The future of Fintech: An outlook
Powered by a large market, an innovation-driven startup landscape and government policies and regulations that are conducive for growth, India’s Financial Technology or Fintech sector is rapidly emerging.
NASSCOM recently reported that around 400 fintech firms operate in India, boosted in large part by foreign investments in fintech-focused startup accelerators and incubators. 125 of these startups were launched in 2018 alone. NASSCOM predicts that India’s fintech software market alone could touch US$ 2.4 billion by 2020, doubling on the current rate of growth.
Several fintech startups inhabit this dynamic sector, while traditional banks and NBFCs are catching up. Technology has a critical role to play in financial inclusion and in bringing millions in India under the banked sector. Government schemes such as the Jan Dhan Yojana have made a successful attempt at making banking more universal in India. In addition, Digital India and National Payments Council of India (NPCI) have provided important enabling platforms for technology innovators. Yet, there remains a largely untapped market, as large sections of the population are still not connected to banks and with most payments still being made in the case, especially in rural areas. By some estimates, as much as 90% of small businesses are not linked to formal financial institutions.
Fortunately, India has a favorable environment, with more than a billion biometric identities, more than a billion bank accounts and a billion plus cell phone connections and increasing internet penetration. With the backing of this massive public infrastructure, the growth potential for fintech in India cannot be overstated. However, policies and governance will need to complement the speed of innovation in this sector, particularly to guarantee secure and transparent growth.
The RBI has encouraged the usage of Unified Payments Interface (UPI) and the Bharat Bill Payments System, as well as digital payments, P2P lending, and the use of automated algorithms to offer financial advice. Moreover, the RBI has granted licenses to 11 fintech entities to establish payment banks that provide savings, deposit, and remittance services.
With rampant advances in the sector, hiring is on an upward trend. Startups will be growing their technology and product teams following recent funding rounds. The hiring outlook is positive, and may be focused on technology, data science roles, product development, data privacy and security. Hiring will also be seen across levels, from entry-level to CXOs. The fintech market is expected to witness a 20-25% growth in hiring this year.
Salaries trends also remain fairly positive. Based on skill and experience, salaries for technology and product roles could range from Rs 7-8 lakhs for entry-level to Rs 28-30 lakhs for mid-level. CXO salaries may range from Rs 1.5 crore to Rs 3.5 crores per annum depending on whether the company is under incubation or has been funded. In addition, benefits may include ESOPs and performance-linked bonuses.
From demonetization to progressive government regulations, efforts to boost the cashless segment of the economy have meant that companies in this sector have raised significant funding in recent years. This has enabled them to spend on an increasing headcount and invest in talent with niche skills that are equipped to address the needs of a rapidly evolving market.
This sector demands convergence of multi-disciplinary skills such as modern programming languages, Artificial Intelligence (AI), Machine Learning (ML), Blockchain, data privacy; a combination which is often referred to as the ‘full-stack quant’. It essentially refers to a talent that can code and possess a working knowledge of financial concepts and statistics.
The current fintech talent pool lacks this desired skill set and therefore organizations are on the lookout for candidates who can integrate concepts of AI, ML and Natural Language Processing (NLP) with other concepts such as applied mathematics, statistics and probability, among others. Knowledge of data science to derive insights from the volume of data created by digitization is an equally strong demand. Programming languages such as SWIFT, Kotlin, Python, Java and C++ along with operating system tools like Windows, Linux and Unix and full-stack development capabilities is a plus. Data security experts that are familiar with the latest regulations will also be in demand, going forward. We expect to Fintech companies acquiring AI and ML technology providers to further develop their capabilities. Financial institutions have begun efforts to utilise Blockchain technology. Thus, experts in blockchain are also in demand.
Fintech companies currently have two challenges: firstly, hiring the right talent to help firms progress and secondly, to reskill their existing workforce to keep up with industry demands. Given the data-centric nature of Fintech firms, it is only a matter of time before ‘full-stack quant’ becomes the norm. Hence, there is a focus on reskilling, encouraging employees to learn new programming languages, learn about complex financial modules, leverage data sciences and employ AI to optimize operations.
Hence, the Fintech sector is positioned for further expansion driven by numerous innovations and a self-aware talent pool striving to meet the skills demand.
