Seamless online banking transactions, digital payments, and instant online loans all of this have become a way of life for many Indians today. As internet connectivity expands across all corners of the country and smartphone sales increase every year, fintech solutions are making financial services readily available to more people.
At 87%, India had the highest fintech adoption rate in the world in 2021. The market opportunity for fintech products is forecasted to reach $1.3 trillion by 2025, growing at a CAGR of 31% from 2021 onwards. Out of this, the lending tech will account for 47%, while digital payments will occupy 16% of the slice.
This is an ever-evolving landscape. Each year we encounter new technologies that make our lives better. So what’s in store for the year 2022? Let’s take a look.
Buy Now Pay Later (BNPL) Will Continue to Flourish
BNPL has emerged as a highly popular cashless credit avenue for digital-savvy young consumers. At its core lies the principles of transparency, cost-efficiency, and customer-centricity. BNPL companies like LazyPay are well poised to address the huge gap in credit card usage in the country. Most people can’t apply for credit cards without credit histories, and many remain reluctant due to the huge fees involved. Fintech organisations utilise scalable technology and can access alternative data for assessing buyers’ creditworthiness and enable faster onboarding. This has led to easy access to credit for many young Indians.
With consumer shopping habits experiencing a drastic shift towards e-commerce since the pandemic, BNPL will continue to remain in traction. There will always be times when people are cash-strapped and yet have to make necessary small and big-ticket purchases. The fact that BNPL offerings can be availed in offline stores through PoS devices means that small businesses will leverage this technology to increase sales and remain relevant. India’s Buy now pay later market is expected to grow to $45-50 billion by 2026, from $3.5 billion in 2021.
The Rise of Digital or Neo Banks
Neo banks have a critical role to play in the government’s quest for a cashless economy. These are banks with no physical presence. The purely digital banks will offer many benefits to customers in the form of lower fees, reduction in processing time, competitive interest rates, and huge convenience. Exceptional UI/UX remains at the heart of quick customer adoption. Further, these digital banking apps offer seamless real-time updates on payments and enable cross-border payments at competitive rates. Over 61% of millennials in India were willing to switch from their conventional banks to digital-only experience in 2021. This will drive large banks to partner with fintech firms and launch their neo banking apps. The former will provide access to their vast customer base, and regulatory approvals, while the latter will ensure cutting-edge and agile technologies.
New Ways to Make Digital Payments
With growing online purchases, cheap internet data, and increased smartphone access India is outpacing the world in digital payments. The presence of Aadhar-based KYC is further expected to propel this sector to reach a $1 trillion size by 2026, from $300 billion in 2021. Several technologies drive the payments landscape in India:
- Unified Payments Interface (UPI)
- Mobile wallets
- Prepaid cards
- Unstructured Supplementary Service Data(USSD)
In 2022, we can expect more usage of advanced technologies like blockchain, AI, and ML in the payments space. For instance, AI-based technologies could help reduce payment fraud. India’s plans to create its blockchain-based digital Rupee could create a much more efficient, transparent, and cheaper payments ecosystem.
Your favourite apps might have sent you notifications about the implementation of card tokenisation from 2022 onwards. As per RBI guidelines, online platforms need to erase your stored debit or credit card details and replace them with a token to secure your data. In 2022 and beyond, we expect this to be implemented across apps and platforms. Tokenisation refers to replacing your card details with a code or “token”, which would be unique to you and the device. This makes your transactions safer as the actual card details won’t be shared with merchants during processing. So, no longer keying in the 16-digit card number, expiry date, and CVV each time you order online.
Robotic Process Automation (RPA)
Today, the financial services industry uses RPA to automate tedious back-office processes, such as KYC, onboarding, account closing, credit card processing, etc. They will use the time and resources to enhance customer services and other pursuits, enabling them to increase cost efficiencies and improve their workforce agility. You will notice this technology usage across companies, from insurance to trading platforms.
India has matured into a global fintech hub. The sector holds enormous promise to drive financial inclusion further and contribute to economic growth. By leveraging newer technologies, LazyPay aims to be a part of this exciting landscape in the country and offer its customers easy access to credit and convenient payments.