Amitabh Kant, chief executive officer, NITI Aayog said that after payments, the next big area of growth for the fintech industry is digital lending which will see a sharp growth
India’s fintech industry has weathered the coronavirus pandemic and is set to post major growth over the next few years with rural areas growing faster than metros, experts said at a conference.
Aided by the government’s accommodative policies, digital transactions by individuals and the amount of digital payments as a share of GDP are set to see a sharp growth, a trend which has attracted tech majors like Google to commit substantial investments in India, said Amitabh Kant, chief executive officer of federal policy think-tank NITI Aayog.
Kant said after payments, the next big area of growth for the fintech industry is digital lending that will witness a sharp growth. “This is being driven by increase in retail loan disbursements, greater access to internet and increase in digital purchase. The future of lending, to my mind, is digital, with digital lending constituting 50% of total lending by 2023," Kant said citing a report.
He was speaking at the virtual Global Fintech Fest organized by National Payments Corp. of India (NPCI) and Internet and Mobile Association of India (IAMAI). A large part of this growth is expected to be driven by customers in rural areas. The first leg of India’s stay-at-home restrictions that started on 25 March gave a boost to digital payments —like the surge in digital payments witnessed during the 2016 demonetization, according to Sameer Nigam, founder and CEO of PhonePe, a digital payment company.
“That (trend) has been continuing for the last four months," said Nigam. He added that the fastest growth is coming from smaller towns instead of metros. “About 60% of all new customers every month for almost a year are in tier 3 and beyond, which is fascinating," the PhonePe founder noted. During the pandemic, Nigam’s company met its customer acquisition target organically, with him describing the growth as “unprecedented."
Kant said the insurance sector will also be a big growth driver for fintech companies with the government’s insurance schemes and welfare measures using technology for delivery of services.
The insurance sector is expected to grow four-fold by 2025 with annual premium scaling $250 billion by 2025. “Despite all the disruptions, our digital payment system has worked smoothly. This is what drives our confidence that we are prepared for post-covid 19 future…The future of fintech in India is extremely bright," said Kant.
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