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Sathish Vaidyanathan

The author is Director of Engineering, New Initiatives and Core Team Member, PayPal Social Innovation

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The Great Indian FinTech Opportunity

To survive the whirlwind of digital transformation and sustain themselves, FinTech players will have to revisit their offerings and strategically address 4S's - Scale, Simplicity, Satisfaction and Security

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The Indian FinTech landscape has been undergoing rapid transformation over the past few years. The spectacular growth of e-commerce, fast adoption of mobile technology by the masses, coupled with concerted efforts by the government and regulatory bodies has resulted in rapid adoption of digital payments and realization of the Government's vision of Digital India. Demonetization has accelerated the momentum and the utility value of these digital payments companies can creep beyond just digital commerce.

These are also interesting times for start-ups which can leverage the opportunity and grow their business. I would like to share some thoughts on the opportunities that these FinTech companies and startups could tap into and the market factors that they need to internalize as they establish and grow their business.

May the 4S be with You
To survive the whirlwind of digital transformation and sustain themselves, FinTech players will have to revisit their offerings and strategically address 4S's.

Scale: The number of users going digital has exponentially increased within a short period of time. In addition to this, the number of external systems and data sources that need to be integrated to meet this scale is also growing. This introduces multitude scenarios that rely on making split-second decisions while handling high volume of payment transactions. Global scale is also important in order to ensure that the reach of these financial products and services are not limited by geographical constraints.

Simplicity: To promote adoption of digital solutions, it is critical to provide simple and seamless experiences with low entry barriers. The merchant and consumer ecosystems are more concerned about their core intents - that is selling and buying goods and services. Hence any unwarranted friction introduced during the process of payments will act as an impediment that could result in rejection.

Satisfaction: To win over the hearts of the new customer base companies should offer a satisfying transactional and post-transactional experience. This includes customer support, protection of their money, and a fair and expedited resolution for refund related issues.

Security: Given that the whirlwind is also bringing into its fold, large segments of population that have limited awareness about technology and its pitfalls, security is going to be of paramount importance. In addition to leveraging the security offered by the regulatory systems, the product offerings should also consider building robust guardrails and risk management capabilities that instill trust in the minds of the user base.

Money has both the potential and kinetic energy and virtually every avenue where money is at rest or in motion has now become a potential opportunity for players in the Indian FinTech ecosystem. 

New Use-Cases to Ponder About
In today's context where money movement has been commoditized, with avenues like Unified Payments Interface (UPI), the value generation happens only by way of facilitating new use-cases, and catering to some of the complex setups we have in India. Some of the areas that crave for attention are:

a) How do we bring in that large portion of population who are happy to embrace technology for other needs, but are reluctant to do so when it comes to dealing with money ?
b) How do we tap into the millennial audience who have great spending potential, limited time in hand and high reliance on technology?
c) How do we digitize payments in the deep pockets of India where, despite significant mobile penetration, internet connectivity is limited?
d) How do we combine various existing solutions to facilitate orchestrated or clustered payments that could propel growth in the rural economy in a transparent manner?

Crystal Ball Gazing
Here's some crystal ball gazing on how this space is going to pan out over the next 3-5 years.
When I wear a realist's hat, I can say that Indians are used to accommodating change, and they will adapt and mingle into the larger digital ecosystem. However, the price point at which these changes come in MUST be reasonable. Hence FinTech providers should look at delighting the users with small, incremental, cost-effective (read as free) dosage of digitization, rather than trying to bring about a meteoric shift. To be able to make digitization successful, we also need better acceptance systems in India. The current acceptance systems are both expensive as well as difficult to procure. This is a space ripe for disruption, and innovations like BharatQR will prove to be highly cost-efficient. The economies of scale paradigm will kick in, wherein, with the increase in volume of online and offline digital payments, the cost of transactions will also come down.

When I wear an innovator's hat, I believe that new and innovative solutions will emerge for the more sophisticated users. Payments will become ambient and will happen when they need to happen. For instance, your printer will reorder ink online, when it detects that it is out of ink. Your fridge will buy ketchup, knowing that you are running out of it. As you enter a concert hall for your favorite event, your mobile phone will pay for your tickets, cutting the queue for you. You will be able to place an order from your online shopping cart using gestures.

Money has both potential and kinetic energy, and virtually every avenue where money is at rest or in motion has now become a potential opportunity for the players in the Indian FinTech ecosystem. It's the start of a super exciting journey that's going to take India to newer heights, and I can't wait to see that day where every Indian benefits from the Great Indian FinTech opportunity.

Disclaimer: The views expressed in the article above are those of the authors' and do not necessarily represent or reflect the views of this publishing house


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