Is Embedded Finance the Future of FinTech in India?

Embedded Finance

Embedded Finance

FinTech in India acts as a vital catalyst for financial inclusion

Embedded finance is better described as combining a financial service or technology with a service, product, or technology that is typically non-financial. For instance:

HR Tech and Payroll in which provide platforms to employees with wage advances and personal loans at rates that are not accessible to workers on the free market.

 

Benefit from Embedded Finance

Embedded finance solves large inefficiencies and reduces the expense of end-user financial services. For first-time buyers, it reduces the barriers and allows for creativity where it has remained static. For lenders, networks, and above all, the customers, it is an overall win-win.

 

A Major Challenge of Embedded Finance

Embedded finance may have a promising future, but there are still some obstacles and concerns. The lack of widespread acceptance by conventional banks is one potential problem. Financial service companies that want to remain competitive and retain their edge are encouraged to find ways to reduce customer interface friction and to incorporate embedded technology as much as possible.

Embedded finance, put in real business terms, enables companies and corporations to open up new revenue sources, and rethink the services they deliver to their clients. This is beneficial not only for those companies but for consumer convenience as well. There are massive potential consequences for the economy at large, and particularly for the fintech industry.

As digitalization takes place across traditional industries, the opportunities for embedded finance, especially in Asia, are extremely exciting, enabling financial services to be developed on top of historically non-fintech businesses. We expect this pattern to be repeated in environments around the world as embedded finance companies begin to unbundle financial processes.

 

Potential of Fintech India

FinTech in India is gradually becoming an integral part of everyday transactions, although at a preliminary stage. It acts as a vital catalyst for financial inclusion in the country from a wider perspective, by providing lucrative opportunities for the vulnerable and unbanked. For both individuals and companies, including self-employed people, rural entrepreneurs, small borrowers, and SMEs and MSMEs, the change from conventional to digital payments have proved to be rewarding. As the second-largest unbanked population country in the world, FinTech has a critical role to play in breaking barriers such as lack of financial literacy, high cost of conventional banking services, and policy gaps that prevent a large proportion of Indians from becoming part of the standard financial environment.

 

FinTech Opportunities

  • Driving Indian Financial Inclusion
  • Customer experience and transparency enhancement
  • Providing MSMEs with financial assistance

 

Challenges of FinTech

  • Cyber-Strikes
  • Regulation Difficulty
  • Privacy Problem for Data

Over the last few years, India has seen the rise of multiple start-ups, accelerators, and incubators for FinTech. India has what it takes to develop itself as a global hub for FinTech. With a broad consumer segment, rising mobile penetration, increasing urbanization, and an active start-up industry, India has a powerful opportunity that is waiting in the FinTech room to be grabbed.