The government is targeting one billion daily digital transactions, up from the current run rate of three billion a month, NITI Aayog CEO Amitabh Kant said on Friday. Fintechs in India can help solve for financial inclusion and integration and make the country a global fintech hub, Kant said, speaking at the inaugural session of a seminar organised by the Confederation of Indian Industry (CII).
“The latest RBI (Reserve Bank of India) numbers indicate that India records more than three billion digital transactions in a month, UPI (Unified Payments Interface) contributes more than 1.2 billion to the overall transactions,” Kant said, adding, “From three billion transactions in a month we are targeting a billion transactions per day and we are pushing for it. The emphasis on building technology commons through various interoperable layers has been the constant theme.”
As per the RBI’s June bulletin, the total volume of digital payments in March stood at three billion, with the number falling to 2.36 billion in April, a month which saw consumption and digital transactions both taking a nosedive amid the lockdown.
Fintech and digitisation have been the two themes that have become extremely prominent in the post-Covid world, Kant said. India has been building on its digital capacities for the past several years and it has prepared itself for disruptions that have happened, with the pandemic inducing many changes in payments and financial services.
Kant said that in the western world, leaders are still figuring out how to distribute benefits to their citizens. “India’s approach, in comparison, has been of equitable and inclusive technology growth. The government has been building the requisite infrastructure investments to ensure financial inclusion and ensure a big push towards digitisation,” he said.
India had hitherto remained a cash-driven economy, but is now transitioning into a formal economy, defined by access to bank accounts and formal means of financial services. More than 80% of Indian adults now hold bank accounts, up from about 36% in 2011, Kant added.
India’s fintech landscape is dominated by payments, billing, consumer payments, mobile wallets and merchant services, apart from lending and market aggregators. In recent times, the market has seen the emergence of various start-ups and solutions in the areas of wealth management, insurance, peer-to-peer (P2P) lending and robo-advisories.
The evolution of India’s fintech market has broadly followed the global trend of fintech adoption, Kant said, starting with payment and transfers, moving to personal finance and gradually leading to activities such as insurance, wealth management and traditional deposit savings accounts. “As the Indian fintech market matures, there’ll be huge opportunities for incumbents and new entrants alike to move up the adoption curve and expand the Indian fintech pie.
To my mind, favourable demographics, an active start-up ecosystem and increasingly knowledgeable workforce, the rising aspirations of the Indian millennials combined with the unique Indian financial services ecosystem — they all provide several opportunities for fintech companies to adapt and innovate,” he observed.
Fintech industry in India can solve for India’s unique needs — financial inclusion, access to credit, limited insurance reach — and can also serve as the solution provider of choice to the global financial sector in the areas of capital markets, fintech infrastructure and offshore hubs for global banks.
“These will all be increased forays in fintech to emerge as one of the global fintech hubs of choice and that is really the potential of India — to emerge as one of fintech’s global hubs of choice,” Kant said.
He proposed that going forward, the biggest theme will be to solve for financial inclusion and then achieving financial integration. The financial integration will be achieved by achieving parity across three layers — firstly, access to basics, that is, savings, equity markets and insurance; secondly, availability of products and services and thirdly, the ability to choose and customise. “The key areas that will need to be actualised for achieving financial integration are really to make ourselves presence-less, paperless and do seamless on-boarding,” Kant said.