Year 2022 will see more fintech-bank collaboration
If 2020 was the year that propelled fintech start-ups, 2021 was when the fintech industry started showing signs of maturity, but 2022 will be the year of heightened collaboration between banks and financial technology startups, thus, taking financial inclusion to a new level.
Says Ashutosh Khajuria, executive director, Federal Bank, “Whatever financial inclusion or mass banking that happened in decades is now happening in a year. Earlier, for a bank of our size, the normal run rate for opening new savings accounts daily was 4,000 but with the collaboration of fintech companies such as Jupiter, Epifi, we are now opening nearly 10,000 accounts per day. So, we think financial inclusion will reach newer levels in 2022-23. Financial inclusion efforts that started with opening of Jan Dhan accounts, demonetisation, UPI, Google Pay, PhonePe, launch of neo-banks and other efforts will see fruition in 2022.”
According to Akash Sinha, co-founder & CEO at Cashfree Payments, “As the economy continues to recover from the Covid-19 crisis and consumer behaviour shifts to a lesscash society, the adoption of digital payment modes will continue to touch new highs. We foresee the following trends in 2022— mobile devices will continue to be one of the most preferred modes for making digital payments and promoting card tokenisation and QR-based solutions, the boundaries between banks, fintechs and technology players are likely to diminish, and players can utilise suitable opportunities to move up the value chain and expand their revenue pools.
“We will see an increasing role of APIs and BaaSbased solutions that will further provide convenience to customers across sectors, the adoption of digital payments in metro and tier-I cities is strong.
We should see banks, fintechs and regulators focusing on developing products to attain similar success in semi-urban and rural areas of the country, we envisage that UPI payments through feature phones will be one of the biggest game changers in 2022. Exploratory activities around digital currencies will provide customers with an alternative to cash as they roll out innovative products together.”
Reports say fintech startups in India drew nearly $2.25 billion in funding in the third quarter, across 70 deal. India’s journey of creating a digital financial infrastructure has been characterised by collaboration between the government, the regulator, banks, and fintechs. The year 2021 saw several productive decisions being made on the regulatory front across various domains such as tokenisation, UPI on feature phones and offline payments–clearing the path for an exciting time ahead.
As per RBI data, Rs 2,326.02 crore digital payments were recorded in FY19, which increased to Rs 3,400.25 crore in FY20. By FY21, the volume had risen to Rs 4,374.45 crore.
Data indicates that the sharpest growth of all has been witnessed by UPI, which accounts for nearly half the volume of digital payments. The numbers also indicate increasing adoption of digital payments owing to growth in various sectors such as telecom, healthcare, IT, retail, automobile and agriculture.
While the shift to digital payments is not new, it has seen a steady rise over the past two years. The pandemic had made many taking to digital payments during the lockdown in 2020 resulting in the volumes as well as value of transactions showing a strong growth. Amid Covid-19, India was home to the highest number of real-time online transactions in 2020 ahead of countries such as China and the US.