Payments

Daily Review: Factors Driving FinTech Growth in India

MEDICIGlobal Head of Content

“India has made a good beginning and is moving in the right direction, but to be a powerful force in FinTech innovation globally, we need to develop a strong ecosystem,” [says] (http://knowledge.wharton.upenn.edu/article/whats-driving-indias-fintech-boom/) [Prantik Ray] (http://acad.xlri.ac.in/facprofile/index.php?185), Professor of Finance at XLRI – Xavier School of Management.

Extensive and rich on examples, the piece published by Wharton explores the hallmarks of the FinTech ecosystem in India, diving into challenges and opportunities for the entrepreneurial community to apply tech and finance innovation to facilitate inclusive financial opportunities for the vast unbanked/underbanked population.

Pick #1. What’s Driving India’s FinTech Boom?

Multiple factors are driving FinTech growth in India. These include inefficiencies in the country’s banking system, a large unbanked and underserved population, steep smartphone penetration, increasing access to the internet, a booming e-commerce market, and availability of a large talent pool which understands both technology and financial services.

A key pillar is the strong support from the government by way of initiatives such as the financial inclusion program Jan-Dhan, which aims to ensure that every Indian has a bank account; the biometric & iris-based Aadhaar, which aims to give every Indian resident a unique identification number; and the Unified Payments Interface.

“There is no compelling reason why new retail financial customers must go through the same sequence of physical banking channels, credit & debit cards, Internet & mobile financial services such as e-wallets, apps, and money transfer mechanisms. An entire generation of Indians leapfrogged the use of personal computers and laptops to connect to the Internet via mobile devices. A similar leapfrogging could take place in certain categories of financial services such as payments, lending, and wealth management.” – Ravi Aron, Associate Professor of Information Systems, Johns Hopkins Carey Business School

Launched two years ago by NPCI, a not-for-profit organization owned by a consortium of major banks, UPI has emerged as one of the fastest-growing payments instruments since the demonetization of high-value bank notes in November 2016.

UPI reported 145 million transactions in December 2017. At the time of its launch, UPI was described as the most sophisticated public payments infrastructure in the world. India has about 800 million mobile phones with over 430 million having internet connectivity. By 2027 the Internet users in India will amount to more than 900 million.

Read more at Knowledge @ Wharton.

Pick #2. Smartphones Are Changing the Way Consumers Shop

India has the potential to be a mobile-first consumer economy.

“It’s imperative, therefore, for India-focused companies to adopt not just a mobile strategy, but a mobile-first marketing strategy in order to create differentiated and lasting value in the Indian ecosystem. It is abundantly clear that mobile, which was the future of marketing until recently, has now become the present.” – Vasuta Agarwal, VP & GM, InMobi India

About 80% of all web traffic in India emanates from mobile, which is the second-highest in the world. That’s because we spend nearly 4.5 hours a day on mobile, 37% higher than the time spent on TV. Mobile has emerged as the most powerful among all platforms in the country and as the primary means of accessing the Internet for most Indians. There will be 781 million smartphone users in India by 2021. With 75% of its Internet users under the age of 35, India also has the youngest online population.

Apps account for 88% of India’s mobile time. In 2017, India ranked third and continued to surpass the USA as the leading app download capital of the world with a 12% share of the world’s app downloads. Mobile video content consumption has also increased substantially in India in the last two years. Videos will be 75% of India’s mobile data traffic by 2021, compared to 49% at the end of 2016. It is being seen as an enormous opportunity for advertisers to gain maximum consumer attention.

Read the paper called “Shifting Terrain – The Mobile Media Landscape in India” and/or the overview of some of the key findings by Deepti Chaudhary, Senior Editor, Fortune.

Pick #3. Bank Transfers in Less Than a Minute as Real-Time Payments Rolled Out (Australia)

Starting Tuesday, Commonwealth Bank, Westpac, and National Australia Bank will start offering customers the ability to make money transfers that will settle within less than a minute, compared to today, where it can take up to three days for funds to arrive. The new system also allows customers to transfer money to an external account without entering a BSB or account number.

The New Payments Platform (NPP) is a $1 billion project, launched with the support of the Reserve Bank, which has involved revamping the infrastructure that facilitates millions of payments between consumers and businesses.

Read more.

Pick #4. Time To Navigate the Super Myway – Give Digital Consumers Exactly What They’re Looking For

The 2018 Accenture Digital Consumer Survey of 21,000 online consumers in 19 countries revealed that respondents want more digital experiences blended into everyday life. Key findings include:

  1. Stand-alone digital voice assistant devices are leading the evolution toward blended digital and physical experiences. YoY growth in ownership of stand-alone digital voice assistant (DVA) devices is greater than 50% in all countries surveyed. DVA device ownership will reach one-third of the online population in China, India, the US, Brazil, and Mexico by the end of 2018.

  2. Interest in connected experiences extends to self-driving vehicles.

  3. Consumers want more than just fun from augmented and virtual reality. AR/VR is evolving into a range of different use cases and device form factor will most likely play a role in their adoption. Consumers are interested in AR/VR technology and services but few are comfortable wearing intrusive devices.

  4. Consumers are in search of simplified, flexible and engaging subscription over-the-top (OTT) video experiences.

Read more (+ the infographic).

Elena Mesropyan

MEDICIGlobal Head of Content

Global Head of Content, MEDICI

Elena is a research professional with a background in social sciences and extensive experience in consumer behavior studies and marketing analytics. She is passionate about technologies enabling financial inclusion for underprivileged and vulnerable groups of the population around the world.