Learn about the latest trends in the Indian fintech industry and how businesses are adapting to stay competitive in the face of economic uncertainty
Welcome readers, In this article, we take a closer look at a new research from FIS, a global leader in financial services technology, which shows how businesses in India are embracing the next generation in financial technology to help fuel new growth in digital channels despite current economic uncertainty.
Businesses in India are embracing the next generation of financial technology to fuel new growth in digital channels despite current economic uncertainty, according to a new research from FIS, a global leader in financial services technology. The inaugural 2023 Global Innovation Report asked business leaders in financial services and non-financial businesses in India about their business strategies and experience with embedded finance, Web3, environmental, social, and governance (ESG) frameworks.
2. Embedded Finance Reflects a New Reality in India in 2023
Embedded finance is when consumers have unique, tailored financial services delivered to them at the point of need by non-financial companies. Embedded payments are most familiar to consumers, enabling the speed and convenience of paying for goods and services in an app, with just a single click. New use cases across banking, lending, and investing are emerging and the drive to deliver embedded financial services is rapidly accelerating in the country.
More than two-thirds (71%) of financial services and fintech firms will significantly invest in developing embedded finance products within 12 months, according to the study. 44% of the financial services and fintech firms that are investing in embedded finance believe it will increase revenue. 37% of non-financial firms that see an impact from embedded finance on their business will respond by increasing their tech or R&D budget in the next 12 months.
Fintech in India: Insights on Key Trends and Impact on Businesses
IMPACT ON BUSINESSES
84% expect moderate to major impact
86% expect moderate to major impact
Environmental, Social, and Governance (ESG) Frameworks
84% expect moderate to major impact
85% expect moderate to major impact
83% expect moderate to major impact
Note: These percentages are based on the survey results from the research mentioned in the article.
3. DeFi and Metaverse: Competitive Edge but Risks Remain
Web3 focuses on decentralized infrastructure and includes concepts of cryptocurrency, DeFi, and the metaverse. According to the research, India has broader investment in Web3 initiatives when compared with global counterparts. Businesses firmly believe that to stay competitive, it is imperative to deliver all financial services in one end-to-end experience. 84% of financial services respondents believe DeFi, which uses blockchain and digital asset technology to manage financial transactions, represents a major growth opportunity for their organization.
However, a higher percentage (89%) assert the need to better understand the risks of decentralized finance before participating. Surprisingly, 61% of non-financial businesses believe it will be strategically important to have a presence in the metaverse in the next 12 months. Nearly two-thirds of all respondents from India (60%) already have or are currently developing products or services in the metaverse. 32% of respondents agreed cybersecurity is the biggest concern in the metaverse.
4. Environmental, Social, and Governance (ESG) Frameworks
ESG frameworks are designed to promote social responsibility and environmental sustainability. 84% of financial services and fintech firms expect a moderate to major impact from ESG frameworks in the next 12 months. Among financial services and fintech firms, 49% of respondents believe that ESG frameworks will increase revenue. Among non-financial firms, 34% believe that ESG frameworks will increase revenue.
Despite the current economic uncertainty, businesses in India are turning to innovation to succeed in 2023 and beyond. The research shows that key areas of fintech, such as embedded finance, DeFi, ESG, the metaverse, and cryptocurrencies will have a major or moderate impact in the short-term, and businesses are investing now to prepare for an impending surge in demand. Companies that take action now are more likely to maintain or attain a leadership position in the market as the next era of digital services emerges.
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