The recent ban by PM Modi is not only a great step for India’s move towards a more white economy, less corruption, more Income Tax collection that would lead to better financial governance in the whole country, it is also a blessing for the growing FinTech industry in India.
Let’s see how it benefits the FinTech companies:-
- Digital Data Trail (DDT)– The move directly aims at reducing cash transactions and the black economy. It will encourage the nation to move towards electronic transfers and transactions. So now, more people and companies will be doing transactions via wallets, credit cards, debit cards for their Shopping (Amazon, Flipkart, Snapdeal), Travel (MakeMyTrip, ClearTrip, iBibo), more e-payments for Taxi rides (Ola,Uber), hotel reservations, food, medicines etc. All of this will leave a digital trail of each and every transaction that is traceable. There have been reports of shopping sites disabling the Cash on Delivery (COD) option on their websites and apps. The COD was a significant conduit of black money.
- FinTech Marketplaces and Lenders – The move to ban Rs.500 and Rs.1000 notes is also a great boost to the FinTech lenders in particular because the Digital Data Trail is very relevant for FinTech companies in general, and for alternative FinTech lenders and credit evaluators like FundsTiger, Faircent, Indifi, CreditMantri as they would be able to leverage this data and better assess the credit worthiness of their borrowers for both individuals as well as SMEs, catching fraud, outliers etc. Moreover, the demand for white money for lending, working capital loans, credit facilities would substantially increase as the tightening noose around black money that was used typically by private financiers, will reduce the lending done earlier in cash. The credit (loan) market in India is expected to grow by 5x to US$ 3020 Billion during the next 10 years by Credit Suisse, and now that would be accelerated even further.
- Payment Wallets – It is an obvious boost for all the mobile wallets and payment like Paytm, Mobikiwik, PayU as well as other alternate payment solutions like UltraCash that make it easy for the consumers to do an electronic transfer.
- UPI by NPCI – It is a great boost to the recently launched UPI (Unified Payment Interface) by NPCI (National Payments Corporation of India) that makes it feasible to do electronic funds transfers to another bank account with out depending on adding the beneficiary in your bank’s account.UPI works based on the underlying link with Aadhar for identification. Phone Pe, TruPay, Axis Bank, Yes Bank have already launched apps based on UPI.
This fight against black money and corruption started by PM Modi is going to usher in a new era for India and also for the FinTech Industry by enabling a cashless and white economy that will accelerate the growth of the nation.
Vikram Verma
FundsTiger
FundsTiger is an Online Lending Marketplace that focuses on the credit needs of MSMEs and their employees. FundsTiger Platform also provides Credit Ratings based on their proprietary model that leverages traditional as well as alternative signals using the Digital Data Trail (DDT)