Fintech is an ever-evolving industry and as the space evolves, it will definitely need more harmonisation
FinTech BizNews Service
Mumbai, 31 October, 2023: Navin Surya is a well-known Fintech Thought Leader, Mentor, and Investor. He is Strategic Venture Partner, Beams VC. Navin Surya is Founder and Former Chairman, Payments Council of India; Founder and Former Chairman, Fintech Convergence Council as well as Founder and Former Advisory Board Member, Global Fintech Fest. He provides valuable insights to the Fintech Biznews.com about the current consumer trends and certain improvements the Fintech industry players need to do.
Mehul Dani: What are the current consumer trends with regard to the Indian fintech industry in general?
Navin Surya: The consumer adoption rate in India is highest at 68%. Most consumers expect all financial services to now be available digitally and expect a 1-click experience for any financial service products and services. In the early stage of fintech adoption, especially pre-pandemic, this was limited to bigger cities and metropolitan areas and only the top 10% of the consumer demographic segment.
However, this has completely changed and today across the country, with estimated 30-40% of consumers across India prefer digital access and experience. Major concerns remain transaction failures, frauds, and cyber crimes for which the industry ecosystem would continue to work on improving consumer education and strengthening the systems wherever required.
What are the challenges & opportunities in the Indian fintech industry at present?
Navin Surya: The core challenge for Indian Digital Financial services or Fintechs remains an underpenetrated market across Banking, Payments, Lending, Insurance and Investment. Banking and Payments are nearing healthy with a two-digit penetration however the rest of the business segments are at an early stage of penetration (<5%). Consumer trust and confidence continue to remain the key challenge areas with issues of access, awareness, transaction failures, fraud, and cybercrime.
Unique Public Digital Infrastructure in our country with supporting and positive policy framework from the government and regulators continuously provides newer and bigger opportunities across the Financial service domain as a License holder (with customer ownership) or as Distributor (across physical and/or digital channels) as well as in the Tech Platform domain across the business segment as most traditional financial business still run on the legacy systems and either needs to be replaced or a major overhaul not just in India but globally.
Startup challenges are mainly around the market, capital, and customer access due to increasing oversight by regulators whose focus is to keep the bad apples out and protect consumer interests.
In contrast, challenges for the established players are mostly around scaling, improving compliance, and building a strong governance culture in the organization. They also need to work on evolving their business models to drive higher profitability and sustainability, and most importantly transitioning from a mono-track player (single-product service success) to multi-track player (multi-product service success)
Core and fundamental opportunities are the same for all players due to under penetration of financial services in our country.
Given my multiple roles in the industry today as a Fintech entrepreneur, expert, Investor, mentor, and industry representative there are multiple areas where individually or as an organization we help both start-ups as well as established organizations. A few examples of these are capital, market access, and market strategy validation, besides governance and policy areas guidance.
What are your views on the recent regulatory changes? How has the changing regulatory landscape evolved so far for the Indian fintech industry?
Navin Surya: I think the regulatory landscape for the fintech industry in India has been most progressive. Across all the policymakers (Government to the individual regulators), we have seen very positive changes and developments that have made India the 3rd largest fintech ecosystem in just a decade and a half. This is evident with growth in market penetration across the financial services.
Digitization of stock markets to the Payments and Settlement System Act, to the formation of the Department of Payments and Settlement systems in RBI to now Fintech Department in the RBI, and recently IFSCA for Gift city, are just a few of the big initiatives taken at the government and regulators which has led to hyper growth in the segment making India the formidable player across the globe.
This was further proven with Global Fintech Fest, India's own thought leadership platform for Fintechs across the globe becoming the largest in terms of scale in just 2years of its physical format. Each of these achievements is because of the active participation and support of the regulators as well as all stakeholders within the ecosystem.
How effectively has been the fintech industry making use of the social media from customers’ perspective?
Navin Surya: I think the fintech players have made use of all new digital technologies very well in the ecosystem and in particular with social media from customers' perspectives as well. Currently, the focus has been on awareness, communication and marketing, acquisition, and driving transaction initiatives. I think going forward we will see more effective use in the areas of customer services, risk and fraud management, and education.
How do Indian fintech perform, compared to those counterparts in the competitive world? What are the plus points of Indian fintech and where they need to do certain improvements / course corrections?
Navin Surya: India is a unique market as it represents demography a large variation in socio-economic status as well (Ultra High Networth Individuals to daily wage workers).
The range of products and solutions required to encompass the diverse culture & languages culture in India also add to the complexities, unlike many other countries. I think the Indian ecosystem has fared amazingly well considering the progress in just 1.5 decades and no major or systemic risks in the system caused by any fintech. This itself is a big achievement. It is very difficult to generally compare the Indian fintech ecosystem however with any specific country.
Some of the key positives for the Indian Fintech ecosystem are: Availability and use of Digital Public Infrastructure, Tech-savvy younger population driving faster adoption, Progressive Policy support from both the government and regulators, Tech and financial knowledge talent pool locally available, World class entrepreneurs with amazing execution skills, Investor ecosystem across the lifecycle of organization from incubation to publicly traded stock investors to name a few.
Fintech is an ever-evolving industry and as the space evolves, it will definitely need more harmonisation starting with the policymakers across different regulators for common risk areas such as KYC, cyber crimes, fraud, and customer protection. As the industry ecosystem is growing the industry players themselves need to play a better role in improving customer protection and awareness by driving SRO models and other consumer awareness initiatives. Measures by the government to make law enforcement more effective to punish and penalize the criminals involved in financial crime is another critical area besides strengthening consumer grievance and protection laws.
You are donning many hats: Fintech Industry Expert and Advisor, Investor, Mentor and Independent Board Member. Which hat do you like to wear the most? Which role gives you the maximum job satisfaction?
Navin Surya: I have been within the Digital Financial Services has been almost for 25 years now, long before the term 'Fintech' was coined.
I got a first-hand opportunity to witness as well contribute directly to the growth of this industry. As an entrepreneur, I was a part of many first's; from launching India's first digital wallet (ItzCash) to getting the first fintech license of Prepaid Issuer (PPI), the first company to get VC investment and also achieving profitability (a rarity in fintech space then) and also being amongst the first few entrepreneur to give exit to its investors with good returns.
As an Industry representative, I was the Founder and Former Chairman of the Payments Council of India (PCI), it was heartening to see the ecosystem grow and our country leading the innovation across the globe. Driving initiatives such as voluntary SRO for PPIs to take initiatives for becoming formal SROs for the Payments Industry over the last 15 years. Extended the same role further to the rest of the Fintech ecosystem as Founder and Former Chairman of the Fintech Convergence Council (FCC) over the last 5 years (both in a voluntary capacity).
Founding the largest Thought leadership platform from India for the global fintech world 'Global Fintech Fest (GFF) for the last 4years, the first two as digital platform and for last two as physical platforms and being able to witness GFF emerging as the largest across the glove in terms of scale has been breathtaking.
As an Industry thought leader for over the last 23 years, participating at multiple global and local platforms of media, industry bodies, regulatory and government policy, and working group and witnessing the high-impact decisions and from dream to reality happening right in front of us over these years has been mind-blowing. Such opportunities exist in very few industries today.
Lastly, in my recent role as an Investor both in startups (with portfoliol of over 15 companies) directly or via our Venture Capital arm Beams VC over the last years has been extremely exciting to see the difference that I and we could make with the founders and the organisations in their growth and success.
I have been blessed that each of these roles gave me immense satisfaction and that's also the reason I could excel and deliver the expectations in each of those to multiple stakeholders. Roles with the highest impact within the global industry (PCI, FCC, and GFF) have been most fulfilling, especially with the love and support I/we received on every step. It was simply overwhelming despite being a voluntary non-executive role.
I am currently enjoying my new role as an Investor which enables me to meet younger entrepreneurs and to witness their energy level, intelligence, and commitment to excel is highly motivating. It's an amazing exchange of knowledge with both sides learning from each other and being able to create value for all the stakeholders as well as for our country.
(All views expressed in this interview are personal)
