbots but AI with ML is increasingly an important tool for detecting bank fraud. Banks' AI-based fraud detection software sends alerts when there is a suspected fraudulent transaction, creating awareness.
Nonetheless, it does require human investigation, but at the very least, it discovered the fraud and made it simple to avoid future unfavorable occurrences. Identifying fraud attempts is becoming increasingly difficult, for banks are embracing AI technologies.
Implementing machine learning-driven analytical models, process automation, and data aggregation platforms can alter and streamline AML operations while infusing new efficiencies.
Digital branchless banking & omnichannel eliminating brick-and-mortar requirements
Fintech in financial services has completely altered banking from a branch-based approach to numerous digital and omnichannel banking solutions that have eliminated the need for the customer to directly or physically visit a bank and perform the transaction.
It also lessens the bank's reliance on physical branches and activities. Banks are slowly closing physical branches and transitioning to omnichannel banking services for their consumers online, primarily Gen Z and Millenials.
Mobile banking-enhanced online transactions
The increased usage of smartphones has shifted schooling from offline to online (1), forcing banks to build solutions and applications that provide convenient FinTech banking services and online transactions.
Most banks now have a specific mobile application with a user-friendly layout and recognized biometrics integrated with AI-enhanced software. Their program currently provides the same activities as physical banking but is better and faster.
A mobile application provides quick payment options, bill payments, transfer activities, checking account balances, gathering statements and cibil scores, and so on, all made possible by integrating technology with financial services.
Furthermore, online transactions are now being handled and transacted throughout India, with access to every Kirana store, etc. Social security, tax payments, shopping, wage, bill payments, and other online transactions are now available thanks to integrated fintech solutions.
This is analogous to the debit card trend, in which the world saw a 90% increase in debit cards, which replaced traditional banking forever.
Smart Chip Technology for reducing financial loss
Smart chip-based ATM cards have been the most revolutionary innovation developed and employed by several banks, NBFC, fintech startups, etc., nowadays. EMV technology is incorporated into the chip, and a one-time password protects each transaction.
Since the code is only valid for one transaction, this strengthens security. Even if someone tries to steal it, they will be helpless, unlike in the past, when we were urged to memorize our pin to access debit card payments and transactions.
Fintech solutions constantly seek new ways to combat theft and fraud by offering their clients superior protection. Chip-based cards are more secure than magnetic stripe cards that require the same pin for all transactions, making them more vulnerable to fraud.
E-wallet supporting sustainability and eliminating the need for plastic cards
The explosive growth of E-wallets is another signal of the rise of Fintech in India, with key players like Paytm and other big e-wallet companies delivering smooth P2P payment, top-ups, utility bills, international transactions, and so on, without the risk of banks being under maintenance like SBI usually does in India.
Certain standalone wallets like Starbucks are also used for specific brand-based transactions. It has attracted many users to its e-wallet due to its enticing services, which include exciting deals, cashback, and rewards, among other things.
Due to the success of fintech integrations, many banks are now realizing and implementing these solutions to create a collaborative measure that embraces technological improvements with financial services, a win-win combination.
Fintech in India
The regulatory officials in India acknowledged that technology could be a "Game Changer" for financial inclusion in India and established fintech institutes such as:
- National Payment Corporation of India (NPCI) (2)
- Institute of Development and Research in Banking Technology (IDRBT) (3)
These are the key pillars that have laid the groundwork for Fintech in India to accelerate technological change in finance and advance the goal of financial participation with technology to address the pain point of the digital gap.
Several government schemes, including UPI, Aadhar, Digital India, and NFS, have established a foundation for financial literacy and integration among every citizen, paving the way for financial automation in the country.
Despite concerns about a possible economic recession in 2023 and geopolitical issues, the fintech space is anticipated to thrive owing to the pandemic's acceleration of digital momentum in India across all tier cities.
We hope this helped you comprehend the impact of Fintech on traditional banking, customer experience, retail operations, and other sectors, which makes it a trend of 2023 and beyond.
It will be exciting to see how more fintech implementations emerge and will change financial services in India.