The role of FinTech in building Viksit Bharat

The Indian FinTech ecosystem continues to evolve, with new players entering the market and established ones diversifying their offerings. There are immense opportunities for FinTechs in India to tap both in urban and rural areas. However, there are challenges to address, including regulatory concerns, data security and low financial literacy among users. As the industry continues to mature, innovations will probably revolve around blockchain, artificial intelligence, machine learning and deeper financial inclusion.

The latest report by EY and Digital Lenders Association of India (DLAI) titled ‘The role of FinTech in building Viksit Bharat’ emphasizes that the India FinTech market is expected to expand by 30% to reach US$180-200 billion by 2029, fuelled by rising income, awareness and digital infrastructure. Digital lending is expected to have the largest share of the FinTech revenue pie by 2030. The key drivers of FinTech growth in India are rising levels of disposable income, financial inclusion initiatives, internet and smartphone penetration and government backed Digital Public Infrastructure. FinTechs in India have leveraged the Digital Public Infrastructure for on-boarding customers at a reduced cost and acquiring new customers with robust checks.

With innovation and technological advancements comes the need of self-regulation for cyber security, consumer protection and data protection. While FinTechs are accelerating financial inclusion, the rise in sophisticated fraud schemes poses a threat to this progress. In response, regulators are enforcing stringent cybersecurity in FinTech measures to foster a secure ecosystem that safeguards innovation while ensuring governance and trust. RBI’s new Self-Regulatory Organisation (SRO-FT) guidelines provide structured oversight and scenario-specific standards, ensuring robust governance without stifling growth. SRO-FTs play a critical role in driving FinTech innovation by addressing barriers such as threats, regulatory challenges and lack of standardization. By uniting industry participants, guiding emerging FinTechs, and influencing sensitive, industry-relevant policies, SRO-FTs can establish global benchmarks and foster sustainable growth.

FinTechs can contribute to the Viksit Bharat mission by simplifying access to financial services and empowering the underserved segments of society. By addressing key challenges like unemployment, credit gap, financial literacy and access to technology, FinTechs have the potential to catalyze economic growth and social progress. Continued collaboration between FinTechs, the government, and other stakeholders to create a more inclusive and technologically advanced financial ecosystem ultimately contributing to India's transformation into a developed nation.

FinTechs have already started working towards achieving the Viksit Bharat mission, but they continue to face challenges like including cybersecurity threats, limited financial literacy, and the need for improved digital infrastructure in India especially in rural and remote areas. Government support and innovative solutions are crucial in overcoming these challenges.