Peer-to-Peer (P2P) Lending Services:
ompanies use alternative credit models and data sources to provide consumers and businesses with faster and easier access to capital. P2P lending allows online services to directly match lenders with borrowers who may be individuals or businesses.
Companies allow both private individuals and businesses to accept payments over the web and on mobile without needing merchant accounts. Transfers are made directly to the bank account linked to the payee in order to secure against fraud.
A few startup ventures, albeit registered abroad, are trying to address the gaps in remittance transactions (both inbound and outbound) as the current process is cumbersome and expensive. These startups aim to disrupt the current monopoly held by firms like Western Union and MoneyGram.
Fintech companies are also growing around the need to provide customized financial information and services to individuals, that is, how to save, manage, and invest one’s personal finances based on one’s specific needs.
Companies are offering a range of cloud computing and technology solutions, which improve access to financial products and in turn increase efficiency in day to day business operations. The scope of fintech is rapidly diversifying at both macro and micro levels, from providing online accounting software to creating specialized digital platforms connecting buyers and sellers in specific industries.
This includes crowdfunding platforms that enable the funding of a project or business venture by raising funds from a large number of people. Such internet-mediated platforms are gaining popularity across the world as access to venture capital is often difficult to secure. These services are particularly targeted at the early stage of a businesses’ operation.
While digital finance firms have profited from the government’s pro-startup policies and flexible regulatory provisions imposed by the Reserve Bank of India (RBI), formal institutions possess an installed infrastructure and legacy that is not easily replaceable. Fintech startups require to instill greater belief among Indian customers, already known for being conservative in their financial preferences. Figuring out how to market to their demands and influence financial behavior are some of the biggest challenges, as is setting up a strong and understanding regulatory infrastructure to keep pace with the speed of technological innovation.
India’s financial technology (fintech) sector may be young but is growing rapidly, fueled by a large market base, an innovation-driven startup landscape, and friendly government policies and regulations. Several startups populate this emerging and dynamic sector, while both traditional banking institutions and non-banking financial companies (NBFCs) are playing catch up. Earlier this year, the National Association of Software and Services Companies (NASSCOM) reported that around 400 fintech firms operated in India, boosted in large part by foreign investments in fintech-focused startup accelerators and incubators. NASSCOM predicts that India’s fintech software market alone could touch US$ 2.4 billion by 2020, doubling the current rate of growth.