Favourable demographics and rising income levels have led India to be counted among the top six economies in the world. The growth in GDP during 2018-19 is estimated at 7.2% when compared to the rate of 6.7% during the financial year 2017-18. The sector has benefited from structural economic stability and continued credibility of Monetary Policy. The increase in the working population & growing disposable incomes has been key aspects influencing the rising demand for banking & related services. India’s retail credit market is the fourth largest in emerging countries. It increased from US$ 181 billion in the financial year 2015to US$ 281 billion during the financial year 2018. While deposits grew to US$ 1,716.4 billion, the total credit extended by commercial banks also surged to US$ 1,297.4 billion.
The banking and financial services sector is exploring several technological initiatives with the potential to power progress of the sector and also provide improved services to their clients. In order to offer various solutions to banking, considerable investments are made in building / revamping the IT and digital infrastructure of banks.
Digital Payment System
• Digital influence in the Indian banking sector has been growing faster due to the rising digital footprint. Also, India’s digital lending stood at US$ 75 billion in Financial Year 2018.
• According to a FIS report, the digital payments system in India has evolved the most among 25 countries in the world, including the UK, China and Japan, with the IMPS (Immediate Payment Service) being the only system at level 5 in the Faster Payments Innovation Index (FPII). India stepped up to 28th position on the government’s adoption of e-payments ranking in the year 2018.
• Total number of ATMs in India increased to 213,004 and is further expected to increase to 407,000 ATMs in 2021.
The Fintech Scenario:
• The number of internet users in India continues to grow at a rapid pace of 500 million in 2018 as per IAMAI projections and is expected to reach 700 million by 2020.
• More and more Indians continue to turn to the internet to solve their money management problems as it as a gateway to the financial services industry. The disruptive potential of fintech firms can provoke the much-needed modernization of the traditional sector, reducing costs in the process and increasing the size of the banking population.
India is steadily moving towards a paperless, presence-less delivery of financial products. Thanks to the various amendments and acts passed by the government, more & more first-time internet users are entering the digital banking space making banks reimagine their engagement with current & potential customers.