January 18, 2016
In recent years, the Indian FinTech industry not only attracted attention from traditional financial institutions and disrupted certain sectors, but also made a significant transformation in consumers’ minds.
In this article, we cover the latest updates from the Indian FinTech sector which includes initiatives taken by wallet companies to curb fraudulent transactions, RBL Bank launching India Startup Club (ISC), the Startup India campaign which was held in Delhi on January 16, Yes Bank partnering with iSPIRT to launch the FinTech app store to support startups, a FinTech competition to be launched soon by the India’s Central Bank and the rise in e-commerce which helped India Post to achieve a huge profit growth.
Wallet Companies Take Initiatives to Curb Fraudulent Transactions:
Mobile payments and commerce firm Paytm is experimenting with facial recognition technology to secure mobile transactions. MobiKwik has introduced card checks and device ID checks. Oxigen has launched Virtual Visa Card in association with RBL Bank that will convert the wallet into a visa card. Users will have to create a one-time, 16-digit card number before making transactions.
Mobile recharges, bill payments, and ticketing and recharge applications contribute to about 95% of digital wallet frauds.
"India offers a very unique challenge because consumers are gullible," said Vijay Shekhar Sharma, Co-founder of Paytm, which claims to be the digital wallets leader with over 120 million registered users and more than 2.5 million transactions daily on average, according to Economic Times. "So, we have to find out ways to run the system even more than differently than the rest of the world."
Paytm itself blocked about 5.5 million users in 2015 after they were hit by fraud. The company even barred about 17,000 of its 1 lakh merchants over the past eight months.
"Fraud is fast becoming an area of concern for retailers as they gear up for further growth in online commerce" with the number of users making online transactions growing exponentially, the Associated Chambers of Commerce & Industry of India said in a recent report. With the surge in the number of companies in the online wallet space, the risk of fraud has been rising in recent months, said Mumbai-based digital payments company TranServ. Mobile wallet fraud peaked during September-October.
RBL Bank Launches India Startup Club (ISC):
RBL Bank is the first bank in India to initiate and launch a dedicated proposition, India Startup Club, for new-age enterprises to offer innovative and customized end-to-end solutions. The company tweeted:
The Startup Current Account can be opened for an average monthly balance of Rs. 20,000. For specific banking services, applicable eligibility norms may apply. To avail any of the referral services, it will be imperative to open a current account with the bank.
Startup India Campaign Held in Delhi on January 16:
At the Startup India event in Delhi on January 16, founders of FinTech-related firms and industry experts came together to share insights with aspiring entrepreneurs. The panel was moderated by Sharad Sharma, Co-founder of iSPIRIT, and comprised of Paytm Founder Vijay Shekhar Sharma, Eko Financials CEO Abhishek Sinha, CGAP’s Digital Finance Plus (World Bank) and Senior Financial Sector Specialist Kabir Kumar, Atherton Capital MD Nitin Mehta, EdCast Founder Karl Mehta and Platform Head of Ekstep Sanjay Jain.
According to Sinha, This is a better time to enter the payment industry, which will see the emergence of 300-400 million new customers in the next two to three years, who have smartphones and an Aadhar card. With the government opening lots of bank accounts, we are becoming data-rich from (earlier being) data-poor. The Reserve Bank of India, for the first time, has issued more than 20 insured licenses. The payment instrument architecture remained unchanged for over 50 years.
Yes Bank Partners with iSPIRT to launch FinTech App Store to support startups
Yes Bank, India’s fifth-largest private sector bank, recently launched the first-of-its-kind FinTech App Store for Indian FinTech startups in association with iSPIRT, a software product think-tank organization. The FinTech App store will hold a governance structure, making it easy for any startup to access it.
The mutual understanding will enable both the bank and the firms to build on each other’s strengths and willingness to support each other.
FinTech companies, as they’ve come to be called, are easing payment processes, reducing fraud and saving users’ money, said Ritesh Pai, Senior President and Country Head at Yes Bank in a statement. They are promoting financial planning, and ultimately moving a giant industry forward.
Mr. Pai said that the Indian landscape is primed for entrepreneurs using technology to promote financial inclusion. This is because about 60% of Indians are unbanked and 90% of small businesses have no links to formal financial institutions. Yet 80% of Indians own mobile phones, and 32% will own smartphones by 2017.
FinTech Competition to Be Launched Soon by India's Central Bank:
The Reserve Bank of India is introducing a competition among FinTech companies in India and providing rewards for innovation and unique services. The step taken by the central bank comes at a time when startups in the Asia-Pacific region are starting to take off.
The Rise in E-Commerce Helped India Post to Achieve Huge Profit Growth:
India Post has the potential to emerge as world’s leading e-commerce delivery platform, Union Minister for Communications and Information Technology Ravi Shankar Prasad said on Saturday after inaugurating an E-Commerce Parcel Processing Centre at Parel in Central Mumbai.
Mr. Prasad said that India Post had updated itself with latest technological developments in the country and has tied up with more than 400 e-commerce agencies including Flipkart, Amazon and Snapdeal for delivering e-commerce prepaid as well as cash-on-delivery orders. Amazon is the largest business partner of India Post’s e-commerce division.
He also said that the parcel revenue, which registered a 2% decline in 2013-14, had clocked 37% growth in 2014-15 and further grew by 117% during the first half of 2015-16.
He added that India Post posted a total revenue of Rs. 11,636 crores during 2014-15, with post and parcel related services accounting for 42% of the revenue and the rest coming from the savings bank activities.