in India

Fintech in India - A global growth story
42
Learnings from global experience:
Opportunity for India to solidify its position
as a global fintech hub
The rendering of financial services is changing at an
accelerated pace, as fintech start-ups emerge as enablers
for the business of extremely large traditional financial
institutions. While start-ups seem to be in the spotlight for
the most part, government bodies and market players
across the mature markets have been robustly serving their
part to establish an environment for the growth of
innovation and technological advancement in the financial
services sector. A continued strong commitment from the
government, the industry and the fintech firms is critical to
allow the fintech revolution dig its roots deep in any
financial system.
Firstly, it is important to study the potential impact of all the
market participants in the thriving Indian ecosystem to
harvest the fintech opportunity. In our earlier approach of
studying mature markets where we draw out the most
impactful growth drivers, the standalone impact potential
was assessed. We aim to inculcate these learnings in our
recommendations ahead.
Secondly, the complex interplay of these factors is
important to understand and plan for, to enable holistic
growth of the ecosystem. Two approaches are notable in
this regard:
• Market-driven approach: In many key markets around
the world, including the UK and the US, incumbent
Financial Institutions (FIs) have sought to emulate the
best features of fintech innovations within their existing
business lines. This approach clearly benefits consumers
overall, as they get improved offerings from their
existing institutions, spurred into action by the
competitive threat from fintech. However, for FIs to do
this successfully, it is important to have very strong IT
leadership and build capabilities that are not always
found immediately within FIs.
• Collaboration-driven approach: For the emerging fintech
markets, strategies focused on collaboration may offer a
sustainable change in the market, and may be easier to
implement. However, it will need a deeper commitment
from the stakeholders to allow a suitable gestation
period for collaboration to come about between
stakeholders across the spectrum.
Thirdly, it is important to identify and plan for the inflection
points - those key checkpoints in the evolution journey
where the risk of failure for the nascent fintech firms are
the most prevalent.
We found that top inflection point in this market is when a
fintech firm is seeking to collaborate with FIs, and thus is
crossing the chasm from being a small, successful
business into potentially scaling their solution for a very
large customer base within an FI.
A common (and critical) approach taken by FIs when seeking
to integrate and test new fintech solutions is to run a Proof of
Concept (POC) project. Successfully running a POC requires
very skilful leadership and a robust approach, and this is often
the point at which fintech/ FI collaborations break down. FIs
need to build or outsource the capability to run robust POCs
which is where real business value is tested. If well managed,
they create the foundation for a business case and eventual
roll-out. If not done correctly, they bring about delay and
missed opportunities.
Indian fintech firms need to play their part in the POC process,
by being willing to subject their innovations to the kind of
testing and reporting that is required by many large FIs, but
they need support (often from professional services firms) to
do this.
Successful POC projects will have another measurable benefit
for Indian fintech firms. Every successful POC creates proof
points and metrics that will make it much easier to offer their
fintech innovation to FIs in overseas markets, e.g. the UK, the
US.
Another inflection point for the fintech firms is the
transformation of a successful POC into a large rollout to the FI
customer segments. This massive up-scaling exercise is a
challenge faced by FIs working with fintech firms around the
world as the enormity of an FI customer base often puts the
fintech solution viability to the ultimate test, leading to a point
of no return.
To prepare for this crucial stage, there is a golden
opportunity to leverage the traditional IT strengths of big
tech firms in India to help smaller fintech firms to make
their solutions robust enough for the FI market. Fintech
industry players in India should seek to use the existing IT
ecosystem to create a few examples of successfully
scaled innovation for FIs. These use cases could
potentially open the door to global sales for both Indian IT
firms and Indian fintech
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