The fintech journey 2020 – from convenience to necessity

The fintech journey 2020 – from convenience to necessity

Fintech has seen a significant growth over the last decade in India, with digital payments estimated to grow at a CAGR of 20% till 2023 (from 2019)[1]. For a long time though, it remained a matter of convenience for most. The primary challenge for the sector has been not to get people to adapt to new technology, but to break habit and perception. India has always been a cash-heavy economy at its core. The perception that cash is ‘real money’ is something we have followed for decades. And while the advent of fintech was able to break this notion for a small percentage of people, most still felt secure with cash-in-hand.

In the last three months however, the outbreak of the pandemic has forced Indians to break the habit. Due to the risk of infection via surfaces, everyone from the government to brands have encouraged and publicised contactless payment modes for everything from utility payments (electricity, phone recharges) to grocery payments to entertainment (OTT, gaming, etc). Fintech today, in the true sense of the word has gone from being a convenience to a necessity, and will remain so in the new normal.

Short-term future outlook

As a response to the economic downturn resulting from the largest healthcare crisis in recent history, the government has introduced relief packages to support individuals and businesses, especially MSMEs. From liquidity injections in form of tax reliefs to principal moratorium on loans, we may expect government support for the near future for businesses and individuals that may be in need.

Medium to long-term future outlook

India is gearing for a fast-track progress to becoming a completely cashless economy, and fintech is expected to play a central role in this transition. Following are the areas we could see major paradigm shifts as far as the sector is concerned:

Increased digital payments adoption: We expect to see an increased push and adoption towards digital payments all around. The government, regulators, fintech players, and banks will most likely get more aggressive in their efforts and marketing of digital payments.

Shifting consumer behaviour: From first time adopters to senior citizens, we will see more individuals in the fray for digital adoption. This is because of the constant push from not only external stimuli but individuals and peers as well.

Contactless payments: In the era of everything contactless, real-time contactless modes of payments are expected to see a sharp uptick. From QR/link-based payments to P2P transactions, we can expect an increase in both the volumes and value of such transactions.

Increase in lending: We are expected to witness an increase in online, paperless processes for alternate lending (unsecured loans, nano-lending). This is due to both individuals availing off low-ticket loans for their needs and MSMEs availing smaller loans from alternate sources of lending rather than banks.

Consolidation & education: In the medium to long term future, we may expect to see multiple mergers & acquisitions as companies focus on survival. Simultaneously, it is also imperative to focus on consumer education & awareness.

Increased focus on cybersecurity: With the number of transactions and fintech users rising, it becomes crucial more than ever to combat frauds and cyber-attacks, given the sensitivity of data in the space.

Change is the only constant

Important to note is that the fintech industry is ever-changing, ever-evolving. And evolve it must, to stay ever-relevant.

In the words of the America’s nonpareil John F. Kennedy, “Change is the law of life, and those who look only to the past and present are certain to miss the future”. And it couldn’t have rung truer for the fintech industry than it does in 2020.


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