India’s Leading BFSI Companies 2020

LIII The Reserve Bank of India has proposed a broad classification of major FinTech innovations as follows – Payments Clearing and Settlement Deposits, Lending and Capital Raising Market Provisioning Investment Management Data Analytics & Risk Management • Mobi le and web- based payments • Digital Currencies • Distributed Ledger • Crowd-funding • P2P lending • Digital Currencies • Distributed Ledger • Smart Contracts • Cloud Computing • e-Aggregators • Robo Advice • Smart Contracts • e-trading • Big Data • Artificial Intelligence & Robotics Source: Report of the Working Group on FinTech and Digital Banking, RBI, 2017 Innovation in financial technology is driven by many factors including changing consumer expectations and demographic factors driving demand, rapid advances in technology, new forms of service provision and regulatory thrust. Although India’s FinTech sector is still in its nascent stage, it is growing at a rapid rate, backed by a broad market base, innovation-driven startup landscape and positive policy setup. Over the last few years, initiatives undertaken by the government in the field of financial inclusion and innovative technology have propelled investment into the FinTech sector while encouraging customers to adopt innovative technology based products and services. These initiatives include the creation of public digital infrastructure such as Aadhar, Unified Payments Interface (UPI), Bharat Interface for Money (BHIM), Immediate Payment Service (IMPS), Bharat QR code and mobile point of sale (PoS). According to Nasscom, India enjoys the highest Fintech adoption rate in the world at 87%with digital lending, digital payments and wealth management being top three segments under FinTech, wherein most of the startups have been concentrated in the country. With affordable high-speed internet and smart-phone usage penetrating further across tier 2, tier 3 and rural areas, the burgeoning rural sector is witnessing a paradigm shift in the way cash and digital payments are being accessed across various platforms. India’s digital payments market is expected to grow to $1 trn by 2023, on the back of growing mobile payments, which are slated to rise from $10 bn in 2017-18 to $19 bn by 2023 according to Niti Ayog. Driving Financial Inclusion The country’s digital transformation has the potential to empower un-served and under-served segments, creating $1 trn of economic value by 2025, as per the Ministry of Electronics and Information Technology (MeitY). Presently, India has the world’s second largest population of unbanked individuals, with over 190mn people having no banking account on any sort. The Pradhan Mantri Jan Dhan Yogana (PMJDY) with the aim of providing ‘banking for all’ has resulted in new account openings in large numbers – over 55% of all new bank accounts opened across the world during 2014-2017 were from India, as per the Global Findex 2017. However, around 48% of bank accounts in India remain inactive. Besides, households in India, especially across the rural areas, low-income groups andwomen, have lower access to financial services and products. In terms of insurance too, the penetration levels remain low. Access to formal credit is also a cause of concern although the Pradhan Mantri MUDRA Yojana (PMMY) providing financial assistance to non-corporate, no-farm small/micro enterprise, has to a certain extent improved the country’s financial inclusion in terms of credit. In furtherance of financial inclusion in the country, the government introduced Aadhar-enabled Payment System (AePS), which allows online interoperable banking transactions at point of sale (PoS) or micro-ATM through business correspondent of any bank using Aadhar authentication. The technology allows customers to withdraw and deposit cash, make balance enquiry, request mini statement and also make Aadhar-to-Aadhar fund transfers. BHIMAadhar Pay allowsmerchants to receive digital payments fromcustomers over the counter through Aadhar verification. Customers of any bank can make payments to any merchant associated with any bank on BHIM Aadhar Pay service using biometrics. AEPs services have now been extended to Indian Post Payments Bank (IPPB), making it the single largest platform to provide interoperable banking services through the last mile reach of the postal network. Dun & Bradstreet