Despite facing funding challenges and navigating a complex market environment, India’s fintech sector continues to grow and evolve, with several emerging fintech trends in India poised to shape the future of the industry.
According to a new report by PwC India and ASSOCHAM, these trends include ecosystem banking, generative artificial intelligence (GenAI), embedded finance, and more.
The report states: title “Fintech – Propelling India’s $5 trillion economy by fostering innovation, enabling inclusivity and building a sustainable future” provides an overview of the current state of fintech trends in India.
It highlights key developments, regulatory changes, emerging market trends and future focus areas.
Generative AI Driving Indian Banking and Fintech Trends
Generative is one of the biggest Indian fintech trends highlighted in the report, as Indian financial institutions are increasingly adopting the technology by building in-house capabilities or forming partnerships to streamline processes and create new solutions.
For example, State Bank of India (SBI), India’s largest financial institution, is considering adopting AI capabilities in the long term, starting with internal use by employees, says Nitin Choo, head of digital banking and transformation at SBI. said It will be published in the Economic Times of India in July 2024.
HDFC Bank, India’s largest private sector bank by revenue, is currently running a proof of concept to help programmers write code faster. It is also looking at using large language models to interpret key data repositories such as statements and provide meaningful analytics to relationship managers, phone agents and other sales and service personnel.
In an interview with Fintech News Network, Gautam Anand, SVP and Head of Mobile Banking at HDFC, explains how the bank is leveraging Generative AI to serve its over 120 million customers.
Technology company Microsoft is working with the likes of Axis Bank and Aditya Birla Capital to implement genAI-powered processes to transform contact centres, boost sales and reimagine claims and underwriting processes.
Ecosystem banking helps FSIs capture untapped opportunities
Another important fintech trend in India is ecosystem banking, where financial service providers offer holistic solutions to integrate financial services within the non-financial ecosystem.
This approach enables financial institutions to capture untapped market opportunities and increase customer loyalty by addressing specific needs across the customer value chain.
An example of ecosystem banking is: partnership Agricultural Insurance Company of India and insurtech firm Wingsure have partnered to leverage advanced technology to improve access to insurance products for Indian farmers.
Another example is ICICI Bank’s ‘Campus Power’ digital platform. Designed It assists students with their financial needs and provides value-added services to higher education in India and abroad.
Embedded finance will foster collaboration between FSIs and non-FSIs
Embedded finance is also emerging as one of the major fintech trends in India, offering opportunities for collaboration between traditional financial institutions and non-financial services companies.
This integration will give financial institutions access to new customer segments, leading to increased customer acquisition and improved engagement.
For non-financial services companies, Embedded Finance can increase customer loyalty, create new revenue streams, and improve customer experiences.
For example, partnership An agreement has been signed between Royal Sundaram General Insurance and Indian Railway Catering and Tourism Corporation to enable the sale of embedded insurance policies along with e-ticket purchases via Insillion’s API platform.
Revenue from embedded finance in India is expected to grow at a compound annual growth rate of 30.4% between FY22 and FY29, reaching USD 21.12 billion by then.
Going beyond financial inclusion to comprehensive inclusion
Total inclusion is another key theme in the financial sector. It goes beyond financial inclusion to focus on participation of women and people with disabilities, and provide opportunities across rural and urban demographics.
Fintech startups and financial institutions are leveraging innovative distribution strategies that combine digital infrastructure with physical outreach to increase penetration and awareness among diverse populations.
One notable example is Union Bank of India, one of the largest government-owned banks in India. Made The company has made significant efforts to increase accessibility and inclusivity for customers with disabilities, including talking ATMs, debit cards with tactile marks, and multilingual screen readers.
CBDC will shape cross-border finance
Other emerging trends highlighted in the report include the introduction of central bank digital currencies (CBDCs), advances in cross-border finance, alternative investments, longevity finance, and the rise of green finance.
Cross-border finance requires financial institutions to address existing challenges such as complex payment procedures, long transaction processing times, and high remittance costs. Advances in this area will streamline international trade and reduce costs for consumers. Meanwhile, CBDC development will continue to gain momentum as the Reserve Bank of India pushes ahead with its Digital Rupee project, aiming to improve the efficiency and security of digital transactions.
Rising investment appetite among the middle class and those living in rural areas will drive demand for alternative investments. This growth will be supported by improved digital and financial literacy, making these investments more accessible to a wider range of people.
Fintech growth prospects in India
India’s fintech sector has seen significant growth in recent years, driven by rising smartphone penetration and strengthening digital payments infrastructure. The market is estimated to be worth approximately USD 689 billion in 2023 and is projected to surge to USD 2.1 trillion by 2030, expanding at a compound annual growth rate of 18% from 2023 to 2030.
Insurtech, which already accounts for a significant share of the Indian fintech market, is expected to grow further owing to increasing adoption of digital delivery channels, technology-enabled underwriting, and automated claims management.
The digital lending sector is expected to grow on the back of advances in credit scoring and underwriting with the aid of AI and machine learning (ML). The outstanding loans of digital lenders in India are projected to grow from $38.2 billion in 2021 to nearly $515 billion in 2030, a compound annual growth rate of 33.5%. According to A 2023 report by IIFL Fintech.
Meanwhile, WealthTech is expected to triple in size, reaching over USD 31 billion in market revenue by 2030. This growth will be driven by the adoption of cutting-edge technologies such as AI, ML, blockchain and big data analytics, as well as the emergence of new business models.
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