Global lessons through Indian FinTech experiences, latest podcast by Theodora Lau

Global lessons through Indian FinTech experiences

The past decade has seen very interesting developments for global FinTech startups. One country that has been in the spotlight is India, whose central government’s demonetisation drive in late 2016 made global headlines. According to the latest EY Global FinTech Adoption Index 2019, China and India are now leading the emerging markets with 87% consumer fintech adoption. According to CB Insights, the Indian fintech startup ecosystem was been able to attract more venture capital funding than China for the first time, with a sizable portion of the funding coming from SoftBank Group’s $100 billion Vision Fund.

Opportunities abound in India with over 1.3 billion people. The country has made massive strides towards financial inclusion: According to the Global Findex Database, over 80 percent of the adult population now has bank accounts. A series of efforts has helped drive such progress, including Aadhaar, a verifiable 12-digit identification number issued by UIDAI to all residents of India. The Aadhaar identity platform is one of the key pillars of the ‘Digital India,’ and the Aadhaar program is now the largest biometrics based identification system in the world.

Along with a progressive government, consumers in India are tech savvy and fast adopters of digital technologies. Mobile penetration is expected to reach 90% by 2020, which will help drive further adoption of fintech tools, increasing the potential to uplift local communities via entrepreneurship and new job opportunities. Of course, for the ecosystem to truly prosper, merely expanding access to digital financial services is insufficient.

“With great power comes great responsibility; lending is easy, responsible lending is hard,” according to Lizzie Chapman, CEO of Zestmoney, which is a B2B2C fintech company that extends consumer credit through merchants using a proprietary AI-based machine learning decision engine, leveraging data points from the consumers’ digital footprint. The solution provides dynamic credit limit based on affordability, and it is tailored for households instead of individuals – taking into account the social dynamics and needs of the Indian market. It is this kind of solution which makes Indian fintech stand out.

While the majority of financial products in India are still designed for prime customers with proof of salary and an established credit score, there is an untapped market for those consumers who don’t have a credit card or other formal financing options. This includes the need for affordable solutions to help consumers “buy now, pay later” and help them build long term credit. Zestmoney also educates consumers about their credit score through its platform – so that they can better maintain a long-term financial relationship rather than being penalized for being consistently transactional alone.

With an NPS score of 76 and a fresh new round of funding, Lizzie and Zestmoney might be onto something. As demonstrated by countries outside the West, such as India and China, there is a growing need to provide services to demographics previously left behind by the formal financial services system. As our lives are becoming increasingly digital, companies can develop innovative and inclusive business models using new alternative data. The challenge is upon us to do so ethically and responsibly, with the best interest of the consumers in mind.

latest podcast by Theodora Lau

Listen in to our conversation with Lizzie Chapman on our new episode of Red Envelope on iTunes and Spotify, as we chat about fintech development in India.

See more articles by Theodora hereIni.

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