Just like the previous two years have been, 2018 was a big year for the Fintech industry in India. This sector has grown with a Compound Annual Growth Rate (CAGR) of 22%, which is about three times the GDP growth rate of the country, in the last year alone. The Fintech sector is one of the most rapidly changing sectors in the country today.
While it was somewhat dormant just a few years ago, the sudden drought in cash brought on by demonetization in November 2016 gave this industry a huge boost with the number of online transactions increasing exponentially by the day. As such, Fintech has been at the forefront of rapid economic growth in the last couple of years. Let us look at a few of the major developments that happened in the space in 2018:
- The banning of Cryptocurrencies
The Reserve Bank of India shocked all of the cryptocurrency marketplaces in India with a sudden order banning all cryptocurrency transactions in India. This order banned all Indian banks from taking part in any transactions involving cryptocurrencies and dealing with firms who use them. This happened at a time when the value of cryptocurrencies was at a peak and disgruntled a lot of investors in India wishing to enter the space. However, this ban could not have come at a better time considering the fact that the cryptocurrency market decreased by half and lost almost $200 billion in value within the next two months.
- The Growth in Mobile Wallets
In light of other direct payment options like UPI, the growth in transactions involving mobile wallets has gone down compared to last year. As such, these mobile wallet companies are adding new and more exciting features into their services and forging tie-ups with other service providers like e-commerce platforms and cab service providers to continue being relevant in the field. Many of them have also introduced UPI within their mobile wallets to make them more easy to use and convenient for customers. Paytm’s UPI payments alone saw a growth of 600% in the last six months of 2018 alone.
- Increase in Online Lending Platforms
The number of online lending platforms has steadily risen in the country during the last few years. Between 2015 and 2018, the share of online lending platforms in NBFC’s (Non-Banking Financial Company) has increased to twice the previous share showing a 35% annual average, while the loan share of traditional banks in MSME’s (Micro, Small & Medium Enterprises) decreased from 95% to 90% within the same period. This growth in online lending platforms can largely be attributed to the vast improvements made in the fields of artificial intelligence and data analytics.
- Collaborations between traditional banks and Fintech companies
Considering how the Fintech sector has managed to overtake the traditional banking system when it comes to offering new and improved services to the customers in the country, several banks have now joined hands with Fintech companies to offer their customers better services. Fintech courses have managed to make the processes of automating services, acquiring customers, credit profiling etc. much easier and more efficient for traditional banks.