CHAPTER - I

INTRODUCTION

1.1 INTRODUCTION

FINTECH IN INDIA

Fintech is one of the highest-growing technology segments in India, bringing innovation

in various applications including loans, payments, stock trading, and credit scoring. As of 2020,
India accounted for the highest fintech adoption rate (87%) and is the biggest destination for
investment deals worldwide. Within the country, some of the top fintech destinations are
Mumbai, Gurugram, Bengaluru, New Delhi, and Hyderabad. Mumbai and Bengaluru together
represent ~42% of the fintech hub in India.

India offers a large unserved market for digital transactions and mobile banking.
According to the World Bank's Global Financial Inclusion Database or Global Findex Report
2017, 80% of Indian adults (age 15+) have a bank account, which is almost double the share
of adults with a bank account in 2011 (35%) and significantly higher than Findex 2014 (53%).
This has created opportunities for Fintech companies to bring about millions of customers to
cashless payment platforms to promote financial inclusion.

Government acts as a leading catalyst between people and fintech in India. The
government of India along with regulators like Securities Exchange Board of India (SEBI) and
Reserve Bank of India (RBI) are supporting the Fintech companies to make India, a cashless
economy through government programs.

THE RISE OF FINTECH IN INDIA

With one of the world's fastest-growing economies, India has undoubtedly emerged as
one of the fastest-growing FinTech hotspots in recent years. Fintech in India has crossed China
as Asia’s top financial technology market and became the second largest fintech economy in
the world after the US. The industry is now setting up new goals for other countries.

Paperless lending, mobile banking, secure payment gateways, mobile wallets, and other
concepts are already being adopted in India. Over the last two years, there has been a massive

1
adoption of digital payment systems in India, making it a lot more convenient to go about with
basic financial services.

This growth and expansion of the FinTech ecosystem in India have been aided by several
factors, including the growing availability of smartphones, increased internet access, and high-
speed connectivity.

The COVID-19 pandemic has accelerated the digitalisation, as the physical interactions
are getting replaced through digital connectivity among the users which has given a boost to
provide the financial services digitally to the customers. A strong push from the government is
anticipated to enable the growth of the India FinTech market. India FinTech transactions
market stood at USD 766.90 billion in FY 2021 and is expected to grow at a CAGR of 49.13%
through FY 2027 as advancements in financial technologies, digital enhancements have
brought significant changes in the money regulation industry of the country.

Fintech in India was valued at US$65 billion in 2019 and at INR 2.30 trillion in 2020 and
is expected to grow to US$140 billion in 2023 at a CAGR of 20% during the forecast period.
This advancement has reduced the cost, that enabled the new players to enter the market. These
services are available at a very low cost or for free to the customers, which has led to a huge
growth in the market.

1.2. STATEMENT OF THE PROBLEM

The rapid pace of growth in the FinTech industry in India comes on the back of accelerated
digitalisation in the country. This study mainly focuses to understand the causes and factors
which influenced its development in the market and in the Indian economy especially during
the pandemic period.

1.3. OBJECTIVES OF THE STUDY

➢ To analyse the growth of Fintech Industry in Indian economy

➢ To examine the interlinkage between digital payments and other fintech sectors
➢ To know the impact of Fintech Industry in Payments and Online Financial Products

2
1.4. SCOPE OF THE STUDY

This study subjected to cover growth rate of each segment in the fintech industry like
Digital Payments, Alternative Lending, Digital Assets, Digital Investments, Neo Banking. As
the Original Research format is suitable for many fields and different types of studies, we have
used the Original Research format in our study. It is the most common types of journal
manuscript used to publish full reports of data from research. This includes full introduction,
research methodologies, Data Interpretation and Findings & Suggestions sections. This study
will also be helpful for the future researchers.

1.5. RESEARCH METHODOLOGY

Research Methodology is the specific procedures or techniques used to identify, select,

process, and analyse information about a topic. A methodology can be considered to include
multiple methods, each as applied to various facts of the whole scope of the methodology.

1.5.1. SOURCE OF DATA COLLECTION

SECONDARY DATA

Secondary data is the data that has been already collected through primary sources and
made readily available for researchers to use for their own research. In this study, we have used
secondary data from public records, historical and statistical documents, business documents,
and trade journals.

1.5.2 RESEARCH DESIGN

This research is based on descriptive research.

1.5.3 TOOLS USED IN THE STUDY

• Simple Percentage Analysis

• Correlation Analysis
• Trend Analysis

3
1.5.4. PERIOD OF THE STUDY

This study based on the data collected from the past five years (2016-2017 to 2020–2021)

1.6. LIMITATIONS OF THE STUDY

➢ The study on growth of FinTech companies is limited within India.

➢ The study period for the project is limited to 5 years. And so, the accuracy of the results
might differ based on the study period.

4
 CHAPTER - II

REVIEW OF LITERATURE

1) Patrick Schueffel (2015) There is currently no consensus about what the term Fintech
means. The objective of this study is to offer a definition which is distinct as well as
succinct in its communication, yet sufficiently broad in its range of application. As the
origins of the term can neither be unequivocally placed in academia nor in practice, the
definition concentrates on extracting out the quintessence of Fintech using empirical
studies and data analysis. Applying semantic analysis and building on the
commonalities of 13 definitions of the term, it is concluded that Fintech is a new
financial industry that applies technology to improve financial activities. The
implications as well as the shortcomings of this definition are discussed.

2) KPMG in India and NASSCOM (2016) 1000 start-ups published about the topic
“Fintech in India - A global growth story”. This study to know the growth and
innovation for incumbent financial institutions. Additionally, it explained some of the
most relevant applications of Fintech in financial inclusions. Leverage incubation
support like working with players in the ecosystem and develop relationships with
technology development and mobilise both domestic and foreign venture capital funds
are recommended to the fintech firms.

3) Mark Coeckelbergh, Quinn DuPont, and Wessel Reijers (2017) researched about
the article “Towards a Philosophy of Financial Technologies”. This study brought two
different fields – financial technologies and finance to the field of philosophy of
technology together that have not traditionally been in dialogue. It also illuminates the
importance of considering financial technologies and their role in the ‘crises of
modernity’.

4) Mr. Nilesh Naker (2017) highlights in his paper that the major reason for rise and
growth of fintech is the reduction of human capital by digital-native fintech landscapes.
Even though the fintech ecosystem has grown by leaps and bounds, it has faced its own
challenges. He also mentioned that insures, Neo banks, Wealthtech, API banking,
digital payment and digital lending are some of the emerging trends that shape the

5
 fintech industry. According to him, adoption of new technology is not done just by
building own IP, but through leveraging of partnership with other fintech ecosystem
stakeholders.

5) Peter Gomber and Michael Siering (2017). This study includes financial industry has
experienced a continuous evolution in service delivery due to digitalization. This
evolution is characterized by expanded connectivity and enhanced speed of information
processing both at the customer interface and in back-office processes. Recently, there
has been a shift in the focus of digitalization from improving the delivery of traditional
tasks to introducing fundamentally new business opportunities and models for financial
service companies. This study gives an outlook on potential future research directions.
This conceptualization supports researchers and practitioners when orientating in the
field of Digital Finance, allows for the arrangement of academic research relatively to
each other, and enables for the revelation of the gaps in research.

6) The Authors, Leong K and Sung A (2018) published an article “FinTech (Financial
Technology): What is It and How to Use Technologies to Create Business Value in
Fintech Way?” They defined ‘FinTech’ as a cross-disciplinary subject that combines
Finance, Technology Management, and Innovation Management. The definition had
been presented to different audiences with different backgrounds, such as students and
business professionals in various events. The definition provides audiences better
understanding on what is FinTech and its potential. Moreover, in order to discuss how
FinTech would create value for businesses, they summarized various FinTech
applications into four major categories: payment, advisory service, financing and
compliance. In addition, we also discuss what are the emerging technologies in FinTech
and how they could create business values. This study could serve as a reference for
researchers, particularly from technology background, on how to identify and develop
new Fintech solutions.

7) Anne – Laure (2019) published the article named “The Future of Fintech” She pointed
up the words by Gobble (2018) that the Fintech is increasingly embedded in everyday
economic transactions, as digitalization and digitization. Simultaneously, she
manifested the struggle of Fintech firms to present a clear value proposition for their
service-based offerings and to understand users and product -market fit.
6
8) The article “Initiatives by India to boost Fintech” was penned by Fintech Futures
(2019). The National Association of Software and Services Companies (NASSCOM)
revealed that 400 fintech firms are currently operating in India, and the number is
expanding every quarter. It is clearly stated all the Government schemes for Fintech
world and initiatives like National Payments Council of India (NPCI), Jan Dan Yojana,
Digital India Programme, etc. This study highlights that the traditional banks and NBFC
for the first time are facing a tough competition from fintech players. The definition
had been presented to different audiences with different backgrounds, such as students
and business professionals in various events, the definition provides audiences better
understanding on what FinTech and its potential is. Moreover, in order to discuss how
FinTech would create value for businesses, we summarized various FinTech
applications into four major categories: i) payment, ii) advisory service, iii) financing
and iv) compliance. We believe that this study could serve as a reference for
researchers, particularly from technology background, on how to identify and develop
new Fintech solutions.

9) Varun Mittal (2019), This document describes the Indian Fintech landscape,
approaching the analysis from a fintech, regulatory and investment standpoint. This
document serves as a snapshot of the key pillars of a fintech ecosystem in a country and
provide a good overall view of the state of fintech at a glance. India’s fintech sector is
growing rapidly fuelled by a large customer base. Much of fin Tech adoption in the
country is driven by digital platforms, which got impetus from recent innovations lie
united payments interface. Banks and financial services industry is working in close
partnership with fin Techs which has resulted in strong B2B Fin Tech presence in the
country.

10) Thomas J. Chemmanur (2019) in JFMMI Conference, published “Research

Development in Banking and Finance Ten Years After the Financial Crisis” with the
Guest Editors of Vincenzo Capizzi and Francesca Arnaboldi. The aim of the study is
recent developments in the field of Financial Technology or FinTech. He begin with an
overview of what FinTech is and why it has become an important growth industry in
the financial services area and therefore an important research topic in finance. He
reviewed some of the academic literature in the FinTech area. In the subsequent section,
He characterized the financing of FinTech start-ups, especially by venture capital firms.
7
11) C. Vijai (Jan 2020) -"Fintech in India " The paper provides the historical evolution of
fintech, and their market size and growth, fintech regulations in India, advantages, and
disadvantages of fintech. The internet boom and the rise of mobile computing had
propelled fintech to become a continuing global revolution. Fintech investments in
India are increasing tremendously expanding the market size of the fintech industry.
Fintech activities are being regulated by RBI. RBI has encouraged the growth of fintech
giving license and by boosting Bharat Bill Payment System and Unified Payment
Interface along with P2P lending, digital payment etc. Fintech is important for the future
of financial and is reshaping the sector.

12) Nicola Branzoli and Ilaria Supino (2020). FinTech credit has attracted significant
attention from academics and policymakers in recent years. Given its growing
importance, in this paper we provide an overview of the empirical research on FinTech.
The main messages emerge from the literature. First, the growth of lenders with
innovative business models is mainly driven by the degree of local economic
development and of competition in the banking sector. Second, FinTech borrowers
generally lack (or have limited) access to finance and tend to be riskier than traditional
bank borrowers.

13) Adilin Beatrice (2021) " Fintech in India: Paving the way to a billion-dollar economy
"Fintech in India has crossed China as Asia's top financial technology market and
became the second largest Fintech economy in the world after the US and Fintech start-
ups are the reason behind this as many start-ups have emerged in recent years bringing
the concepts of paperless lending, secure payment gateway and many more.
Government plays a vital role for the development of fintech industry in India through
their programs. Tech Vendors and Banks contributes majorly to the Indian economy
merging with the fintech start-ups.

14) Kavya Shree (2021) studied about the Fin Tech industry in India. She analysed various
factors influencing the financial sector and identified the initiatives of the government
to promote the FinTech industry. It also highlighted the inter linkage of financial
services and technology in three different eras i.e., analogue context, digitalization of
Finance in the late twentieth century and the present era of digital transformation.

8
15) Naina Bhardwaj (2021) - " What trends are driving the fintech revolution in India ".
In this, the major trends shaping the future of Fintech in India and how the Fintech
market is evolving in technology segments are discussed. During the pandemic when
every other sector experienced slump in growth the Fintech sector has thrived as
COVID based restrictions encouraged contactless transactions. Growth of fintech in
India is driven by various macroeconomic factors. There are over 2100 Fintech
companies in India out of which 67 percent has been set up in the last 5 years. The
Fintech investment and transaction value size has met remarkable growth. Different
fintech segments in India and the major challenges affecting fintech adoption in India
are also discussed in this.

16) Devashish Shrivastava (2021) researched about the topic “Fintech Industry in India –
History, Growth, Future”. He highlighted money related innovation and the list of best
emerging fintech start-ups in India. As per NASSCOM report, the financial
programming and administration advertising in India was around $8 billion in 2016 and
it was expected to develop 1.7 times by the end of 2020. He also mentioned in this
article about the factors which are propelling the comprehensive growth of Fintech in
India and about few leading Fintech companies.

17) Nandan Nilekani 2021, the paper gives deep insights into all Fin Tech segments and
within each segment, in-depth research has been done to give an accurate picture of
what is happening in these segments by closely studying the trends, innovative business
tech models, inhibitors, and challenges. The study also covered some of the upcoming
Fin Tech innovations like Account Aggregation Framework, Agri Tech, Health Tech,
Prop Tech etc.

18) Dr. Disha Mehta and Dr. Sweta Kumari (2021), published the paper which focuses
on customer’s responses with respect to adoption, inclination, and attitude towards
Fintech technologies. Research has been supported by survey from wide variety of retail
customers of financial products. Fintech will be disruptive to payment and investment
management sectors majorly. Variables like ease of use, cheaper service, easy
accessibility, and enhanced customer experience significantly impact customer’s
interest of adopting fintech in next five years.

9
19) Helen Bollaert, Florencio Lopez-de-Silanes and Armin Eschenbach (2021). This
research is about the effects of digitalization on access to finance. They focused in the
review on access through fintech. They discussed about the existing evidence on how
fintech affects access to finance for firms and investors and considered the regulatory
challenges it poses. In this study, they underlined their significant contributions to the
understanding of the digitalization of finance and its effects using past data and
analytics. Finally, they concluded this study with the challenges of research in the
digital finance area and proposed some new avenues for future research

20) Anne – Laure (2021) published the article “The Age of FinTech: Implications for
Research, Policy and Practice”. This research highlighted that the FinTech is inducing
changes in how financial services (FS) are perceived, developed, promoted, delivered,
and consumed. Future of FinTech, however, is rooted in deliberate integrated actions
to improve framework conditions related to consumer trust, regulation, and scalability.
Building on limited scholarship, this paper identifies the building blocks for the future
of FinTech and provides prescriptive areas of focus to guide research, policy, and
practice. In sum, the purpose of the paper is to serve as a catalyst and a call for an
integrative approach in developing a common understanding and interpretation of
FinTech as a socially constructed phenomenon at the intersection of research and
technology management

21) Michel Crouchy, Zvi Wiener, and Dan Galai (2021) published “The Impact of
FinTech on Financial Intermediation: A Functional Approach”. In this study, they
analyse fintech and their impact on the traditional financial system from a functional
perspective. Following the approach suggested by Merton (1995) [A Functional
Perspective of Financial Intermediation, Financial Management 24(2), 23–41], they
have shown how the six core functions of financial intermediation are affected by the
technological developments. This analysis provides a new perspective on the future of
financial services and their regulation. India stack has played a catalytic role in India’s
digital transformation and acted as a disruptive force to reinvent the whole process.

10
22) Terrence Hendershott, Xiaoquan (Michael) Zhang, J. Leon Zhao and Zhiqiang
(Eric) Zheng (2021). Technologies have spawned finance innovations since the early
days of computer applications in businesses, most recently reaching the stage of
disruptive innovations, such as mobile payments, cryptocurrencies, and digitization of
business assets. This has led to the emerging field called financial technology or simply
FinTech. In this review, they provided an overview on relevant technological,
pedagogical, and managerial issues pertaining to FinTech teaching and research, with
a focus on market trading, artificial intelligence, and blockchain in finance. The
discussions of potential research directions and topics in FinTech of this study stimulate
future research in the fields of information systems and finance toward making their
unique marks in the FinTech evolution and the associated business and societal
innovations.

23) Norestad F (2022) published the article named “Fintech - Statistics and Facts”. The
research began with the fact that 70 percent of senior banking executives said that
collaborating with FinTech and Bigtech to create a new service was an important
opportunity for banks. He also listed out facts like 38% share of U.S. personal loans
granted by FinTech and 65.3% share of Americans using Digital banking by 2022. In
addition to it, this article discloses the statistics of fintech relating to its investment,
leading companies, and adoption rates.

11
 CHAPTER - III

OVERVIEW OF THE INDUSTRY

FINTECH INDUSTRY

FinTech is a term used to describe emerging digital technology that aims to improve
and automate the delivery and usage of financial services. The word “FinTech” is a
combination of "financial technology.”

The term “FinTech” was first coined in the 21st century to describe the technology used
in the back-end systems of established financial organizations. Today, however, FinTech spans
various sectors and industries, including education, retail banking, non-profit fundraising,
investment management, and much more. FinTech helps companies, business owners, and
consumers manage their financial operations and processes. FinTech has also come to include
the development and use of cryptocurrencies like Bitcoin in recent times. Although different
sectors of FinTech continue gaining traction today, a large part of FinTech still focuses on the
traditional global banking industry. And India is at the forefront of this FinTech revolution.

INDIAN FINTECH INDUSTRY

12
HISTORY OF FINTECH INDUSTRY

Technological development of finance (1886-1967)

Taking the definition of fintech as ‘new tech that seeks to improve and automate the
delivery and use of financial services’ [Investopedia] you could argue that the history of fintech
goes back to the 19th Century. From 1886-1967 investment in communications infrastructure,
such as the telegraph and transatlantic cables, enabled the transmission of financial information
across borders. The Fedwire, a centralized funds transfer service was established in 1918. The
1950s brought credit cards, reducing the need for people to pay in cash. [The Evolution of
Fintech: A New Post-Crisis Paradigm by Buckley, Arner, and Barberis]. It can be argued that
while such types of fintech may not be regarded as such today, they were, however, relevant to
their period.

Fintech 2.0 (1967-2008)

This period marks the shift from analog to digital and is led by traditional financial
institutions. It was the launch of the first handheld calculator and the first ATM installed
by Barclays bank that marked the beginning of the modern period of fintech in 1967.

There were various significant trends that took shape in the early 1970s, such as the
establishment of NASDAQ, the world’s 1st digital stock exchange, which marked the
beginning of how the financial markets operate today. In 1973, SWIFT (Society for
Worldwide Interbank Financial Telecommunications) was established and is to this day
the first and the most used communication protocol between financial institutions
facilitating the large volume of cross border payments.

The 1980s saw the rise of bank mainframe computers and the world is introduced
to online banking, which flourished in 1990s with the Internet and e-commerce business
models. Online banking brought about a major shift in how people perceived money &
their relationship with financial institutions.

By the beginning of the 21st century, banks’ internal processes, interactions with
outsiders and retail customers had become fully digitized. This era ends with the Global
Financial Crisis in 2008.

13
Fintech 3.0 (2008-Current)

As the origins of the Global Financial Crisis that soon morphed into a general
economic crisis become more widely understood, the public developed a distrust of the
traditional banking system. This and the fact that many financial professionals were out of
work, led to a shift in mindset and paved a way to a new industry, Fintech 3.0. So, this era
is marked by the emergence of new players alongside the already existing ones (such as
banks).

The release of Bitcoin v0.1 in 2009 is another event that has had a major impact on
the financial world and was soon followed by the boom of different
cryptocurrencies (which, in turn, was followed by the great crypto crash in 2018).

Another important factor that shaped the face of fintech is the mass -market
penetration of smartphones that has enabled internet access for millions of people across
the globe. Smartphone has also become the primary means by which people access the
internet and use different financial services. 2011 saw the introduction of Google Wallet,
followed by Apple pay in 2014.

The 21st century started with banking services becoming digitized. The financial crisis
coupled with the rise of smartphone usage had a massive impact on the fintech industry. The
2008 global financial crisis eroded confidence in traditional banking institutions, and together
with the broad-based rise in digitalization, kickstarted what we now recognize as the fintech
industry.

The introduction of Bitcoin in 2009 for example, had a significant effect on the financial
world and many different cryptocurrencies were also introduced. Various fintech business
models also started to emerge, some of which included alternate credit scoring, digital wallets,
and small ticket loans.

GOVERNMENT INTIATIVES TO BOOST FINTECH INDUSTRY

Central Government – Generates Necessary Tailwinds:

Since the beginning of 2019, there has been a concerted effort bythe central government
through appropriate policies to leverage innovation to bring about visible societal-level changes.
While some of these policies have been heavily debated in the context of already-operational

14
FinTech business models, some have afar-reaching impact on fundamental issues such as data.
Abolishing MDR on UPI and RuPay payments was one such heavily debated policy measure.
Even as some of the existing revenue models in payments have come under extreme stress due to
this mandate, it is expected to push the agenda of digital payments adoption much further.

The Reserve Bank of India:

RBI mandated all payment service providers to localize data within the country with no
option to mirrorthe data outside of the country. Considering the significance of data, security,
and access in an exponentially growing digital payments landscape and the fact that the
majority of big players are foreign enterprises, this might have been an important move.
However, the cost of this mandate to these enterprises is still being argued upon. The Personal
Data Protection Bill wastaken to the parliament in early 2020 but was delayed due to the COVID-
19 pandemic. Clarity on the localization of data and the nuances of data protection, sharing, and
portability are heavily dependent on the safe passage of this bill.

The Supreme Court of India:

It ruled against the RBI, lifting the ban on cryptocurrency trading.

Regulators:

Initial Traction, Long Way to Go: The RBI has been proactive in examining and setting
up regulatory frameworks across various FinTech verticals such as digital payments, P2P
lending, and more. In January 2020, the RBI gave its nod to video-based KYC as an alternative
to physical verification. The video-KYC process allows due diligence of the customer and
identifying documents via video chat. Additionally, the RBI also authorized the use of digital
lockers for paperless document management as part of the KYC process. These steps will
particularly help banks, NBFCs, prepaid wallet players, and Neo banks, all of whom have been
pushing the edge of fully digitized onboarding for a while. Additionally, this should augment
financial inclusion, with the cost of onboarding reducing significantly.

While SEBI and IRDA have constituted committees to study the growing impact of
FinTech’s in the WealthTech & InsurTech in India, the advances for proactive regulatory
policies that will facilitate disruptive innovations have been relatively slow. However, the
initiative for setting up regulatory sandboxes where start-ups can develop and experiment
with innovative products in a controlled environment is a step in the right direction.

15
 In June 2020, the SEBI clarified that corporate Registered Investment Advisors could also
distribute mutual funds. This should encourage several budding robo-advisors in India to re-
strategize on their business models.

16
 CHAPTER - IV

ANALYSIS AND INTERPRETATION

Correlation analysis in research is a statistical method used to measure the strength of the
linear relationship between two variables and compute their association. Simply put -
correlation analysis calculates the level of change in one variable due to the change in the other.
A high correlation points to a strong relationship between the two variables, while a low
correlation means that the variables are weakly related. Sector analysis helps investors assess
the economic and financial prospects of a sector of the economy to identify potentially
profitable investments.

Trend analysis is a strategy used in making future predictions based on historical data. It
allows to compare data points over a given period and identify uptrends, downtrends, and
stagnation. Trend analysis is computed using numerical data. This information is
usually historical data either traditional data in the form of a company’s performance taken
from its public financial statements or alternative data of last few years.

NUMBER OF USERS BY SEGMENT

TABLE NO: 4.1

Years Alternative Alternative Digital Digital Digital Neo

Financing Lending Assets Investments Payments Bankin
g
2016-17 0 300 1563 32200 3215500 8400

2017-18 0 300 271400 58100 3778500 14900

2018-19 0 400 457500 93100 4979900 26100

2019-20 0 400 730300 134400 5485500 44100

2020-21 0 400 1085000 179500 6439300 70100

2021-22 0 400 1430400 227600 7393400 101700

17
INTERPRETATION:

The above table 4.1 shows that number of users using fintech applications in different
segments during the study period. In this table, we came to know that the users of Digital
Payments stand very high with the change in percentage of 99.8, which is followed by Digital
Assets with the change in percentage of 89.07 and Digital Investments with the fluctuation in
percentage of 85.8

EXHIBIT NO: 1

USER BY SEGMENT
10.17
739.34
2021-2022 22.76
143.04
0.04
0

7.01
643.93
2020-2021 17.95
108.5
0.04
0

4.41
548.55
2019-2020 13.44
73.03
0.04
0
YEARS

2.61
497.99
2018-2019 9.31
45.75
0.04
0

1.49
377.85
2017-2018 5.81
27.14
0.03
0

0.84
321.55
2016-2017 3.22
15.63
0.03
0

0 100 200 300 400 500 600 700 800

USERS(In Millions)

Neo Banking Digital Payments Digital Investments

Digital Assets Alternative Lending Alternative Financing

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CORRELATION ANALYSIS

A Correlation study is undertaken to evaluate the relationship between the Digital

Payments and other Fintech sectors. In the table 4.2, the correlation related to the users of
Digital payments and other fintech sectors is Highly positive. The analysis in table 4.4 revealed
the presence of high positive correlation between digital payments and other segments except
Alternative lending. Thus, it shows that increase in number of users and transaction value of
digital payments also increases the value in other fintech sectors except Alternative lending.

CORRELATION OF DIGITAL PAYMENTS WITH OTHER FINTECH

SEGMENTS

TABLE NO: 4.2

Segments Coefficient value Positive or Negative

Alternative Lending 0.844037 Highly Positive

Digital Assets 0.983501 Highly Positive

Digital Investments 0.993628 Highly Positive

Neo Banking 0.970973 Highly Positive

INTERPRETATION

The relationship between Alternative Lending and Digital Payments shows Positive
Correlation. If there is an increase in the number of users of Digital payment, then there will
be increase in number of users of Alternative lending. From the above table, the Correlation co
efficient between Digital Assets and Digital payments is Highly positive. And so, changes in
value of digital payment affects the value of digital assets also. The Correlation of Digital
payments with Digital Investments and Neo banking is Highly positive.

19
TRANSACTION VALUE BY SEGMENTS

TABLE NO 4.3

Years Alternative Alternative Digital Digital Digital Neo Banking

Financing Lending Assets Investments Payments

2016-17 100 1100 1000 20500 421600 23600

2017-18 100 1000 1800 39200 513000 46600

2018-19 100 1100 1800 69400 667900 93600

2019-20 100 900 10800 92900 885200 172500

2020-21 100 1000 18800 142900 1169000 300300

2021-22 100 1000 26200 202300 1374000 467900

INTERPRETATION

The above table 4.3 shows that the Transaction value by Fintech companies in different
segments during the study period. In this table, we acknowledged that the transaction value in
Neo banking is comparatively higher than other segments with the conversion of percentage
94.95, which is followed by Digital Investments with the percentage change of 89.86 and the
Digital payments with the change in percentage of 69.3.

20
 EXHIBIT NO:2

TRANSACTION VALUE BY SEGMENT

46.79
137.4
20.23
2022
2.62
0.1
0.01

30.03
116.9
14.29
2021
1.88
0.1
0.01

17.25
88.52
9.29
2020
1.08
0.09
0.01
YEARS

9.36
66.79
6.94
2019
0.18
0.11
0.01

4.66
51.3
3.92
2018
0.18
0.1
0.01

2.36
42.16
2.05
2017
0.1
0.11
0.01

0 20 40 60 80 100 120 140 160

TRANSACTION VALUE (In Billions)

Neobanking Digital Payments Digital Investments

Digital Assets Alternative Lending Alternative Financing

21
CORRELATION OF DIGITAL PAYMENTS WITH OTHER FINTECH
SECTORS

TABLE NO: 4.4

Segments Correlation Coefficient Positive or Negative

-0.44805
Alternative Lending Negative

Digital Assets 0.980556 Highly Positive

0.991396
Digital Investments Highly Positive

Neo Banking 0.982998 Highly Positive

INTERPRETATION

The above table makes clear that the relationship between Digital payments and
Alternative lending is negatively correlated. Thus, Alternative lending will have a opposite
reaction with digital payments. The correlation between Digital Assets and Digital Payments
is Highly positive and so these sectors will go together. The relationship of Digital payments
with Digital Investments is Highly positive with the correlation co efficient of 0.991396. In the
table, Digital payments and Neo Banking has the correlation coefficient 0.982998 and so these
segments are highly positive.

22
FINTECH FUNDING IN INDIA

TABLE NO: 4.5

Year Funding (in billion)

2016 -17 .922
2017 -18 3.7
2018 -19 2.1
2019 -20 4
2020 -21 2.7
2021 -22 3.1

INTERPRETATION

The above table 4.5 indicates that the Funding for Fintech Companies in India during the
study period. From this table, we concluded that the Funding for Fintech companies in 2019
stood high at the amount of 4 billion which is followed by funding in 2017 with the amount of
3.7 billion and 2021 with the amount of 3.1 billion. The lowest funding of Fintech during the
study period is in the year 2016 with the amount of 0.92 billion.

EXHIBIT NO: 3

FINTECH FUNDING
4.5
4
4 3.7
3.5 3.1
FUNDING(In Billions)

3 2.7
2.5 2.1
2
1.5
0.92
1
0.5
0
2016 2017 2018 2019 2020 2021
YEARS

Funding

23
TREND ANALYSIS

Trend analysis is a technique used in technical analysis that attempts to predict future
stock price movements based on recently observed trend data. Trend analysis uses historical
data, such as price movements and trade volume, to forecast the long-term direction of market
and business.

𝐶𝑢𝑟𝑟𝑒𝑛𝑡 𝑦𝑒𝑎𝑟
𝐶ℎ𝑎𝑛𝑔𝑒 𝑖𝑛 𝑃𝑒𝑟𝑐𝑒𝑛𝑡𝑎𝑔𝑒 = − 1 × 100
𝑃𝑟𝑒𝑣𝑖𝑜𝑢𝑠 𝑦𝑒𝑎𝑟

TABLE NO: 4.6

Previous year Current year Change in Percentage (%)

0.922 (2016-17) 3.7 (2017-18) 301.30

3.7 (2017-18) 2.1 (2018-19) - 27.02
2.1 (2018-19) 4 (2019-20) 90.47
4 (2019-20) 2.7 (2020-21) - 32.5
2.7 (2020-21) 3.1 (2021-22) 14.814

INTERPRETATION

The above table 4.6 shows that the change in percentage of funding for the year 2017 –
18 and 2018 – 19 is -27.02% and so there is a decline in funding in the current year 2018 - 19
with the available funding of 2.1 billion comparing to the previous year 2017 – 18 with 3.7
billion. In this table, it clearly shows that there is an increase of 90.47% in funding from 2018
– 19 to 2019 – 20.

24
SEGMENT WISE FINTECH

TABLE NO: 4.7

Segments Percentage
Investment Tech 28%
Lending 16%
Payments 27%
Banking infrastructure 9%
Others 20%

INTERPRETATION

The above table illustrates that every percentage in the segment in Fintech services during
the study period. From this table, we figured out that 28% of Investment Technology segment
being the highest and followed by, 16% in Lending segment, 27% in Payment segment, 9% in
Banking and Infrastructure, 20% in others segment.

EXHIBIT NO :4

SEGMENT WISE FINTECH

20%
28% Investment Tech
Lending
9% Payments
Banking Infrastructure

16% Others
27%

25
NUMBER OF FINTECH START UPS BY 2020

TABLE NO: 4.8

Characteristics Number of Start-ups

Others 747

Payments 405

Lending 365

WealthTech (Retail) 313

Personal Finance Management 173

InsurTech 111

RegTech and Cyber Security 58

INTERPRETATION

The above table 4.8 indicates that the Funding for Fintech Companies in India during the
study period. From the table, we concluded that the number of fintech start-ups started in other
segments stood higher with the 747 start-ups companies, which is followed by payments sector
with 405 start-ups and lending sector with 365 start-ups. The RegTech and Cyber security
segment have the lowest number of start-ups in the year 2020.

26
 EXHIBIT NO: 5

NUMBER OF FINTECH STARTUPS

800
747

700

600

500
STARTUPS

405
400 365
313
300

200 173
111
100 58

0
Others Payments Lending Wealth Personal InsurTech RegTech and
Tech(Retail) Finance Cyber Security
Management
CHARACTERISTICS

27
 CHAPTER - V

CONCLUSION

FINDINGS

• This study made obvious that the number of users for the Digital Payments is higher
than any other segments. This ensures the rapid growth of cashless economy for the
past 5 years.
• We figured out that the percentage change in Transaction value of Neo banking is the
highest with 94.95% from the year 2017 to 2022.
• The Funding in Fintech goes peak in the year 2017 with the amount of 3.7 billion and
2019 with the amount of 4 billion. This is followed by funding in 2021 with the amount
of 3.1 billion.
• From the data, we concluded that during the pandemic period there was a huge funding
in the area of Fintech Industry in India. Thus, this Epidemic is also included in the
growth drivers of Fintech Companies.
• As per the Report, the percentage of segments in fintech is highly covered by
Investment Tech (28%), which is closely followed by the payment sector (27%).
• In the year of 2020, the number of Fintech Start-ups started in Payments sector is higher
with the 405 companies apart from other segments.
• During the study period, the number of users, the Transaction value and the fintech
start-ups is comparatively higher in Digital Payments sector, which has been in its
expeditious development.
• The Correlation analysis clearly shows that the relationship in number of users of
Digital payments and other fintech sectors is highly positive. The transaction value of
Digital payments and Digital Assets, Digital Investments, Neo Banking is Positively
correlated to each other. The relationship between Digital payments and Alternative
lending is negatively correlated with the coefficient of -0.44805.
• From the table 4.6, we found that the Funding in the year 2018-19 and 2020-21 had
declined from the previous years with change in percentage of - 27.02 and - 32.5
respectively.
• Funding in 2017-18 is the highest change in percentage of 301.30 from the previous
year 2016-17.

28
SUGGESTIONS

• The Government and regulatory body should create awareness among rural areas about
the availability of Fintech services and introduce various measures to increase the
investment flow in the Fintech sector.
• Fintech companies must understand the behaviour of users, get insight into the user’s
health, social interactions, and events. They should engage with their customer listen to
them and respond to their needs fast.
• Users of fintech should be aware of the online threats and required measures must be
taken by the fintech companies to safeguard the users from such cyber-attacks. The
more secure the software is, the better the protection of customer data, and the more
certainty that more people will be benefitted
• The companies can add a layer to user’s security by introducing biometric
authentication. Biometric cybersecurity is based on a person’s features like fingerprint,
voice, iris pattern, etc. which minimises the chances of a breach
• The companies can analyse their competitors, observe what they are using to offer a
seamless user experience and implement innovative ideas and provide better services
to gain competitive advantage.

CONCLUSION

The FinTech industry has been a boom in the financial sector of India and will continue
to contribute to the growth of the Indian economy in terms of National income, GDP,
Employment opportunities, and much more. Due to the Covid-19 Pandemic, the Indian
economy had taken a hit, which resulted in ambiguous contribution of the FinTech industry to
the Indian economy. It can ascertain that the age and gender of an individual does not play a
vital part in the usage of these services but on the contrary these demographics appear to be
influential to the adaptation of FinTech services. This project research also elucidates the
interpretation of the factor analysis of various components that denotes their significance
towards FinTech services impact and growth on Indian economy. The ease of usage and user
friendly is the most influential towards the adaptation of FinTech services. The FinTech
industry will continue to grow exponentially over the next five years. As per our research, it is
evident that the revenue would have an upward inclination which would indicate that these
companies would benefit the economy

29
BIBLIOGRAPHY

http://www.fintechindiaexpo.com/
https://builtin.com/fintech
https://www.fintechfutures.com/2019/01/initiatives-by-indias-government-to-boost-
fintech/
https://fortunly.com/statistics/fintech-statistics/
https://bfsi.economictimes.indiatimes.com/news/fintech/indias-fintech-market-size-at-
31-billion-in-2021-third-largest-in-world-report/88794336
https://financesonline.com/fintech-statistics/
http://www.makeinindia.com/

30