Emerging technologies are disrupting the global financial services industry, weaving artificial intelligence, blockchain and open banking into the everyday lives of consumers. The influx of new technologies and entrants in the fintech space has been fueled not only by rapid consumer adoption but the implementation of these technologies by incumbent financial services providers.

With North America and Europe leading the charge in fintech start-ups over the past few years, global focus seems to be moving towards Asia, particularly India and China. With an unbanked population of 190 million, India’s fintech industry has a vastly untapped growth potential.

Mobile wallets and payments have driven significant innovation in the Indian financial services industry. LiveMint estimates an estimated 250 million mobile wallet users in 2018, set to grow to 500 million in the next few years.

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The introduction of Unified Payments Interface encourages the acceptance of digital payments, positively impacting wealth, lending and insure-tech start-ups. This interface and its services have also been adopted by WhatsApp, Google, Facebook, Flipkart, Amazon and many others; driving down operational costs through technology.

Post demonetization, the Indian market was forced to adopt digital methods for financial transactions and payments. Paytm, an Indian mobile wallet and payments provider, registered a 435% increase in traffic with a 250% increase in transactions as well as transactions value.

The IAMAI (Internet and Mobile Association of India) pegs India to have 500M internet users in 2018, estimating it grow to 700M by 2020. This has resulted in an entire millennial generation driving adoption of digital products and services.

The EY FinTech Adoption Index 2017 places India with the second highest fintech adoption rate (52%) across 20 global markets. Digitally active Indian consumers display 50%-100% higher adoption rates than global averages across 5 categories of financial services:

• Money transfers & payments

• Financial planning

• Savings & investments

• Borrowing & Lending

• Insurance

Rural India has a fintech adoption rate of 33%, far behind the metropolitan rate of 66%. With 51% small and medium cities adopting fintech services, its evident that the fintech growth story will continue for some time to come.

Investor interest aside (Indian fintech raised just over US$ 2B in 2018), there is significant interest from traditional financial institutions in scaling innovation throughout the ecosystem. In addition to start-up and enterprise partnerships, several corporates are now launching their own incubators across the country to tap into the ecosystem. Barclays, ICICI, RBL and Axis Bank are some of the leaders in this stage. The YES Bank Fintech Report in 2017 states that there were over 50 PoCs developed across the incubators operating in India.

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According to MakeInIndia, this spurt of investment and international interest has led to the establishment of over 600 fintech start-ups in the country.

A range of initiatives launched by the Reserve Bank of India (RBI) as well as the Government of India (GoI) have also spurred the growth of Indian fintech. Platforms such as the Unified Payments Interface (UPI), Bharat Interface for Money (BHIM) and the Bharat Bill Payments System contributed to the increased adoption of mobile and digital payments across the country.

Other approaches include the tax rebates for digital transactions, withdrawals of credit card payment surcharges as well as exemptions on gains through investments in unlisted companies. Such a strong push by the government has increased awareness and acceptance of digital financial services across the country, reaching relatively rural areas as well.

These aspects that are positively impacting the Indian fintech story are merely the trip of an iceberg that runs deep and wide. However, the Indian start-up ecosystem is developing a strong story in the fintech chapter – one that is continuously evolving according to what the consumers expect; both domestically and internationally.