Why Join FinTech 2022? Why It is Getting More Popular after Covid-19 Hits? What are Indian Market Projections?
Hello guys, Kanhaiya here, I am an SDE Intern working in the FinTech domain.
So, we have heard the terms FinTech a lot, after Covid-19 hits. Before 2019 we as fresher used to hear only two terms, either a product-based company or a service-based company. But after 2019, this word was heard a lot. But FinTech is not new, It is very old in the IT domain.
FinTech 1.0 was introduced in 1866–1967. But after 2019, this domain has seen the growth of another level, If we will talk about the Indian market size in 2021, It was $31 billion and you will be surprised, If you will see the estimation for the range 2021–2025, Indian FinTech market opportunity is estimated to be $1.3 Tn by 2025, growing at a CAGR of 31%.
Of this, lending tech is likely to account for 47%(approx,$616 Bn), followed by insurance-tech at 26%(approx,$339 Bn) and digital payments are supposed to go at 16%(approx,$208 Bn). Here according to these figures, if we will talk about the position of the Indian FinTech market, It was ranked 3rd after US and China.
Seeing these figures you can guess how big the Indian FinTech market is going to be. There is no doubt that in the coming years, maybe after 10–15 years, the Indian FinTech market can hit the US FinTech market, If it will be growing to this rate.
But apart from this, when we talk about any tech, the first thing that comes to our mind, is what problems, Particular Tech is trying to solve?
FinTech is trying to solve some of the problems pointed out below but it is not limited to these only.
- Payment Processing
As we are leaving in 2022, where major startups already made a more powerful wave in the world of online payments but this industry can grow further than just giving the capability to smartphones to read credit cards.
Now brands that treat payment processing as an asset rather than a cost open the door to new frameworks for communicating with their customers.
As we have examples where payments are already migrating from physical banking to applications. These banking APIs solutions need to rise up to the challenge of ensuring business agility in a more complex financial ecosystem.
2. Blockchain Technology
If we will talk about this technology, this is a very recent technology but people often confuse blockchains as just a tech of cryptocurrency, actually, blockchain has evolved to mean more than just a tech of cryptocurrency.
Many startups are there who are picking this tech, developing payment solutions using this tech, and development in this technology is just now beginning to form the backbone of new methods for managing turn in financial transactions.
3. Access to Investment
If we will analyze it, FinTech has helped to expand access to investing people who traditionally were reluctant to invest money, traditionally focused on using and saving cash. Robert Kiyosaki says “savers are losers.” They literally lose money every month by keeping it in the bank.
So what do the rich do? They buy assets. They buy real estate, they buy gold, or they buy fine art. Now the traditional way was, as investment firms were targeting for an established male person to invest money and always used to ignore the women and age group of 18–24.
But now this is not the case, certain apps have focused on opening investment accounts and developing portfolios for customers who might have previously been ignored by the brokerage.
4. FinTech In Banking Domain
If we will see the digital finance and fintech app and their program, they are outsiders, they are not from the traditional banking industry.
For example, Paypal is not a bank and does not have the same rules and regulations that the banking industry needs to follow. Even if they are outside of the bank industry but the services these companies are offering, directly compete with the services offered by banks.
If we will take the approximation by PwC, The majority of financial sector executives (73%) perceive consumer banking as the one most likely to be disrupted by FinTech and more than 80% of banks believe they could lose up to 20% of customers to independent fintech companies in the next 5-6 years.
5. Neo Banking
Nowadays most people confuse digital banking with Neobanking and they are often interchangeably used but they are not the same.
A Neo bank exists solely online without any physical branches functioning independently or in partnership with traditional banks. Neobanks have advantages over traditional banking such as:-
- Automated services
- Easy-to-use APIs
- Rich insights to boost revenue.
- Provide real-time notifications and keep everything transparent.
The global neo banking market size was valued at USD 47.39 billion in 2021 and is expected to grow at a compound annual growth rate (CAGR) of 53.4% from 2022 to 2030 and transaction value in the Neobanking segment is projected to reach US$47936m in 2022(Indian).
6. AI and IoT
In the upcoming future and current times, data is and will be everything. Now the major goal of these FinTech companies is to understand the customer behavior with the help of the data, which they have collected.
If we will think deeper, there are many powerful and potentially revolutionary potentials in the intersection between FinTechs and IOTs.From offering simple investment and debt collection to personalized customer offering and keeping them busy with their platforms by giving rewards, there is no limit to the number of ways FinTech businesses can interact with customers through their devices.
With the help of artificial intelligence, fintech can leverage consumer data and can make IoT FinTech decisions by reading and analyzing consumer behavior changes over the past decades.
These were some of the problems, FinTech is trying to solve but there are lots of challenges with it. We will be discussing these challenges in the next blog.
Wow, we are done, shoutout to you and your patience.
Thanks for reading this article, hope you like it.
In this article, we discussed a small portion of the problems, which FinTechs are trying to solve and after reading the market size, you must have an idea about the future growth of this industry and if you are excited about this industry, just give it a try, it will not disappoint you.
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