India Innovation – Fintech and Telecoms get thumbs up, Cryptos get hit

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For the past two weeks, I have been in India, partly holidaying and partly on business. Good part of my time I spent in Bangalore meeting entrepreneurs and hearing their stories. It has been nothing short of an inspiring two weeks to see the startup ecosystem buzzing like never before.

Since the cashless drive 18 months ago, India has seen a boom in payments startups, and several other Fintechs emerge. Volume of digital transactions has increased unsurprisingly. It wouldn’t have happened without various measures from the Central government to boost innovation. Fintech market in India is expected to double from $1.2 Billion in 2016-2017 to $2.4 Billion by 2020.

As per a report from Credit Suisse, payments in India is set to grow from $200 Billion today to $1 Trillion in 2023. Within a few months of launch, Googles payments app (Tez), is already processing the same number of digital transactions as Axis Bank (4th highest amongst Indian banks). Tez has also helped increase unified payment interface (UPI) transactions by about eight times

The digital economy and the leap frog moments in emerging markets have been preceded by mobile penetration. In the budget 2018, the country’s finance minister Arun Jaitley, has allocated about $1.5 Billion to set up about 500,000 wi-fi hotspots in the country and bringing fibre optic broadband to rural India with a view to connecting another 50 Million rural people.

The government is creating smart city infrastructure across about 99 cities with an investment of about $30 Billion. And the telecom industry is gearing towards adopting 5G technology along with the developed world, to ensure consumers are benefited.

That sounds like a lot of big building blocks to a new wave of a digital innovation, of course if executed well. The centre’s innovation drive is completely backing the Fintech ecosystem in the country. People in rural India will be able to use digital payment solutions such as BHIM UPI, Aadhaar Pay and Bharat QR.

Close to $600 Million dollar is being invested by the government into helping SMEs and Fintech firms that are focused on bringing Financial inclusion. This should increase innovation around lending businesses, especially in rural areas. On top of these industry focused initiatives, AI and Cyber research have also got major boost from the centre.

However, the government hasn’t been benevolent to the crypto industry. The budget clarified that the government will not legitimize crypto currencies in India. The Fintech community in India, should pushback on this, in my opinion. The Crypto world, when regulated has a lot of merit and I believe absolutism in regulating new innovative trends is counter productive.

Yet, its heartening to see the recent developments in innovation in India. 10 years back such budgetary measures to boost innovation was unheard of in the country. Discussions after budgets typically focused on tax brackets for the middle class and railway fare increase. It is refreshing to see the country buzzing with such activity and the government is spearheading this cultural and economic transformation.


Arunkumar Krishnakumar is a Fintech thought leader and an investor. 

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