Fintech start-ups gain traction
India’s digital drive, coupled with rising smartphone penetration and data usage, has created a huge market for fintech start-ups that are targeting young salaried professionals.
Traditional financial services providers are partnering these start-ups to address opportunities from these digital-first customers. These partnerships are being expedited as there is a fear among incumbent players of being left behind by techsavvy start-ups.
“Fintech is going to become much bigger than what it is with UPI, demonetisation and smartphone use driving digital money adoption. Payment and lending will see action,” said Vidhya Shankar, executive director, Grant Thornton. “Banks and NBFCs need to come on board as strategic investors to capitalise on this trend because while startups have revolutionary algorithms, they still need data to fine-tune them,” she added.
Shankar further said consumers were looking beyond securing credit cards to being able to afford expensive travel and gifting options, which would set these financial institutions apart. The on-demand money market is gaining traction and it will depend on strong analytics and on understanding the customers themselves.
PwC partnered robo-advisory firm Mintwalk recently in building the core platform to help guide them with technical requirements. “We look at investing a percentage of our efforts in start-ups. We work with incumbents like Nomura or different banks in identifying potential. We also work with accelerators to mentor start-ups,” said Vivek Belgavi, partner and fintech leader, PwC India.
Start-ups are more interested in supplementing the offerings of existing institutions through plug-and-play solutions that dramatically improve the user experience, says a PwC report, adding 80 per cent of incumbent players in India’s financial services markets feel threatened by new-age start-ups.
MintWalk is a financial advisory firm focused on catering to users in the 25-40 year age group. The app offers investment solutions for aspirational goals like designer clothes and travel plans, besides the cohort of home, car, marriage and retirement plans.
“Fintech platforms like ours bring specific skillsets, like an ‘investment experience’ in our case, to the consumer. Banks will target certain services at people based on their potential to invest. We can provide the same experience to people, irrespective of their investment size,” said Shiv Negi, MintWalk co-founder.
While start-ups bring in the business idea and data analytics, having a bigger organisation like PwC helps navigate regulatory and compliance requirements which would be difficult for them otherwise.
Start-ups are interested in supplementing the offerings of institutions through plug-and-play solutions