India’s Leading BFSI and FinTech Companies 2021

52 While UPI accounted for 9% of all retail digital transactions in volume terms and 1% in value terms in FY18, by March 2020, UPI’s share in retail digital transactions grew to 52% in volume terms and 16% in value terms. As the COVID-19 pandemic unfolded in India, prompting stringent nationwide lockdown in March 2020, digital payments got a further boost. In terms of volume, UPI accounted for nearly 60% of all the retail digital transactions in India. 0 20 40 60 80 Apr 2019 May 2019 Jun 2019 Jul 2019 Aug 2019 Sep 2019 Oct 2019 Nov 2019 Dec 2019 Jan 2020 Feb 2020 Mar 2020 Apr 2020 May 2020 Jun 2020 Jul 2020 Aug 2020 Sep 2020 UPI: Share in Retail Digital Payments (%) By volume (%) By value (%) Collaboration with Banks FinTechs are gaining importance as well as acceptance as pivotal enablers in banking and finance services. In this regard, FinTech firms are no longer viewed by banks as disruptive forces. In fact, banks are now turning their attention to innovation and are joining forces with FinTech players by investing in themand/or launching FinTech subsidiaries in order to collaborate with them for various operational functions. In a bid to boost revenues and profits, banks are foraying into new areas such as insurance, asset management, brokerage and other services supported by financial technology. Both banks and FinTech players have different set of comparative advantages and these synergies need to be explored. While FinTechs are rich in latest technological knowhow, banks enjoy a wider client base and possess the skills and experience to navigate the regulations and licensing discipline of the financial services industry. Banks are viewed as safe havens and have a strong reputation and trustworthiness built over several decades, which is their biggest strength. They also possess adequate capital to beat competition besides experience and good knowledge of risk management, local regulations and compliance. All of these factors can be of great value to FinTech players and a strategic alliance between the two can help build synergies and optimise core competencies. However, it is still a largely unexplored territory and both banks and FinTech players need to look at the various opportunities and challenges in order to make the strategic partnership more efficient, reliable and resilient. FinTech Lending FinTech lending companies, including online and P2P lending platforms have played an important role in bridging the financial gap of individuals and businesses against the backdrop of the COVID-19 pandemic. While lending stalled during the first 2-3 months since the lockdown was imposed, by June, online lending platforms began extending credit in order to help MSMEs. It size of credit is estimated to have multiplied over the next two quarters. Some FinTechs have been using advanced technologies such as AI & ML and data analytics to assess credit based on parameters such as mobile phone records, cash flow cycles, social records, payment activity as well as psychological tests; these capabilities can potentially lead to an exponential growth in credit loans. Why there is Need for Partnerships between FinTechs and Financial Institutions Partnerships between financial institutions and FinTechs can prove to be a win-win proposition for both parties. Financial service providers can provide FinTechs with much-needed distribution and volume boosts in terms of revenue as well as market share, and also knowledge about regulations and compliance. On the other hand, FinTechs can provide innovation, means to enhance customer engagement and reduced costs through efficiencies. Dun & Bradstreet