‘Fintech, start-ups will boost economy’
The stakeholders involved in the sector are finding rewarding ways to ensure inclusive growth through innovative services and products in the sector. The report was released during the CII Connect event in Chennai.
PUNE: A recent report by the Confederation of Indian Industry (CII)-KPMG India, titled Fintech and start-ups fuelling India’s USD 5 trillion economy stated that the transaction value for the Indian fintech sector is estimated to be approximately USD 33 billion in 2016 and is forecast to reach USD 73 billion in 2020 growing at a five-year CAGR of 22 per cent.
The stakeholders involved in the sector are finding rewarding ways to ensure inclusive growth through innovative services and products in the sector.
The report was released during the CII Connect 2019 event in Chennai on Thursday.
The report takes a deep dive into the digital disruption in the Fintech sector and the role of startups in boosting the economy.
The report states that for the Indian economy to reach the USD 5 trillion mark, it would need to rise at a rapid pace of 12 per cent CAGR, up from less than 6 per cent currently and areas like Fintech and start-ups can help in achieving the desired growth. The report also shows how some of the startups in India are driving the economy by solving unique problems.
The report, which is divided into two parts, stresses on the need to build new-age financial infrastructure for inclusive growth and role played by start-ups in changing the socio-economic structure of the country.
“In the last decade, India has made great strides in setting up a robust, world-class financial infrastructure. Be it the Immediate Payment Service (IMPS) system, which is rated the best fast-payment network in the world by FIS, or the UPI, a layer on top of IMPS for easy, direct bank-to-bank transfers, the country has seen rapid innovation in financial infrastructure in this period. The principles of open banking will form the base of a lot of innovation and competition in the future among fintech firms,” the report stated.
As a way forward, the report states that there is a need for the creation of a holistic, secure and consent-based data-sharing framework among all stakeholders. Importance must be given to expanding financial literacy programmes by the government and industry to ensure larger adoption at scale.
Futuristic technology such as 5G networks, quantum computing, etc., will also form the base of a lot of innovation in low-cost, mobile financial infrastructure, and even help in overcoming the current challenges in complex technologies such as blockchain for financial services.
On ways to boost start-up culture in the country, the report suggests that the government can create various exchange programmes and partnerships with nations, corporates and academia to encourage start-ups to go global. They can also try and partner with global universities and sponsor research and development.
“Globally, the private sector and corporates can tie up with academia to sponsor research and development in various fields. Indian academia needs to make research an intrinsic part of its existence by allocating more funds towards scholarship and research under its various programs,” stated the report.