Evolution of FinTech in India

                                 Evolution of FinTech Sector in India

Liberalization of Banks in 1992 led to the introduction of technology savvy banks in India. The government took legislative action to boost the banking system and promoted the use of new technology such as MICR, electronic fund transfer, and other electronic payments that revolutionized the banking system and in turn boosted the Indian economy. Since 1992, India’s fintech journey has been shaped by factors such as smartphone usage, internet access, regulatory support, and digital payment innovations. The phases of evolution of FinTech sector in India are listed below:

Early Phase (Pre-2000s)

During this phase, the banking sector in India relied on core banking solutions and IT-driven services. ATMs, NEFT, RTGS, and Electronic Clearing Services were introduced in the country.

Growth Phase (2000-2015)

Aadhaar, enabling digital identity verification was launched in 2009. Immediate Payment Service (IMPS) was introduced by NPCI in 2010 to facilitate real time transactions. The first digital wallet, the Oxygen Wallet was introduced in India in 2006 by Times Group in collaboration with YES Bank. Paytm, an Indian multinational financial technology company specializing in digital payments and financial services was founded in 2010. Pradhan Mantri Jan Dhan Yojana (PMJDY) to enhance financial inclusion was launched by the government. Thus, this phase also witnessed the introduction and rise of alternative lending platforms, and digital NBFCs.

Acceleration Phase (2016-2020)

Demonetization in 2016 accelerated digital transactions. Unified Payment Interface (UPI). Unified Payment Interface (UPI) developed by National Payment Corporation of India in 2016 facilitated real time money transfer between bank accounts through a mobile app. FinTech startups such as Zerodha, Policy Bazaar, and PhonePe emerged in India. There were 733 startups in India during this phase mainly providing financial services to customers.

Current Phase (2020 – Present)

Covid-19 pandemic boosted digital banking, contactless payments, and fintech adoption. In 2021, Account Aggregator Framework was launched to provide seamless financial data sharing. In 2022, RBI introduced Digital Lending Guidelines to regulate online lending platforms. Buy Now, Pay Later (BNPL) models, and embedded finance solutions have increased. Rupay credit card linked UPI payments, cryptocurrency exchanges, and AI driven financial services are now on an increasing trend.

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