Now’s the best time for Financial Technology – or FinTech – to take a large hit at India and make a resounding impact.
For, the number of mobile Internet users in India are only set to rise by the year 2017. A recent report on FinTech trends in India pegs the country’s mobile Internet user threshold to rise to 236 million users by the end of 2016. Meanwhile, this same number is projected to rise to 314 million users by the end of year 2017.
Meanwhile, 3G and 4G penetration will increase by leaps and bounds in Tier II cities and some rural areas, while the recent Reliance Jio phenomenon may gather many more previous 3G users into the higher spectrum of mobile connectivity.
Correspondingly, what does this mean for India’sFinTech?
The rise of mobile Internet in India
Though India has been relatively slow in catching up to global mobile Internet trends – it has been slower even than neighboring China, which hit its peak in the last decade – there are many heartening signs that India is about to deliver the goods in mobile banking in an immense fashion.
In fact, banks have been the earliest adapters of new-age FinTech modalities.
Catering as they are to distinct sets of users – those over 60 years old still learning how to use the Internet, the mid-segment 35 to 50 years that is comfortable with the digital medium and the digital-savvy millennial population, banks have been quick to offer the latest in digital technology via their banking apps.
We are today the world’s third largest smartphone market. From the time that Indian users were clearly reluctant to use their mobile phones for anything payment-based a decade ago, to a time when e-commerce majors and banks have made the mobile phone an important financial gateway for customers, India has surely progressed in leaps and bounds with such technology as peer-to-peer money transfer and utility bill payment taking centre stage in banking apps.
The incumbent government has also laid out as one of its key policy objectives, the proliferation of the digital medium to all corners of the country. Not to put too fine a point on it, and certainly not to uphold a certain popular slogan of a few months ago, but ‘Deshbadalrahahai (The country is changing)’ and the major change is being attributed to the rise of mobile internet and banking app technology in India.
One of the first key disruptive factors in the current growing FinTech phase of India was introduced by the RBI in August this year, when it announced the granting of ‘private bank licenses’ to 11 private players. Interestingly, private players with proven track records in low operative costs and scalability of operations were granted licenses. A key unifying factor between all these entities holding private banking licenses is that they are superior digital medium users – and this factor is set to further disrupt the current FinTech environment in the country.
In terms of banking, the present government’s Jan Dhan Yojana has made staggering progress. The RBI contends that over 200 million new bank accounts were opened in the last year alone, following the ease with which previously unbanked masses could not access banking services. Meanwhile, more and more mobile wallets continue to be created – the RBI pits this number at 100 million in a year – as users create them for shopping, travel, money transfers and other daily use tasks.
For banks, the setting up of new payment banks could very well herald an era where tying up with these entities could help them extend their reach in the rural hinterlands without actually setting up the machinery and banking app technology by themselves.
It also means that current banking apps are set to receive frequent upgrades in an effort to keep up with new age FinTech that evolves as per customer demand. This is a significant development for current users of banking apps, with the banking leaders further set to increase market penetration with new features, better technological inputs and higher connectivity. Leading banks reiterate that about 60% of their overall banking transactions are conducted over mobile banking apps and Internet banking. With a higher penetration of digital services, this percentage could increase dramatically in the coming years.
At the moment, banking apps are on an upswing on the popularity charts, but the trend is still largely confined to the metros and Tier I cities. Indian banks have been quick to appreciate the rising use of Internet-based technologies in daily personal and business banking. They have also grasped the potential for banking app-based connections with consumers: by the year 2020, the average age of India is touted to be 29 years, and customers will primarily be digital-only consumers. Hence, modern business intelligence and real time analytics are to be set up now, not later.
A major influencer in the banking app arena has been the recent signing of the UPI – United Payments Interface – with the RBI and 10 of the country’s leading banks. This UPI is set to be the definitive financial services app for every Indian, allowing for simple payment transfers as also large bulk transfers up to Rs 1,00,000. Its best feature is the third party payments interface, where instead of adding the beneficiary details (IFSC, account number) you only need to send the payment to the beneficiary’s unique ID and send the payment.
Banking is changing in remarkable ways, and it is up to consumers to make the choice between banking app technology or choosing offline banking. With ease of access, saving of cost and time, the choice seems pretty obvious at the moment!