UPI, QR codes, cards, and online payments – these are some of the financial terms that have become part of our daily life in the last few years. It was not that popular two decades ago. These new-age words are contributions of a rapidly growing technological area, the financial technology or fintech.
Fintech refers to modern technologies designed to simplify financial management and operations. When it originated, the purpose of fintech was just to serve financial institutions to improve and automate their operations. As time flew by, the application of fintech has moved by leaps and bounds to cater to numerous verticals in various ways.
Sectors spanning from education to retail banking, fundraising to non-profit, investment management to e-commerce are now utilizing fintech to manage their finances. The wide application of financial technologies has brought comfort and convenience to everyone, even to those, who don’t have access to banking.
The global population has become more dependent on new-age technologies in response to the COVID-19 outbreak and the associated regulations. Fintech was one such area. It’s undeniable that the pandemic has frozen all activities for some time. However, things did not deteriorate as worried, and demand for trustworthy financial technology increased like never before.
While a majority of the population continue to stay indoors, their financial transactions and management are done through digital channels. Market research agency KPMG says that the increasing use of digital financial services models will spur investments in ancillary areas such as fraud prevention, digital identity management, and cybersecurity.
As a result, the outlook for fintech remains positive amid the coronavirus-caused challenges and economic deterioration. Many countries have flattened the pandemic curve and life is expected to embrace a new normal.
The pandemic has not disappeared from our planet. More caution is required as restrictions and regulations are being eased gradually. At the same time, the virus outbreak has brought in shifts in buying habits. Adoption of contactless transactions and purchases has increased and it is likely to continue in the future.
In the coming days, small businesses are expected to move towards digital transformation faster as they start bouncing back to life. Let’s check out some of the trends likely to stay with us in the coming years.
The explosive growth of contactless payment adoption
We all know that social distancing was one of the widely accepted ways to control the coronavirus outbreak. As a result, the public adopted digital modes of payment vigorously. Contactless payments were accepted in shops, restaurants, and where not! Over the nine months into the pandemic, people have become more comfortable with this kind of money transaction and the trend is likely to carry on in the coming years.
More investment to flow into fintech
As the popularity of contactless payment swells, demand for secure payment, financial management, technologies will see a surge. Moreover, the application of fintech will become a necessity of the future business for all verticals. That means a sea of opportunity is lying ahead for fintech companies.
Online buying habit likely to grow
As mentioned above, the pandemic has brought in a major shift in buying habits. Some consumer behavior will fall back to earlier days when things go back to the pre-Covid days. Online stores and services have become more functional during these hard times. This change in the buying habit is the beginning of a massive change that is going to happen.
Fintech in India
India is one of the fastest-growing fintech markets, with a higher fintech adoption rate. Market research reports indicate that the digital payments value is expected to grow at a CAGR of 20 percent for the next few years. In figures, it represents an increase from $65 billion in 2019 to $140 billion in 2023.
Similar to elsewhere, India’s Fintech sector was also hit by the pandemic drastically. Due to an inevitable stop in economic activities, transactions and remittances showed a dip. Further, businesses were compelled to reduce their manpower to sail through the tide.
Although the sector is showing some signs of recovery, a return to pre-Covid time remains uncertain. Market players call for some revival measures, but how things will evolve is not predictable given that the pandemic is not over yet. Adopting an innovative and futuristic approach would help fintech players to overcome the repercussions of the deadly virus outbreak.
Besides, continuing efforts from the government are expected to give a boost to the fintech industry to get onto the recovery track.