Fintech Companies with the growth of digital economy

Fintech Companies with Growth of Digital Economy

by Shreya Anaokar Last Updated: Mar 13, 2023 - 03:04 pm 1.9M Views

The accelerated development of fintech players has helped in speeding up financial inclusion and new-age advances in technologies like AI and ML will boost digital adoption or reception in India, helping both the business industry and the consumers shortly. 

Digital technology helps niche providers to reach a target customer base and be economically viable and on the other hand, customer acquisition, funding, “assembly,” and switching costs tend to favor larger providers of digital financial services. 

Indian digital economy is projected to grow exponentially. The emerging Fintech solutions are going beyond the business environment at an inconceivable pace. The contribution from government, regulators, financial institutions, start-ups, and investors has become a key enabler to constructing a robust Fintech ecosystem.

Changing Landscape with Fintech:

  1. Most of the new-age Fintech companies along are also subscribing a self-service model to Clients by reducing or eliminating the human intervention to offer exceptional digital client experience. AI bots have been commonly seen on various websites.
  2. Web 3.0 focuses to create a level of transparency, where smart contracts will control user data and transactions as a replacement for centralized organizations.
  3. Various countries are assessing and testing digital currencies to adapt to the changing consumer needs and more stability without affecting the existing macro-economic framework.
  4. New-age payment solutions are changing the unorganized economy into the organized one like Wallets, UPI, IMPS, and Pay later.
  5. Neobanks are changing the landscape of fintech and could one day replace traditional banks. They influence technology and AI to offer personalized services to customers while minimizing operating costs.
  6. Even the traditional banking and financial institutions are changing themselves by positioning as Fintech firms. Additionally, many financial institutions are transforming into either hybrid or completely digital models to reduce the associated fixed or variable cost.

Top 5 Fintech Companies in India:

  1. LendingKart: LendingKart provides entrepreneurs the access to capital funding at their fingertips to deal with cash flow gaps.
  2. Easiloan: Easiloan manages the home loan process digitally end to end using its proprietary AI engine. Easiloan’s technology platform is built for home buyers (seeking a home loan), real estate developers, and lenders thus bringing the demand and supply together.
  3. Razorpay: Companies can receive, process, and disburse payments through Razorpay, an Indian payment solution. With credit, debit, and net banking, you can pay with JioMoney, Mobikwik, Airtel Money, FreeCharge, Ola Money, and PayZapp.
  4. Instamojo: Instamojo helps microentrepreneurs, startups, small and medium-sized businesses, and others to launch, market, run, and expand their businesses quickly and easily.
  5. Policybazaar: helps users find out more about insurance by offering a price comparison tool and an online knowledge base.

ASEAN Outlook:

  1. Started in South-East Asia, NIUM has built payment network infrastructure in Africa and Latin America to build an emerging market ecosystem.
  2. Xendit provides payment solutions to enable businesses to accept and send payments localized for Indonesia and the Philippines, with an annual total payment volume of ~$20bn. Xendit has also expanded into lending, data, as well as banking and services business. 
  3. M-DAQ builds applications to facilitate cross-border business for various industries, providing risk and pricing solutions (e.g., floating to fix and vice versa) with a focus on FX.

Challenges and opportunities:

The Covid-19 pandemic has shifted consumer behavior and many have embraced e-commerce. Additionally, the rise of remote working has spillover effects on remote payment. All of these aided by complementary government policies, led to the acceleration of the digital payments system. 

Whether it is a fragmented system within a country or between countries, a seamless connecting platform and infrastructure connecting all monetary systems are still the missing puzzle. This presents prospects for more growth. While such expansion is not without its potential accompanying risks, these can be mitigated - from regulating FX (with a focus on demand vs. the traditional focus on the supply of money) to ensuring risks are accounted for in pricing. At the same time ensuring services are provided at a low cost.

The crypto space has been expanding with the rising affluent of younger generations, many of whom want to hold wealth outside the traditional system and make payment with more than just fiat currencies. To serve this market, there are plans to enable cryptocurrencies payment platforms to extend to banks and in the e-commerce space, more merchants are expected to come on board in the next two to three years.

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About the Author

Shreya Anaokar is a Content Writer at 5paisa. She has completed her Master’s in Finance and Graduation in Statistics from the University of Mumbai. 

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