By Amit Nigam, COO & Executive Director of BANKIT
The raging global pandemic has taken a heavy toll on global economies and financial markets, including India’s fintech sector, have seen a slump. Fintech as it was during the pre-COVID times is long gone. With the end of the pandemic not yet in sight, there is a looming uncertainty vis-à-vis the future of Indian fintech, despite the sector getting back on its feet slowly. What is certain, though, is that the current scenario calls for certain measures to be taken to ensure the revival and growth of India’s fintech sector is fast-tracked. On that note, here is an overview of the status of India’s fintech industry in the current situation.
Impact of COVID-19 and the lockdowns
The pandemic’s devastating impact is being felt profoundly across the country – be it metro cities or in the hinterlands. For Indian fintech, there is a looming possibility of the sector taking a plunge if immediate reforms are not made. This is to say that the ongoing crisis may have a more significant impact on the sector than the 2008 financial crisis that led to the world’s economies tumbling into a recession. To quicken the process of revival, fintech players across the country, both big and small, need to adopt a highly innovative, aggressive, and futuristic approach as a response to the downfall caused by the pandemic.
Over the past 6-7 months, not only businesses but even the common man has faced several challenges in terms of finance, as even simple things such as access to basic banking, appeared to be a daunting task due to the lockdowns. Business took a hit in terms of reduced transactions and remittances and was forced to cut costs in the form of manpower. Even amidst the crisis, fintech players left no stone unturned to extend their services to even the most remote pockets of the country, by offering a wide array of services including doorstep cash delivery, amongst others. The economy has gradually begun to reopen, and although there is still a long way to go to return to pre-COVID times, fintech players are ramping up their efforts to boost business and begin full-fledged operations soon.
The road to recovery
Despite the pandemic continuing its onslaught across the country with a sharp increase in the number of COVID-19 cases and healthcare authorities fearing a massive second wave, lives and livelihoods have resumed after prolonged lockdowns. Workers who migrated to their hometowns from metro cities during the lockdowns due to lack of job opportunities are now slowly returning to the urban areas with businesses resuming operations. For the fintech sector, the road to recovery is a long one. Fortunately, the sector has been witnessing an increase in business over the past couple of months, with a rise in remittances and other services offered, particularly digital banking services that are seeing a newfound demand.
Banks and other fintech startups offering banking services are going the extra mile to ensure frictionless services to even the last-mile customers. Companies in the sector have even started online approval and disbursal of loans to eligible customers without the customers having to make several trips to the bank. That being said, a large chunk of this is possible only with the help of technology.
Fintech in India has grown leaps and bounds thanks to the advent of technology. One of the best examples is the growing adoption of digital payment solutions such as UPI, AePS (Aadhaar-enabled Payment Systems), mobile wallets, etc. Over the past few years, tech-led banking and other financial services have made remarkable progress owing to technological penetration even in the hinterlands of the country. The ongoing pandemic has further accelerated the adoption of technology, making it easier for banks and other fintech players to render seamless services to customers.
What’s in store for the future?
As mentioned earlier, the end of the pandemic is yet to come into view. But, despite the widespread disruption, India’s fintech sector is returning to normalcy. Players in the industry are even introducing new services and features such as cash collection, CMS services, Insurance, Loans etc., along with existing ones in a bid to boost the business post-pandemic. India’s fintech sector is one of the largest and most lucrative ones in the world, and with continued efforts from brands and the government, the industry will be well on its way to fully revive itself over the next few months.
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