The Indian FinTech software market holds the potential to reach USD 2.4 billion by 2020, notes a 2015 report titled “Fintech in India: a Global Growth Story” by KPMG in India and NASSCOM 10000 Start-ups. With about 2000 startups, India is currently the world’s second-largest FinTech hub.
There are many factors such as large population, favorable regulatory policies, digitally empowered entrepreneurs that forms the basis for the prospective growth in the FinTech industry in India.
That said, this recent spur is also affected with multitude of challenges that includes identity theft, service misuses, among others- thereby negating the overall growth.
In its fifth annual PACE report, FIS revealed that nearly 96% of the Indian respondents fell victim to financial fraud last year, implicating the seriousness of this issue. Thus, it becomes imperative for the FinTech players to safeguard themselves from rising financial frauds.
Where on one hand, the government of India is bolstering the security with preventive measures, on the other, the current identity systems don’t necessarily ensure the secure delivery of financial services.
One big reason that can be attributed to such state of affairs is continuous relying on outdated approaches, not in sync with current landscape.
Such instances have led to the introduction of more digitally secured, advanced security measures such as Artificial Intelligence (AI)- to achieve context-aware identity verification. This includes, taking a selfie, or recording a voice note to match with ID, etc.
To mitigate the possibility of identity fraud and malpractice, it would be important to either amalgamate or use nuances from both the traditional methods and new-age practices, for more informed security decisions in real-time.
Owing to such security measures in place, lending, financial institutions can now identify prospective borrowers while weeding out cases with a higher probability of fraud, save costs and reduce the loan processing time.
This in turn, will determine the success of SME and MSMEs, which often turn to informal lenders for credit. At a time when the consumer expectations are constantly evolving, it becomes critical for financial institutions to provide a fully digital, seamless banking experience.
It can be assumed that the Indian FinTech market is poised for exponential growth. That said, it wouldn’t be plausible without addressing the rising cases of identity fraud.