India's fintech adoption rate of 87 percent easily trumps the global average of 64 percent, Commerce & Industry Minister Piyush Goyal has said.
Stressing that India is poised to become one of the largest digital markets in the world, Goyal has said the government will continue to support the sector. He was speaking at the 2nd Global Fintech Fest-2021 hosted by the Fintech Convergence Council, Payments Council of India, National Payments Corporation of India (NPCI) and Internet and Mobile Association of India.
India is today one of the fastest-growing Fintech markets with more than 2,100 FinTechs, the Minister said. “A lot of players in the Indian Fintech market are becoming unicorns and India’s market itself is currently valued at $31 billion, and expected to grow to $84 billion by 2025,” he said.
“As of May 2021, India’s United Payments Interface (UPI) has seen participation of 224 banks and recorded 2.6 billion transactions worth over $68 billion and the highest ever, more than 3.6 billion transactions, in Aug’21,” said Goyal. Over 2 trillion transactions were processed using the AePS (Aadhar-enabled payment system) last year, he added.
The Minister said the sector came to the rescue of people at the time of the pandemic, by enabling them to carry out critical activities from the safety of their homes, particularly during the lockdown and the second wave of Covid.
Goyal underscored that FinTech today has the potential to bring investments for mobile apps, e-commerce stores & several other digital infrastructures. “Investment inflow into the Fintech sector which has gone up to $10 billion since it started in 2016, has the huge potential to up the game further," Goyal stressed. He added that this will happen provided companies simultaneously enhanced customer experience.
"Your strength will be augmented by the world’s third largest startup ecosystem which is hungry for growth,” he added.
An interesting development is the emergence of embedded finance.
The non-financial services sectors are also proactive in adopting FinTech solutions today. Goyal said that with the expansion of their value chains, we need to consume more, and more fintech services will grow proportionally.
“Our MSMEs have also rapidly adopted FinTech solutions whether for credit, payments, accounting & tax filing. The government has recently launched the Open Credit Enablement Network (OCEN) & Account Aggregator (AA) framework," Goyal pointed out.
These enable formal credit flow to the most vulnerable segments, especially small businesses, brings ease for financial institutions to reach large segments by lowering distribution costs and now institutions can give smaller loans, with short repayment cycles.