FinTech – The perfect arena for UK-India collaboration
By UK India Business Council (UKIBC)
To mark the opening of the India-UK Tech Summit in New Delhi today, we look at one of the potential future key areas of tech collaboration between the two countries
Digital disruption is set to transform the world. Every sector from retail – where it’s already pretty obvious machines are replacing staff – to infrastructure –Transport for London’s DLR has been completely automated since launch and more driverless tubes are underway. However, it’s perhaps new financial technology that is set to cause the biggest disruption to the modern working world. FinTech businesses aim to take on the traditional banks by offering faster, more innovative, accessible, and cheaper services.
Vivek Belgavi, Partner and FinTech Leader at PwC India, explains the basics, “FinTech is the emerging financial services ecosystem enabled by digital technology. The sector is seeing tremendous growth with considerable interests from VC’s and other investments. Global investments in the sector nearly tripled last year, growing from about $4 billion in 2013 to over $12 billion in 2014.”
The perfect partnership
London is leading the way in Europe in terms of financial technology, with the UK FinTech sector worth £6.6 billion in revenue annually. The UK is the number one FinTech hub in the world, a report by EY revealed. This is based on market size, investment and workforce. And commentators and industry leaders are confident this will remain the case after Article 50 is triggered.
At the same time, the majority of Indians do not yet have access to bank accounts. And with up to 1 million new young people entering the workforce every month, the Government of India’s Ministry of Finance is committed to replacing cash transactions with electronic money to increase transparency, and squash corruption and black money for good. Additionally, a KPMG AND IAMAI study has highlighted that India is the third largest global market for smartphones with the country set to have 314 million mobile web users by next year. These factors make India the perfect place for FinTech to flourish.
Britain is equipped with the right expertise and experience to support the enhancement of FinTech in India. As a world renounced tech hub, the UK can assist the regulation of the Indian banking industry in an affordable and effective way. This is a perfect collaboration that has the potential to boost both countries’ economies.
Potential challenges
However, it’s not quite that simple. Ashok Vaswani, CEO of Barclays (who is leading the way in terms of tech innovations), stresses the pressures of increased scrutiny on banks hindering their profitability. So reducing costs and squeezing out inefficiencies is an obvious direction. Robotic process automation and similar technologies offer a solution, but with inevitable loss of jobs. As a result, this is a difficult transition for big players.
Belgavi offers advice, “The more established FinTech companies will need to be able to wade through regulatory requirements while simultaneously trying to expand operations without losing momentum. Traditional players will need to develop quick turn-around go-to-market propositions in order to compete and evolve their business models as the industry re-shapes itself. The key to differentiating and winning in this space will be through the effective use of digital technologies to maintain operational efficiency while providing a superior customer experience.”
Job losses will be a major challenge. The Government of India is expecting banking growth to provide a million new high quality jobs. This number may well be cut by increased use of technology to automate knowledge-based, but nonetheless repetitive jobs.
Yet, this challenge can be overcome by deploying the right education and training to upskill workforces, with a focus on technology. This will ensure staff are better equipped to take on new challenges as the work environment changes, as well as limit job losses.
FinTech offers both the UK and India a new and innovative way to collaborate that can benefit both nations. Patricia Hewitt, UK India Business Council Chair, concludes, “We have an extraordinary opportunity now to take the UK-India relationship to a completely different level, to the great benefit of people in both countries.”
