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Challenges of Fintech Revolution
FinTech is a short-term used for the financial technology industry. It aims at improving the financial sector by integrating it with technology. Fintech works to improve the overall structure of the financial world. Its objective is to upgrade the services to make them more efficient and easily accessible to people.
India is leading in the fintech world by having so many budding startups and companies in the field after demonetization. It is because of fintech that we can access online banking and UPI’s. Fintech is working to decrease the gap between banks and customers by linking them via technology and make them fast and easy.
A hassle-free exchange environment came into existence with the fintech revolution hitting India. Otherwise, we would still be standing in long queues in banks to complete every financial work. We now have access to our money and assets 24/7, unlike old times when we could access them during office hours only.
The sudden rise in the financial sector in India not only helped us in monetary benefits but also created various opportunities in other business areas and opened new ways for them. But the fintech revolution has to face challenges like fund-raising, fluidity, and security-related concerns arise. Below are some of the vital challenges that the Fintech Revolution faces in a country like India.
Governmental and agreement laws
The Indian government has made laws that act as a hurdle in the growth of the Fintech Industry. Because of these laws, many people do not even try to enter the financial sector. The main objective of these laws was to prevent various frauds and illegal activities. It becomes an obstacle for the new entrants in the market. Anyone willing to enter the financial market goes through a big list of formalities before they proceed, and therefore step back.
Population lacking Financial knowledge
When FinTech started to spread its impact, India lags because of the low literacy rate and poor internet connectivity that staggered the Fintech growth. But now we can see its results in the long-run, after ages, people now started understanding fintech and its policies.
But, we can not oversee the fact that a large Indian population does not even hold a bank account nor has any financial knowledge. The people here have very little or no financial knowledge, thus the financial industry lags and has to overcome this barrier to serve its motive. According to a report, about 40% of bank accounts in India have no money. Thus they are not able to carry even a single transaction in the year. The government is trying to improve financial literacy with its various policies like Pradhan Mantri Jan Dhan Yojana and we have a long way to go before we can see huge impacts in society.
People have been friendly with cash-related transactions for a long time. They have thought cash to be the only medium used for money exchanges, so it is difficult for people to adopt entirely new policies and systems. People having no or less financial knowledge have the mentality that online transactions are fraudulent activities going around. So, they fail to utilize the importance of the fintech industry in their lives.
The fintech industry has important financial data of the company or individual and thus has to work on the high-security systems. A single cyber fraud can lead to the loss of so many individuals by leaking out their financial data. A little risk can lead to a failure of the fintech industry, therefore people are scared to adopt the measures because of security concerns. Fintech has to ensure people and earn their belief in the security measures to hold its place. Data privacy is important in any Financial Industry.
The Indian government does not support the financial industry and does not try to make policies, measures, or stimulate the FinTech industry. No policy is bought to support or benefit financial companies, thus new entrants get highly demotivated. FinTech plays an effective role when it comes to the economy of the country. And should be offered all necessary objectives that lead to success.
Various financial bodies work in the traditional ways and FinTech does not get support from them because they fear that they will lose their customers if they support fintech measures and therefore It is a big task for FinTech companies to manage untroubled relationships with other financial organizations.
Despite having all these challenges and barriers Indian economy is continually moving towards an economy that will be cashless. By using various platforms like UPI’s, digital wallets, Aadhaar, etc we are moving towards a cashless economy. Fintech startups have to be ready for the challenges to achieve success and get public attention. It has to work on evolving the mindset of Indians, towards the innovations in society. It is the world of technology and we have to adapt to every possible technology change that is beneficial for us. Fintech resolves various problems for us and makes effective changes in society that are the need of time. Also by getting proper government support, fintech can reach heights and help in regulating the traditional ways of accessing finance.