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Manish Khera

Manish Khera, Founder & CEO, Happy, one of India's most innovative loan facilitators.

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What is in the to-do list for Fintech in 2019-2020 Fiscal?

After a year passed in total chaos, this year brings a ray of hope for the Indian fintech sector. So, let us quickly have a look at what is in the to-do list of the fintech sector in the year that we’ve just stepped into.

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After the IL&FS loan default last year, all eyes have remained stuck on the government and the regulatory since investors aggressively pulled out capital from the market. For the uninitiated, the IL&FS crisis, with IL&FS being a major infrastructure player in India, was much like the collapse of Lehman Brothers which ultimately triggered the global 2008 financial crisis. Thankfully, the government and the regulatory were quick to step in and prevent this undesirable scenario. It has given the sector a breather with recent policy overhauls enabling greater capital infusion towards the sector.

After a year passed in total chaos, this year brings a ray of hope for the Indian fintech sector. So, let us quickly have a look at what is in the to-do list of the fintech sector in the year that we’ve just stepped into.

Aiming high, staying low: What is the fintech planning to do this fiscal?

In a way or the other, the current fiscal would have several macroeconomic factors affecting it. The biggest of them is going to be the upcoming General Election. It goes without saying that all political parties will try their best to sway voters into their fold. There is a high likelihood of tall poll promises followed by relevant budgetary allocations to fulfil them. So, technically, requesting any allocations from the Union Budget later this year would be asking too much. Still, given the significance of the fintech sector, there are hopes that the government will do its bit. The rest, as always, the sector will do for itself.

Financial services expansion towards low-tier geographies: Indian fintech sector has been quite phenomenal in stoking digitization in India. The masses first became aware of the sector back in 2016 in the wake of demonetization, when about 86% of the currency was removed from active circulation. It was then that the fintech platforms such as mobile wallets and alternative lenders ensured that the Indian economy didn’t came to a halt. Today, given their proactive approach, digital technologies can be seen becoming a part of everyone’s day-to-day lifestyles. This year, Indian fintech players will try and delve deeper into the low-tier geographies as well as the Indian rural heartlands and expand the scope of financial inclusion.

Blockchain: The blockchain technology is changing the very fabric of finance across the globe. Blockchain, given its sheer technological brilliance, is enabling financial players to create infallible ledgers and paving the way for quicker financial settlement and smart contract enforcement. Apart from finance, the technology has several broader applications as well. Indian government has also announced its plans to develop IndiaChain based on the technology to create a centralized and unforgeable data repository. The fintech sector is also leveraging the technology for an array of use cases. Multiple fintech players have already developed their own fintech projects or are working on them.

Tighter Financial Management: Fintech lenders, as already indicated, are bearing the brunt of IL&FS crisis. Though RBI’s intervention has given the sector a breather, they are still sitting on the negotiation table without any bargaining power. This is preventing them from asking Indian banks for rate transmission. So, the fintech players will have to ensure a tighter financial management this year and ensure that they experience minimal losses and NPAs.

Unconventional Data Sources: Data has lately become the new oil in the global market. Data ensures greater visibility (of both market and consumers) and thereby, helps in taking prudent business decisions and spearheading product innovation initiatives. However, the problem here is that data sourced via government bodies is often fragmented. This makes value extraction from this data quite unviable and often leads to wrong logical implications. Fintech players will have to turn towards unconventional data repositories, including telecom service providers, utility players, etc., to refine these datasets and gain more visibility of the market.

Deep Learning: Artificial Intelligence has considerable advantages and helps us to achieve what we otherwise cannot. However, the technology’s true potential is far from being tapped at present. Currently, a majority of fintech players are leveraging Machine Learning’s task-specific algorithms. The sector is gradually moving towards deep learning given the high performance delivery of the model. 2019 will be a landmark year on this front for the fintech sector and will see multiple deep learning projects surfacing within the industry.

In the yesteryears, the Indian fintech industry has led several pioneering initiatives and developed ingenious models to solve longstanding financial woes of the country. According to forecasts, the sector will attain a market value of $2.4 billion by 2020, or double its market value as compared to 2016. Still, the sector has a long way to go. Let us hope that the year 2019 provides the sector a conducive growth environment and pushes it towards global brilliance

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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