China and India had the highest Fintech adoption rate (at 87%) out of all emerging markets, as of March 2020, according to a Research and Markets report.
The Fintech sector has been expanding during COVID-19 because more consumers and businesses are conducting transactions online. Many countries have attempted to “reopen” physical business locations, but it has been challenging because the Coronavirus continues to spread globally.
Industry professionals have argued that the pandemic has accelerated the shift towards digital platforms and services. The global average Fintech adoption rate stands at 64%, according to Research and Markets’ report.
The report states:
“The Fintech market in India was valued at Rs 1,920.16 billion (appr. $25.6 billion) in 2019 and is expected to reach Rs 6,207.41 billion (appr. $82.7 billion) by 2025, expanding at a compound annual growth rate (CAGR) of approximately 22.7% during the 2020-2025 period.”
Ramki Gaddipati, the co-founder and CTO at Fintech firm Zeta (India), writes that we’re witnessing a rise in Fintech adoption, as more people are conducting cashless transactions and contactless payments, even in developing countries like India. He argues that this is a key Fintech trend in the country, and he believes that traditional cash, debit and credit cards will be used a lot less in the coming months and years.
He adds that the increased demand for cashless transactions, due to COVID-19, should create more opportunities for online or digital wallet providers. Digital transactions should also help companies obtain customer data that may be used to offer new financial services, which would then create additional sources of revenue (but may also pose privacy concerns).
Gaddipati further notes that companies will also have to take cybersecurity more seriously. There will be significantly more consumers and businesses transacting online, which will give cybercriminals more chances to target them. That’s why it’s important for all Fintech service providers to have an effective cybersecurity plan, Gaddipati recommends.
As reported, many Fintechs have been bundling multiple services into a single platform to make it easier for customers to access them. Gaddiati believes consumers will be looking for service providers that can offer convenient options for them to take care of their everyday requirements through a single interface or app.
He points out that Fintech firms in India and globally have increasingly been adopting emerging technologies such as Big Data, AI, and machine learning. These breakthroughs allow service providers to improve their services.
For instance, some form of AI and Big Data algorithms may be used by credit assessment systems to determine whether individuals and businesses are eligible for loans.
Fintech adoption in India will also lead to more progressive regulations.
“This is just the beginning of a huge Fintech market…The Reserve Bank of India is rapidly adopting [emerging Fintech solutions and it’s] implementing [appropriate] policies.”
He adds that companies that can offer the best consumer experience and can respond effectively to regulatory challenges will be the most successful.