On Thursday, Reserve Bank of India Governor Shaktikanta Das declared that India is progressing toward becoming the top financial technology hub in Asia, with an adoption rate of 87 percent, compared to the global average of 64 percent. The fintech market in India, which was valued at 1.9 lakh crore in 2019, is projected to reach 6.2 lakh crore by 2025, covering various areas such as digital payments, digital lending, peer-to-peer lending, crowd funding, blockchain technology, distributed ledger technology, big data, RegTech, and SupTech.
Das said that in the ever-evolving world of financial services, and especially in the wake of the pandemic, fintech is likely to challenge the financial sector with its innovative nature and fast growth. He added that using fintech for customer services will help to manage costs and expand the banking and non-banking businesses.
The RBI Governor also noted that the increased use of digital payments due to Covid-19 can result in a boost in digital lending in the current decade as companies accumulate consumer data and upgrade credit analytics. This, in turn, entails new regulatory frameworks and novel ways of monitoring, as there are trade-offs between financial stability, competition, and data protection.
Das mentioned that he sees four distinct sets of banking landscapes emerging in the current decade. The first set will be dominated by a few large Indian banks with a domestic and international presence. The second will encompass several mid-sized banks with an economy-wide presence. The third set will include smaller private sector banks, small finance banks, regional rural banks, and cooperative banks, which may cater to the credit requirements of small borrowers. The fourth segment will consist of digital players who may act as service providers directly to customers or through banks as their agents or associates.