Javascript on your browser is not enabled.


Sachin Maheshwari

Sachin Maheshwari is CEO at EzCred. Sachin has over 18 years of investing, operating and consulting experience in India and the United States. Prior to starting EzCred he was Managing Director at Zephyr Peacock, a private equity firm based out of Bangalore, India. He has previously been at Draper Fisher Jurvetson and Opus Capital (venture capital firms in the Silicon Valley).

More From The Author >>

Top 10 Trends to Look Out in Fin-Tech Industry for Year 2018

2018 will definitely be an exciting year for Fintech in India. Data and technology would be the forefront drivers of change and companies that are successfully able to adopt both would be the eventual winners.

Over USD 20 billion poured into the fintech sector in 2016, globally. This allowed entrepreneurs to aggressively attack almost every aspect of the financial services industry – be it credit, retail banking, investments, treasury and payments as well as the allied sectors of Regtech and Insurtech. Of this amount, a little over 1% made its way to Indian Fintech companies. Needless to say, India is still in the early days of its fintech journey. But with financial services industry constituting 6% of the GDP, disruptions are just waiting around the corner.

EY, in a recent report indicated that China and India are far ahead of the rest of the world in Fintech adoption. While government regulations and past investments in India have enabled rapid proliferation of the likes of PayTM and Bheem, I would argue fintech is still very nascent in India and certainly hasn’t reached the broad base that one would like. We have yet to substantially leverage modern technologies to create significant efficiencies and opportunities across all financial services. Our barometers for penetration of credit, investments, insurance, planning and savings in the country still remain quite low. Our banks have made significant effort in adopting technology but are still not at the forefront of cutting edge technology when it comes to running their operations. Investment decisions by institutions and individuals hardly leverage new age technologies like machine learning, AI, etc. All these are areas where a lot will emerge in the coming few years. I present below some themes which will emerge in India in the coming year in the realm of fintech:

  • ATMs will start disappearing – No, it will not be because of demonetization. But because, people will become very comfortable using digital instruments to carry out transactions. As GST matures, we will start seeing more and more retailers accepting digital payments reducing the need for people to withdraw cash.
  • Credit decisions will go beyond looking at CIBIL scores for individuals and SMEs – Credit providers will start leveraging other forms of digitized data to evaluate ability and willingness to pay of the borrower. With CIBIL scores having a very low coverage, a large chunk of the market today gets excluded from decision frameworks.
  • Chat and payments platforms will start integrating – With the announcement of WhatsApp in-chat payments feature, there’s already a huge buzz. With customers opening chat platforms several times a day, it’s only a matter of time before the said platforms around chat become more prominent when it comes to money transfers and payments. WeChat in china has already made a strong presence in payments in China.
  • Payments and lending platforms will start integrating – Lending platforms are already working with payment platforms leveraging transactional data. Payment platforms will see thin margins in their payments business and will start building or partnering with lending platforms. For lending platforms, a payment platform is a cheaper customer acquisition avenue and also a source for credit assessment data. Qudian tie-up with Ant Financial in China is an example where with payment and lending platform have come together.
  • Fraud Prevention solutions will start emerging – With maturity in AI, we will see more robust platforms for fraud prevention and security management. Platforms similar to Feedzai and Threatmatrix will start emerging provisioning security in transactions at consumer, merchant and institutional levels.
  • Wealth platforms will go direct to consumer – We still haven’t seen any platform assume scale in a direct to consumer wealth management play in India. Across the world, over a 100 Robo-advisors have been funded and a handful of them have scaled. While investing in the financial market is still something that very few Indians do, trust, transparency and intelligent algorithms will provide impetus to wealth management tools. With SEBI putting robo-advisors under its ambit, trust some savvy entrepreneurs to start building durable wealth management platforms.
  • New themes will emerge in Insurtech – New models in Insurtech have emerged and collapsed in the last few years. But a lot of learning has now been accumulated. With a flurry of Insurtech companies getting seeded in the last couple of years, I expect more mature offerings to come out in the coming year. Innovations through IoT, analytics and business models will see new insurance solutions across segments such as health, gadgets and vehicles as well as improvements in claims management.
  • Large institutions will consolidate credit: While I don’t predict the death of P2P lending entirely, as interest rates keep reducing and costs of capital for larger institutions keep reducing, it is difficult to see P2P lenders getting any scale. The only advantage that P2P lenders have is information asymmetry but with newer methods to collect data on the borrower, I see that advantage diminishing gradually.
  • Regtech solutions becoming mature – As financial thought-leaders across the world are trying to increase the breadth and depth of financial services, we are also entering hitherto unknown territories of risk. This has resulted in rapid changes on the compliance side for institutions as well as emerging financial entities. Digitization has been the first step in compliance. For example, we have seen the emergence of paperless lending. In the coming year, we will see greater use of block chain and AI in managing compliance issues.
  • Greater localization of bots – Over 30 startups are working on bots for the fintech sector in India. The offerings so far are fairly basic and largely use English as a medium. With rapid work going on in NLP and local languages, we will see emergence of more bots offering more localized interfaces and increasing the breadth of their usage. As an aside, I expect bots to monitor our financial transactions a lot more and nudge us towards better decision making.

2018 will definitely be an exciting year for Fintech in India. Data and technology would be the forefront drivers of change and companies that are successfully able to adopt both would be the eventual winners.

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

Tags assigned to this article:
Fin-Tech Industry

Around The World