How can investment and lending super-charge fintech world?
The Indian start-up galaxy is making a mark around the world, after emerging as a comfortable home to the third-largest set of Unicorns globally. E-commerce along with Fintech platforms have been spearheading this progression. Indias financial technology ecosystem has experienced unique growth as it counts on strategic partnerships along with the developing digital public infrastructure. Supported by increasing connectivity and digital public infrastructure like the India API stack fintech platforms are now transcending other tranches like insurance, investments and lending. Fintech Beyond Payment Gateways -  With manageable communication and transparency in transactions coupled with the pandemic accelerated digital growth innovations triggered a paradigm shift in the fintech marketplace. Fintechs are no longer payment gateways, they are now offering a whole range of services in one mobile application from opening a bank account to paying insurance at one click and a 2-minute onboarding process. Mobikwik and Paytm were the early adopters of this embedded platform offering. Various other fintech companies followed and started partnering with NBFCs and banks to expand. Fintech Lending Platforms -  Traditional banking and lending undoubtedly were polluted with cumbersome paperwork, lack of customer support and reliance on credit score which was further problematic with the rise of the unorganized sector. The retail digital lending market has delivered more than 40% CAGR over the past decade. This growth is accredited to the integration of payment and lending. Using the amalgamation of an asset-light model, paperless KYC, a smaller ticket size of the loan and faster disbursement digital lending platforms have managed to gain over 40% of the market share in the personal loan segments and are moving towards the larger ticket size and underwriting. These digital lenders are monetizing the short term credit industry by providing Buy-Now-Pay Later credit and EMIs without hassle. Razorpay, a payment gateway is offering the Razorpay Cash Advance and Credit products that help businesses solve their cash flow problems through quick business loans and instant settlements. These accessible fund and transparent pricing mechanisms level the playing field for MSMEs. Pine Labs is considered the one-stop solution for future-positive business. Pine Labs pay later offerings are not limited to credit and debit cards but are extended to UPIs and online payments. BNPL offerings help businesses promote loyalty while building a payment experience. Other platforms that are worth mentioning are Lendingkart, Krazybee and Dhani. However, with digital lending apps mushrooming in India to fill the gap in loans, unsecured apps that promised quick loans with high interest rates and no collateral started to flourish. These dubious platforms are heavily criticised for misuse of customer data, discriminatory credit check practices and aggressive loan recovery practices. These digital lending platforms were developed to solve the credit problem in India but with the lack of regulation, India may be heading towards solving the Chinese lending app problem domestically. Fintech Investment Solutions -  Since the disruption caused by the pandemic and people working from home, personal finance and financial literacy have become coffee table discussions. This can also be evidenced by the influx of retail money and rush of Demat accounts opened in India. The Indian wealth tech market is expected to grow by over $60 billion by FY25. These platforms leverage analytics, artificial intelligence and big data to provide efficient solutions and tools to make consumers equipped for wealth creation. One of the key global trends in investments is Robo Advisory, leading this in India is Tavaga Advisory. Tavaga is a SEBI registered investment advisor that uses algorithms to analyse risk appetite and promote goal-based investments. Tavaga is democratising investment advisory by eliminating discrimination on portfolio size. Spenny is capitalisation on the millennial trends by making investing easy and quick. The platform has an easy activation process that automatically invests roundups into a diversified portfolio. Small case, Harmoney and likes are helping investors make better financial decisions. However, the gap between the advancement of technology and the heavily regulated established institutions is an issue worth highlighting. Multiple platforms have emerged with no banking and market risk background which makes it difficult to put a hygiene check. With people relying on social media for financial advice, it is crucial that regulators formulate a plan to make financial literacy an everyday conversation. The author, Nitin Mathur is CEO at Tavaga Advisory Services. The views expressed are personal