‘Fintech startups on-boarding, integrating new-to-credit customers in line with country’s digital India ambitions’

It is unimaginable to think about conducting daily transactions, without the existence of digital payments and other forms of technological influences we currently see in the financial sector. However, the demonetization of 2016 transformed the sector completely, as a country which was until recently fully dependent on cash-based transactions, switched to digital methods overnight. There was a lack of awareness about the digital payments system and people had several apprehensions about digital banking frauds in the mobile and net banking modes of transaction.

Initial Journey to Digitization

Further to this, demonetization has ensured the disruption of the payments industry, making cash payments the conventional and traditional method of the transaction, instead of the primary position it enjoyed in the country’s financial system. Additionally, internet penetration has played an equalizing role in bringing the smallest neighbourhood store, as well as the wealthy merchant of a high-end store in the mall onto the same platform. Payments through digital gateways such as mobile e-wallets and direct bank transfers are being transacted through the scanning of QR codes.

The change we are witnessing is so unprecedented that customers are increasingly visiting only those grocery stores that offer digital payments. They are actively deciding where to take their business, as merchants who accept only cash transactions tend to lose out on opportunities to entice customers to purchase from them. Technological innovation is taking place at a rapid pace, while smartphones and E-wallets have become ubiquitous, resulting in the slow but steady phasing out of paper currency from peoples’ lives.

Fintechs have played a significant role in reaching such milestones, giving a strong impetus to digital avenues through a consumer-oriented prism, wherein, applications have been designed keeping the difficulties faced by millions of people in mind. Financial inclusion has been a long pursuit in the past few decades for many governments. It is being realized only now, through state-of-the-art fintech innovations through digital instruments such as UPI and QR Codes.

Disruptive Technologies and Transformations

UPI technology has ensured the smooth running of a robust system where an instant transfer of payments from one bank account to another can take place, enabling frictionless experiences for customers. The speedy growth has only encouraged up and coming start-ups to integrate the UPI payment gateway into their models and applications, improving app usability as a result.

In addition to UPI, the usage of QR Code procedures has also gained popularity, as people can make instant payments through a simple scan of code through mobile phones, saving merchants both time and resources in handling cash transactions and machines. Therefore, these modes have empowered both the customer and the merchant, giving them several options to make monetary transactions.

Also read: CBDT: Payment gateways won’t have to pay tax on e-commerce transactions under this scenario

Fintech boom, Startups, and E-Commerce

Fintechs have spearheaded their efforts upon realizing the market demand for financial services, which have eased up everyday transactions for people. Their competitiveness and zeal made them enter a race to create the most sophisticated, yet user-friendly technologies. This reflects their positive attitude, high level of flexibility, and openness to have a vision for changing India digitally while learning from emerging players across the world. Through continuous engagement and feedback mechanisms with customers, start-ups were able to learn and re-invent themselves, thereby bringing innovations in technologies.

Moreover, realizing the growing competition, several companies have begun incentivizing digital transactions. Each time a user makes a payment digitally, he/she receives a cash-back or other price benefits, and it is usually a token amount encouraging them to make more transactions at every POS.

Furthermore, the meteoric growth experienced by the e-commerce industry in the past few years has also led to the proliferation of digital procedures, as people are surely moving away from ‘cash on delivery’ payments to prepaid options. Following these enormous transformations, the Government of India and RBI realized the growth potential of the sector, working steadfastly with Indian banks and NPCI to boost digital payment channels. By regularizing digital mechanisms, they are speeding up the creation of a sturdy ecosystem, enabling fintechs to fearlessly pursue their business expansion plans, while creating last-mile connectivity.

Conclusion

The financial sector revamp is likely to take the Indian economy on a positive growth trajectory through the on-boarding and integration of new to credit customers, in line with the country’s digital India ambitions. In a nutshell, fintech has eliminated barriers that were created earlier in the payment methods, resulting in greater economic activity and the creation of new wealth.

Digital centric customers are looking for innovations such as these, as everyone can witness a visible change in administration, monetary transactions, and the manner in which seamless functions are taking place without corruption and loss of resources. The positive disruptions are being appreciated, as tech innovations are enriching the ecosystem and giving reasons for people to trust the digital path forward.

Zafar Imam is CEO of Oppo’s fintech subsidiary Finshell. Views expressed are the author’s own.