What is Fintech?
Fintech is a new term and has been gaining popularity since early 2015. This term is usually confused for being a strictly technological and tech-savvy term. When in reality this term is the merger of financial services provided by various clients with the developments and advancements in the technological arena.
The basic point is that Fintech developed more as a necessity out of the developments in the areas of financing services and the rapid growth of the technology than due to the need of such services. The merger of technology with financial service here means that various applications and platforms are being built and developed to provide you with an ease of using financial services including applying for business loans, online personal loans, etc. easily.
Factors Affecting Fintech in India
Although India has been rising to match the other countries with their Fintech developments, it is clear that India is quite behind when compared to them. India has a huge market for growth in this sector. But there are many factors which make it hard for the Fintech sector in this country to rise and be an equal to the more developed markets and economies.
Some of these factors are discussed below:
- Low Internet Penetration: For Fintech sector to grow in a population as big as India’s population, we need a good connectivity. But as we know, India does not have that. The majority of the population is still very new to the concept of smartphones and other gadgets; therefore, the connection via the internet is still in the developing stage.
- Bank Accounts: India has a huge population and is a great economy for the Fintech sector, but sad as it sounds, the majority of India’s population lives in rural areas or is below the poverty line. In addition to this, there are many people who do not even own bank accounts, which makes it hard for fintech to grow in the Indian economy.
- Absence of Hardware and More Hands: The absence of the right hardware and the right information makes it rather hard for this new sector to grow. The growth of this sector largely depends upon the understanding of the new language and putting that into work. The absence of the easy to understand language for the local people has been causing a lot of trouble for the sector. This not only leads to fewer hands and minds to work in the given sector but also reduces the population that understands the working of the new fintech sector.
- Lack of Funds: Majority of the Fintech sector applications are the children of start-ups. And it is common knowledge that start-ups usually are not able to raise enough funds for their projects. A lack of resources, difficulty in getting business loans is as bad as a lack of idea. India could grow into a great market for Fintech, but the present scenario with the funds and money does not give enough space for this sector to grow up to its potential.
Although India has a huge population which favours the growth of the new and budding Fintech sector, the economy and the present scenario of the country is not favourable for its growth. The major difference between the global Fintech sector and the Indian industry is the presence of various factors that hamper the growth of Fintech in India, as discussed earlier. India may be able to stand shoulder to shoulder with the more developed economies when all these factors as mentioned will begin to disappear. The primary requirement for any Fintech start-up to settle will be a consumer base, a high internet penetration and more minds to work on the project.
India is growing at a fast pace, and due to many changes in the economy, a great revolution is coming in the financial sector with the emergence of Fintech. As the need for business loans rises, more and more people are coming to terms with the idea of digital lending. The market is still new, and our economy is still growing. Therefore, in the coming years, this sector will grow as well.