Table of ContentsSummaryIntroductionAn Evolving Indian Fintech Ecosystem“Enablers” for an Enabling Fintech EcosystemAn Untapped Indian MarketGrowth Human Capital and Investment in IndiaDigital InfrastructureGovernment and RegulatorOpportunitiesChallengesDiscussion and ObservationSummaryPost-Recession In 2008, financial institutions around the world have gone through a huge shift in including financial technology in their product and service offerings. The world has seen a surge of technology startups and new companies working on a new platform called financial technology (Fintech) to meet the demand of financial institutions. According to NASSCOM, the Fintech business in India is expected to reach $2.4 billion by 2020. In the Indian startup ecosystem too, this is one of the areas where Indian startups are performing well and every year, new Fintech startups are continuously popping up in the startup ecosystem. . The government’s policy framework not only provides impetus to this vibrant ecosystem but also creates an enabling environment for opportunities to spread. The objective of this article is to study the enablers of the Indian Fintech ecosystem that creates an enabling environment for the growth of Fintech companies. It also aims to study the opportunities to be exploited and study the challenges that may pose a barrier for the Fintech sector. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”?Get the original essayIntroductionFinancial institutions around the world have seen tremendous changes in their business processes by including financial technology in their products and offerings. services. This change could be attributed to the global financial crisis of 2008. It could be said that the global financial crisis of 2008 jeopardized the entire banking system, leading to the collapse of customer confidence in the banking sector. This crisis has made the banking sector to think about new innovative financial solutions to address customer problems and also to create a platform which could be effective and efficient enough to alarm the world of the coming crisis and which could also respond to the demands of global customers. . The current fintech era has evolved in three phases and this emergence has addressed both risk diversification and competition concerns and has also catalyzed opportunities. Arner, DWet al (2015, 2016) in their article stated that the global financial crisis of 2008 gave rise to the “Fintech 3.0” and “Fintech 3.5” series in developed and developing countries respectively. Since then, technology development companies have started focusing on the banking and financial sectors as prospects, with this shift fueled by the expectations and demand of consumers and the political fraternity. Developing countries are still struggling with the inefficiency of the financial system and development needs, which has led to the emergence of “Fintech 3.5” series in developing countries. This is why the whole world has witnessed a surge in technology startups and new businesses working on a new platform called financial technology (Fintech) to meet the demand of financial institutions. According to BASEL (2017), “Fintech enables technological financial innovation that could result in new business models, applications, processes or products with an associated material effect on markets and institutionsfinancial services and the provision of financial services. » According to NASSCOM, Fintech business in India is expected to reach $2.4 billion by 2020. In the Indian startup ecosystem too, this is one of the areas where Indian startups are performing well and every year, new Fintech startups are continuously popping up in the startup ecosystem. . The government's policy framework not only gives impetus to this vibrant ecosystem but also creates an environment for the propagation of opportunities. The objective of this article is to study the enablers of the Indian Fintech ecosystem that creates a conducive environment for the growth of Fintech startups. It also aims to study the opportunities to be exploited and study the challenges that may pose a barrier for the Fintech sector. The fintech sector in India is still in its nascent stage. Due to unavailability of data, compilation of secondary data is done from various research papers, reports and publications of various authors, research agencies, data aggregator websites, companies and government agencies. Over the past decade, many definitions regarding fintech have emerged and all definitions somewhere emphasize important components of the Fintech world, but in the evolution of definitions, there seems to be a lack of unanimity on the limits of the Fintech sector. Financial technology (Fintech) is technology integrated into financial products and services aimed at helping businesses organize the financial aspects of their business. According to a comprehensive analysis report on Indian fintech landscape by YES Bank on fintech (2017-18), “Fintech are high-growth organizations combining innovative business models and emerging technologies to enable, enhance and disrupt financial services. » Philippon, T. (2018) states that new startups are continually emerging in the fintech sector because financial services are still very expensive. The current regulatory approach has not brought any major structural changes, but fintech is capable of bringing about these changes and can also create significant regulatory challenges. The IOSCO FinTech Research Report (2017) highlighted some key elements that contribute to the development of this sector, namely the abundance of consumer data, decreasing cost of goods and services, increased computing power, disintermediation and reintermediation, and major consumer demographic shifts. Truong, O. (2016) finds in a research that technology has enabled financial products to be innovative and has increased “the flexibility and user-friendliness of financial services”. It has also become mandatory for businesses to continually innovate in order to maintain healthy competition among organizations. Fintech providers are creating a revolution in financial inclusion in both developing and developed economies. Along with financial inclusion, fintech offers people with moderate incomes various valuable facilities that will cost them more when coming from the conventional banking channel. Varga, D. (2017) states that the fintech sector has impacted those beyond the reach of banks and provided flexible and simple solutions in these areas. An evolving Indian fintech ecosystem Reserve Bank of India Report of the Task Force on Fin Tech and Digital Banking (2017) defines the EndTech as “Fin Tech is a technologically enabled financial innovation that could result in new business models, applications, processes or products with an associated material effect on financial markets and institutions and the provision of financial services. services." According to Ernst and Young (2017), India, with 52% digitally active population, is second after China in terms of Fin Tech adoption rate. This means that there are many opportunities as half of the population still does not have access to fintech services So far, Mumbai is the only state to have developed a fintech policy for startups and supporting tech accelerators and incubators. Financial Startups receive financial support of Rs10 lakh for three years to cover their expenses This will enable startups to offer better products and services According to NASSCOM & KPMG (2016), the Indian fintech sector is expected to grow by 1. .7 times and could reach $2.4 billion by 2020. KPMG (2018) highlights that financial technology is significantly accelerating change in three sectors: artificial intelligence, open banking and blockchain activities. blocks. To strengthen open banking, the fintech sector regulator has taken three major steps. Firstly, by bringing Bharat Bill Payment System (BBPS) to facilitate security and easy and quick payment of bills. Secondly, the National Payments Corporation of India brought a Unified Payments Interface (UPI) and Aadhaar supported services. Thirdly, the Reserve Bank of India (RBI) has directed a non-banking financial company to establish a non-banking financial company - account aggregator (NBFC-AA) in India to share customer information with their consent with other financial entities . The Reserve Bank of India (RBI) has been working on the Public Credit Registry (PCR) so that the credit information of any individual and business is accessible at any time. According to IBEF (2018), the Securities Exchange Board of India (SEBI) is working on a “regulatory sandbox” framework so that technological innovations in products and services can penetrate the securities market in India. NASSCOM Artificial Intelligence Primer (2018) mentions that around 400 artificial intelligence startups have worked in India and secured funding worth $150 million in the last five years. The application of blockchain also plays an indisputable role in various banking services. The NASSCOM (2016) report “Indian fintech products-innovation Driving Growth” indicates that 400 Indian startups emerged in 2016 in the fintech sector. The sector recorded a growth of 282% between 2013 and 2014. “Enablers” of a conducive Fintech ecosystem Although there are a number of factors responsible for the rise of the Fintech sector. But it can be said that the untapped needs of the Indian market and abundance of efficient human capital serve as catalysts for a conducive fintech ecosystem. At the same time, the financing and financial structure created by the government and regulatory bodies form the foundation of the fintech ecosystem. An untapped Indian marketIn India, even today, a significant portion of the population is beyond the reach of banking and financial institutions and their products and services. RBI in a “Task Force Report on Fintech and Digital Banking” (2018) stated that almost 40% of Indian population has no connection with banks and almost 87% of transactions are done in species. This givesfinancial technology startups a formidable landscape to conquer an untapped market. India's Human CapitalAccording to UNCTAD (2018), India has the largest pool of STEM (science, technology, engineering and mathematics) graduates. In 2012, out of five million successful STEM students worldwide, 29.2% belonged to India. India is way ahead of other countries in terms of human capital. This human capital forms the cornerstone of the entire Indian startup ecosystem. Growth Capital and Investment Over the past decade, investments in Indian fintech startups have increased significantly. According to data aggregator Your Story Research (2018), India's fintech and finance sector has secured total funding of around $2 billion as of November 30, 2018. The sector closed 132 deals in 2018, compared to 103 deals in 2017 Additionally, the top ten startups managed to raise 60% of the total funding for the fintech and financial sector. Digital Infrastructure In recent years, India has focused on creating a framework for fintech startups by including the “stack” in its financial infrastructure. In this stack, JAM has made a paradigm shift by including electronic signature and digital locker. JAM provides infrastructure for fintech companies to build a business model and processes that use it. Additionally, Immediate Payment Service, Bharat Bill Pay, Aadhaar Enabled Payment System, India Quick Response, Unified Payment Interface and National Automated Clearing House have created a payment system that has facilitated the operability of this stack in the fintech ecosystem. The Government and Regulator The Indian government has taken many initiatives to create an enabling environment and create linkages between the financial technology sector framework. For the fintech sector to thrive, government support is necessary so that a large portion of the unbanked population can have direct access to banking practices. The government has launched an awareness movement called “Financial Inclusion” to encourage the public to open bank accounts so that more and more people can avail financial services. This is done to track the inflow and outflow of money and to transfer the subsidies to the necessary population directly into their accounts. According to the National Payments Corporation of India (NPCI) and UIDAI, as of March 2018, banks have been sufficiently successful in linking Aadhaar identity to 878 million bank accounts. Around 312 million transactions worth Rs 542 billion were made through the Unified Payments Interface in August 2018. For the government, support from the Reserve Bank of India (payments sector regulator financial technology) is of utmost importance as the RBI has been working aggressively towards formulating a framework for policy implementation. RBI introduced 'Unified Payments Interface' to move India towards a digital and 'cashless' culture. RBI has taken some additional steps. It has enabled entities and NBFCs registered under the Companies Act to become players in the P2P lending platform. This P2P lending platform will solve the financing problem of startups. Opportunities The Fintech sector can achieve financial inclusion of a large number of individuals by providing them with basic financial services and it can offer financial services to sectors that are still not accessible through mobile phones to the tune of fifty percent. The population of emerging economies now owns a telephone.