India currently stands second after the US when it comes to FinTech companies. You might wonder how our country rose to that level. Do you remember the Demonetization wave that hit in 2016? Past 3 years, the fintech industry has witnessed a significant rise in its consumer base not only in metro cities but also in the rural sector. Most Tier II and Tier III regions have less understanding of the digital world. Companies are running campaigns to educate the rural Indians about financial inclusion and how they can make their life more comfortable.
To drive adoption among rural customers, financial institutions have introduced certain tweaks to their digital product offerings to promote awareness and adoption among rural customers, aimed at addressing the key challenges faced by rural customers. This has shifted the focus now from urban-first to rural-first taking cognizance of the fact that the rural areas could potentially become the growth engines for India. With the smartphone user base improving in the rural areas, FinTech startups are coming up with innovative and user-friendly online platforms to make banking easier. This is where fintech startups aim at now – making rural life easier.
According to a recent report by NASSCOM-KPMG, the FinTech software and services market in India is expected to grow by 1.7 times by 2020 over the $8m billion the country had achieved in 2016. Furthermore, the Indian FinTech software market is also expected to hit $2.4 billion by 2020.
Fintech Adoption in Rural Sectors
The major roadblock for rural India, which stops them from coming under the umbrella of financial inclusion, is a lack of education about fintech or digital services. Fintech players are now conducting training sessions to ease them into using their services and becoming comfortable with processes. Providing online services in multiple regional languages helps to break the language barrier, getting new customers to experience the digital platform.
Nearly 83 million people live in rural India and are majorly engaged in agriculture-related businesses. There are a set of fintech firms that are specifically targeting this segment of consumers.
Credible India, for instance, focuses on agricultural entrepreneurs by identifying financing gaps. It also designed AI-driven crop monitoring and local market demand forecasting tools.
A socio-fintech startup, Gurugram-based FIA Technology, is taking financial institutions and their products to people’s homes. Another startup, Jai Kisan offers securitisation solutions and a tech-led value proposition for the sellers of products and services it finances. The team disburses loans at approximately 12 percent per annum within seven days, with minimal paperwork for the borrower while generating risk-adjusted required rate of returns for the lender.
From 2018 to 2020, the total VC inflow into Indian fintech startups has more than doubled to 117 percent, whereas the fintech adoption rate for India has surged to 87 percent (2019) from 52 percent (2018)
Over the next decade, we can see fintech’s contribution to improving a lot of the unbanked rural sectors. This move will improve the industrial growth, the GDP and also impact the rural millions positively who are yet to see the major benefits of financial and social inclusion on all fronts. Fintech industries must stay ahead of the curve and look at services and products meant for their rural clients.
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