Fintech to Revolutionize Financial & Insurance Inclusion: Amitabh Kant, NITI AAYOG
Use of financial technology (Fintech) revolution for achieving greater financial and insurance inclusion, besides lifting people above the poverty line would be amongst the biggest agenda of the Narendra Modi 2.0 government, NITI Aayog CEO, Mr Amitabh Kant said.
Sharing his outlook at the ASSOCHAM Fintech Summit: “Emerging Technologies disrupting the Financial Sector”, Mr Kant said India is the third largest and one of the fastest growing FinTech markets globally, attracting about USD 6 bn in investments since 2014. Industry reports estimate that India’s total FinTech software and services market is expected to grow to ~USD 13bn with the software market alone set to touch USD 2.4 bn by 2020.
The transaction value for the Indian fintech sector which was approximately USD33 billion in 2016 is slated to reach USD73 billion in 2020, growing at a five-year compound annual growth rate (CAGR) of 22%. The most dominant theme of India’s FinTech growth is the Digital Payments space, market size of which is expected to reach US$1 trillion by 2023 from the current market size of USD 200 bn. As much as USD 1 Trillion, or 60% of retail and SME credit, will be digitally disbursed by 2029, said Mr. Kant. ASSOCHAM President Mr B K Goenka agreed with the NITI Aayog CEO, stating the Fintech can meet a huge untapped demand in areas, where the traditional delivery channels were unable to reach.
In his inaugural speech, Mr Kant said the government has played the role of an active enabler for the FinTech industry by disrupting payments. IndiaStack – through its 4 layers viz. Consent (permission), Cashless (UPI, Payments Bridges and Systems), Paperless (digital locker and digital signature) and Presence-less (Authentication through Aadhaar), has powered the growth of FinTech startups. Government, in collaboration with the industry, has built the world’s most advanced payment system, Unified Payments Interface.
The Unified Payments Interface –has taken less than 8 months to reach US$1bn in transactions, fastest ever globally by any financial product. In addition to Bhim, UPI has empowered several private payment systems like Paytm, GPay, Mobiwkik, PhonePe and Whatsapp. With UPI, you can transfer money in India, just as exchanging a message on Whatsapp. The numbers that have been achieved using UPI are truly phenomenal, said CEO, NITI Aayog.
FinTech industry can meet India’s unique needs (viz. financial inclusion, access to credit, limited insurance reach etc.) and can also serve as the solution provider of choice for global financial sector (viz. leadership in RegTech, capital markets Fintech infrastructure and offshore hub for global banks’.
The financial industry is seeing three major trends globally a) Disintermediation at all levels of the value chain and the rise of P2P business models, b) The development of unique payment interfacesand c) use of advanced data techniques and AI for highly personalized financial services.
The applications of Artificial Intelligence and Machine Learning in data analytics and customer service create the opportunity for exponentially more personalized and faster customer experiences, significantly better insights, and, automation of back-end workflows. Typical use cases of AI include customer acquisition, KYC and on boarding, Accounts and Loans, Customer Service, Brand Management and Risk & Credit.
Blockchain technology’s power to disintermediate opens the door to a host of use cases, especially in the insurance and P2P lending models.Globally as well as in India models . He also said NITI Aayog’s FinTech Conclave, organized on 25th March 2019, was aimed at discussing India’s existing capabilities in FinTech, and the impediments faced by the industry, and build the narrative for future strategy and policy efforts, and to deliberate steps for comprehensive financial inclusion. More than 250 thought leaders from banks, insurance companies, startups, investment community, central and state governments, ecosystem enablers and regulators were engaged in the discussion across five tracks like Digital on boarding of Customers/Merchants for Financial Inclusion, Building Financial Products for Bharat and Millennial India; Emerging Areas of FinTech; Fast Tracking Investments in FinTech Industry; and Financial Inclusion of MSMEs.
ASSOCHAM, being India’s Apex Chamber for Commerce and Industry, has always been the front-runner in promoting various technologies in the country and trying to understand how these technologies can be leveraged for the country’s growth and make India globally more competitive. This Summit is another step in the same direction, said Mr. Goenka.
Others who also spoke during the conference were Mr. Sunil Mahta, Chairman, Indian Banks Association and M.D. & CEO, Punjab National Bank, Mr Vivek Belgavi, Partner, India FinTech Leader, PwC India, Dr. Lavneesh Chanana, Chairman, ASSOCHAM National Council on IT/ITes & e-Commerce and Mr S.C. Aggarwal, CMD, SMC Global Securities.