FinTech India – Mobile Phones, FinTech & the Incoming of New Players

The economic challenges presented in 2019 coupled with protectionist regulatory measures didn’t actually hinder the development of the FinTech ecosystem of India as the startups in this domain managed raising over USD 365 million in July 2019, while the total investments entering in this sector being USD 1.16 billion, per the research conducted by IBS Intelligence. 

The FinTech sector is poised to witness established firms entering with much optimism. These include companies such as PhonePe and PineLabs (both having raised 100 million), BharatPe (raising USD 75 million), PayMate (raising USD 25 million), and Niyo (raising USD 35 million). As reported by Tracxn, the total investments entering in India’s FinTech sector stood at USD 800 million in the 1st half of CY 2019 (up 14% from the USD 688 million raised in 1st half of CY 2018. Whereas in 2019, FinTech startups raised over $3.2 billion.

However, that’s not all; a couple of top smartphone vendors are also making their presence felt in the FinTech startups space of India. Xiaomi launches MiCredit, in association with domestic startups such as CreditVidya, ZestMoney, Aditya Birla Finance Limited, Early Salary and Money View (to determine credit worthiness and financing eligibility). Xiaomi is intending to offer digital lending (credit in the range of Rs. 1000 and Rs. 100,000 at reasonable interest rates). In March 2019, Xiaomi started Mi Pay (a payments app powered by UPI) in India as a unit of its Mi Finance ecosystem (having around 20 million registered users).

Following the trend of entering the FinTech domain are other popular mobile phone brands, viz. RealMe, OnePlus and lately OPPO, as well. OPPO Kash by OPPO, is scheduled to be launched in June 2020 in India, to offer 1-click micro-loans coupled with flexible repayment features. Realme India started its payments service, Realme Paysa in December 2019, with the aim of being top-5 new financial services offering entity in 3 years.

As reported by AsianAge, mobile wallet transactions in India soared by 40 times in the preceding 5 years. Much of this momentum can be attributed to the mobile phone-based financial services global standard of FinTech, the Unified Payment Interface (UPI – enabling secure, real-time transfers even without a bank account). Mobile wallet transactions in India have increased 40 times in the preceding 5 years. Compared to traditional financial models, mobile finance gives distinct advantages, as follows: 1. Digital transactions generally don’t cost when initiated. 2. In-person services and cash transactions are now innate elements of routine banking expenses. 3. In the case of mobile finance, clients maintain their balance money in digital format. 4. In the absence of transaction costs, sending and receiving money from individual banks or mobile service providers is easy. 5. Mobile communication leads to high-volume of data, usable by banks and service providers to develop optimally profitable services. 6. Traditional credit scores get done away with as the subscribers without financial credit history also obtain the necessary credit to run their small businesses. 7. Mobile platforms have bank accounts linked to their clients on a real-time basis, thereby, banks can process account information. 8. Microfinance is also made accessible to those no credit risk proofs.

As per Financial Express, smartphone users in India are poised to double to reach 829 million by 2022 (growing at a CAGR of 15.5%). Coupled with this, there is also the influx of mobile form factor in the Point of Sale (PoS) devices to accept device-based payments (the growth numbers have been forecasted at a CAGR of 54.2% in the period 2019-23, per the Mobile PoS Payments, Statista, 2019