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Thursday, July 21, 2016

FinTech startups in India - The way forward

Authors: Shivali Vij and Amit Datta
Institute: Indian Institute of Management Lucknow
In the current era of digital revolution, technology has changed the way in which we lead and live our lives. This is visible in almost all areas including Finance. Financial Technology or FinTech refers to the digital platforms and services solutions in finance related areas like banking, personal finance, peer-to-peer payments, insurance and many more.
Financial services industry had huge barriers to entry in the past: unmatched distribution through branches; insurance and interest on savings, expertise in credit analysis through data as well as extensive network.
Using technology, start-ups are now innovating products and services and disrupting the industry, in segments like consumer banking and payments, insurance and asset management. FinTech innovation is fueled by a large market base, an innovation-driven startup landscape, and friendly government policies and regulations. We observe a 7% CAGR in FinTech start-ups.
According to Accenture, global investments in FinTech ventures tripled to tripled to $12.2 billion in 2014 from $4.05 billion in 2013, a 201% YoY increase.
India provides a huge potential for startups in this area. From getting into untapped segments to targeting foreign markets, FinTech startups in India are pursuing multiple dreams. The Indian FinTech market is expected to double to $2.4 billion by 2020 from a current $1.2 billion as forecasted by NASSCOM.
An encouraging regulatory environment has enabled the launching of 174 FinTech startups in 2015 alone , as per data analytics company, Traxcn.
Market Potential
The Indian economy has been traditionally driven by cash transactions. But with the high penetration rate of the Internet, e-commerce and smartphones this scenario is fast changing. With 40% the population is unbanked, 87% of the payments made in cash and 53% of the population owning smartphones which is expected to rise to 64% by 2018, the India market hold a promising potential for FinTech startups. The transaction value of the India FinTech market is estimated to be $33 billion in 2016 and is forecasted to reach $73 billion by 2020 growing at a CAGR of 22%.
When compared to the global markets, the growth may not seem to be overwhelming, but if the large pipeline of easy-to-hire and inexpensive technical workforce is considered, India shows huge growth potential. Mobile wallets, internet banking, cashless transactions have redefined the way people access financial services. With a high rate of adoption, especially among the youth, India is positioned as an attractive market for FinTech startups worldwide.
Growth opportunities in the FinTech market
Next generation payments (Current adoption - high) and P2P lending (Current adoption: medium):  FinTech played its role by converting a device people already own- a mobile phone- into a sales system. Startups offered unique prepositions like allowing businesses and individuals to lend and borrow between each other, alternate credit models (using data analytics) to price risks. Lower operation costs by removing human intervention and savings in infrastructure meant all cost savings were passed on to the customer. The RBI has promoted the Unified Payments Interface and the Bharat Bill Payments System and has set up a committee to  understand the risks involved and emergence of new models, and assess how the banking system could then adapt and respond to them.
Bank in a box (Current adoption: medium): Banking solution designed for a non-bank financial institution wishing to open a deposit taking division and to operate on an inexpensive technology platform, with flexibility for growth. They exploit Software as a Service (SaaS) and reduced the capital expenditure for themselves possibly through partnerships, to cover call center, back office; fulfillment; account reconciliation; check processing and other services. Several financial institutes are looking into this for rapid market penetration and ease of introducing digital lending products.
Financial inclusion (Current adoption: high): Advantage of FinTech is that they cherry pick their small segment and use analytics to make offerings to them.  Indian FinTech startups target unique segments like education (Shiksha finance) which provides loans to parents for fees and to schools against assets. Catalyst labs links farmers to bulk buyers of crops, verifies quality and acts as a digital market. Profitbooks is taking over the accounting and inventory tracking industry.
Blockchain (Current adoption: low): FinTech are using solutions that leverage biometrics for fast and robust authentication coupled with technologies like Blockchain to achieve best ever security standards.
Even the government is promoting technology using in finance industry by introduced RuPay. RBI has even proposed a committee to study the usage of Blockchain technology to reduce the use of paper currency, recognizing the power of FinTech.
Robo-advisory (Current adoption: medium): Automated investing and tailor made financial products are another offering that FinTechs provide. Wealth managers are increasingly using analytics solutions at every stage of the customer relationship to increase client retention and reduce operational costs.
Challenges were faced by the traditional industry as to how to cater to small investors, but now automated FinTech solutions can run algorithms for a customer’s risk appetite and generate a portfolio just for him.  Such advisory capabilities will put pressure on traditional advisory services and fees and will transform the delivery of advice.
Security and biometrics (Current adoption: medium): Dynamic Signature Facial Finger Prints Voice and Iris are now being used to authenticate a person’s identity, thereby removing the need to enter pin every time.  They also help strengthen the fraud detection mechanism.
Insurance (Current adoption: low): 5 fold increase in global InsurTech start-up investments has been observed in 2015. FinTech is changing the standard customer offerings; like customer centric designs create compelling user experiences (e.g. quotes obtained by sending a quick picture of the driving licence and the car vehicle identification number (VIN)). Auto insurance pay-as-you drive is now the most popular usage-based insurance (UBI) where FinTech has played a role.
Customers’ demands for personalised insurance solutions. The ability to access and capture remote risk data gives FinTech edge over the traditional FS models. Start-ups like Lemonade are introducing peer-to-peer insurance model and employing psychologist Dan Ariey for changing the way industry looks at insurance selling. Indian startups can explore this huge segment.
Remittances (Current adoption: medium): Transfer and payments in remote areas, aid in managing exchange rates and premiums. eKYC Aadhar enabled KYC is helping startups like ZestMoney make online payments and set EMI installments without customer having to use the credit card. This fastens up the approval process from 2 weeks to 2 hours.
Analysis of FinTech startups in India: Shiksha Finance
An RBI-licensed, non-banking financial company (NFBC) that offers microfinance to middle and low income school students in Tamil Nadu. Students are provided loans for education, books and uniforms, while schools are provided loan for infrastructure expansion.
Shiksha Finance has successfully dispensed loans that amount to INR 10 crore to over 85 government-recognised schools and over 100 individual students in eight other schools.
Business model: Raised money through equity and debt, on which they pay interest. They earn interest from loans offered to schools and students.
Repayment incentives: If EMI is paid on time, the loan can be repeated; Fees is paid directly to schools to avoid misuse of funds; Interest rate as low as 50% of market rate; Schools get easier repayment periods like 24-60 months in comparison to 10 months by banks.
Competition: No banking or finance company, at this stage, offers loans for school student education.
Issues FinTech startups may look into
Youth preference for convenience and speed accelerates FinTech, but regulators have difficulty assessing the risk profile of these startups. Online banks rely on transparency, service quality and unlimited global access to attract Millennials, who are willing to access multiple service channels.
Challenges: Regulatory tolerance for lapses on issues such as anti-money-laundering, compliance, credit-related disparate impact, and know-your-customer will be low.


It is now just a matter of time before we see a rise in the number of FinTech startups coming up to aide the financial institutions. But unlike other areas, this will be a totally collaborative approach taken by the multiple unique ideas that will come up. They will pave the way for the more traditional players to come in.
Although many will raise questions like security of transactions, privacy of information, threat of data-theft to the extent that economies can be brought down overnight - it is just a matter of time that technological prowess and development over-shadows these. With increasing literacy, higher adoption of technology and greater internet penetration probably FinTech startups are the best way in which small business owners can grow beyond the identity of the owner. Finally, it is just a wait for the policymakers to allow the digital revolution to take over and create a transparent and accountable platform for the betterment of the society.
FinTech Innovation Lab, Accenture Consulting
India emerging hub for FinTech Startups, NASSCOM
‘Cash outlook: India’, IBGC working paper 13-01 - Forecast of mobile users in India - FinTech India
KPMG - FinTech in India: A global growth story - The Reserve Bank of India announces Blockchain committee - Still stealthy new insurance company lemonade continues to impress - Cutting through the noise around financial technology
PWC FinTech global report - FinTech landscape in India 2016

Thursday, March 28, 2013

And finally motion pictures!

Two and a half years ago I began this journey as a budding engineer. At that time I thought that I would study hard, get a great campus placement and will walk off with a million dollar job. As time passed by things changed. This would be engineer turned into a graphic artist - then a software developer - then a web developer - and finally a film producer! It's along and difficult journey ahead. Lets see where it leads me to.
Being a film producer and managing your own production house is a pretty tough job. But again anything can be done for quality script, quality music and a quality motion picture. I never dream of making it to the Oscars, but yes, I do dream of producing a few quality movies! It is a difficult journey ahead, but as said, there is nothing to fear but fear itself.
On the 26th of March, 2013, I finally started my own "F-wing Production House" and started working on my first movie - "Deeds not Words". This will be a short movie and will be released sometime this summer!

Take a look at the official trailer of my first movie - "Deeds not Words"

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Sunday, November 18, 2012

Back in 3D

After a really long break from blogging, I'm back on the eve of my semester exams. Things got really catchy as I was bored with web design and decided to take some time off it. Meanwhile I did do something new. :) I concentrated on 3D design, not just any 3D design but real time automobile modelling. Being a mechanical engineer, it was a hell lot interesting and surprisingly some of the subjects in my course, especially CAD/CAM, helped me a lot (I didn't expect them to). After a lot of hard work, research and practice I came up with good models of the Lamborghini Murcialago SV and Ferrari 458 Italia. I worked them in Cinema4D and put don the finishing touch in Photoshop. Although the photoshopping was just to put a few filters to enhance the colours.

 Well, it would have been much easier if I did these in Maya, but I'm well suited to the C4D environment. It's really easy and you do get quite a lot of handy tutorials online that will help you to get through with the HyperNURBS and Wireframe designing (believe me, these are the tough parts of designing, material designing and lighting is a lot simpler). If you are new to 3D modelling, you can check out C4Dcafe and other websites for some really cool plugins and tutorials. These include both animations and still image designing and the important part - rendering.

If you are interested in getting the source files of these models, just send me a mail at

Thursday, July 26, 2012

Vacation Tracker on Android - LungoJs

After hanging around a lot with PHP and CSS, development of web apps for PC's got somewhat monotonous. Hence, I decided to move on to develops web apps for the tablet and the smart phones. Being the possessor of a Sony Xperia U, Android was the obvious choice of platform. Instead of hard coding the entire application with javaScript I decided to use the framework called LungoJs. The first look at the framework convinced me that it is definitely cool, but lack of documentation and support made it really cumbersome. It took a hell lot of time for me to figure out how to use the Framework. At this point I must tell you that it is not at all that tough as I felt, its just the lack of support.  
 The application itself is very simple. The routine is stored in a MySQL database. All I need to do is to update the routine if I'm absent in a particular class. The absent dates are stored in the database. The application automatically calculates the percentage of classes I have attended in each subject and warns me if I'm low on attendance.
The application is currently in alpha stage of development and major features have already been implemented. The last module that I'm working on is trying out a algorithm that will help me to plan my classes so that I can cope up if I'm low on attendance. A bit of AI ;)

Thursday, July 12, 2012


Finally my first corporate based application reaches testing phase. Taskware, as it is being called, is an advanced task management application that synchronizes all your tasks, projects, contacts and notes over the network. The thing that really makes it different from other task management softwares is that every part of information can be shared over the network with someone if necessary. Few additional features that makes this application special is its cloud storage - file sharing system, the internal messaging system and the accumulation of contacts sensibly. Security has also been taken ample care off, as corporate solutions always require neck tight security.
I'm looking forward to the results of the first real time test of Taskware over the National Institute of Technology Durgapur servers somewhere in the near future.

The Taskware Dashboard

Wednesday, May 16, 2012

Client side validation vs Server side validation

It is quite a fun developing a web application this summer for NITD Alumni. Working at such a professional level is tough, but it definitely teaches you plenty of new stuff.
While working on this project I came across a major problem with validation. Since the application is supposed to store profiles of alumni's and present students, we need a lot of validation work. Any wrong data will make the database useless, and also we want to put the best user experience forward. So the idea is to give the user the least number of controls and still collect the most amount of data possible.
Initially, I decided to use client side validation using javascript as that would speed up the process as well provide an enhanced user experience. But how much I tried, javascript was easy to hack and anyone could submit garbage data into the form. So finally it was decided to do server side validation using PHP.
Now to make our plans, we did both client side and server side validation. The obvious question is how will this help! Well the client side validation does most of the work, make the interface fast to use and gives a superior user interface. On the other hand the server side code gives a secure backend. So the before the data is written onto the database, the server side validation makes it foolproof and writes it down.
Hence, for a site to work out proper and secure validation techniques, it needs to have both client side and server side validation.

P.S. For those of you looking for client side validation, look out for the jquery.validate.js and additional-methods.js. They contain almost all the necessary validations. And obviously you can write down a few of your own. :)

Sunday, March 25, 2012

300 not out

Coding and web design has always been my strengths, but another favourite hobby of mine has been to make posters. After coming over to college this hobby turned into a passion. Clubs and communities helped me flourish and gave me ample oppurtunity to learn. They allowed me to commit mistakes, learn from them and then rectify them. After designing for more than 14 months, finally I've completed making 300 posters in this college. It has been a tough journey but it was a whole lot of experience which not only improved my skills but also increased my level of artistic ideas. Election posters to promotion posters, I've done it all. Certificates, ID cards, flyers and flexes. These brought a whole lot of versatility in me making me adapt to different situation. I also designed 4 brochures meanwhile - 4 full fledged books. It was an amazing journey and it is to continue.