Microsoft Philosophy for Startups

Empowering India's fintech startups to transform financial services

India is among the most favorable destinations for fintech companies in the world. Across more than 2100 fintech companies that exist in India today, over 67% have been established in the last 5 years. Digital payments in India have grown from transactions worth Rs two trillion in 2019 to Rs four trillion in 2020. This growth spurt can primarily be attributed to two reasons - increase in adoption of fintech by end-users and non-stop innovation by startups in the fintech sphere. Today, India has the highest fintech adoption rate of 87%; against the global average of 64%. Several new segments of fintech startups have emerged and are gaining popularity among consumers in India including - Payments, Lending, Wealth Technology (WealthTech), Personal Finance Management, Insurance Technology (InsurTech), Regulation Technology (RegTech) etc. These emerging fintech companies are redefining financial services for customers and adding more value to them.

Customer preferences are changing

During the COVID-19 pandemic, there was an unprecedented physical-to-digital shift in BFSI industry, and this is set to accelerate in 2021 and beyond. Today, the priority for BSFI companies is to provide immediate, intuitive, and seamless digital journeys to customers. Due to the shift in consumer behaviors and increased preference towards online transactions in recent times, banks and FSIs are accelerating towards a digital frontier. To manage and capitalize on these changes, fintech startups are collaborating with banks and financial services companies to help them benefit from adoption of cutting-edge technologies while also leveraging their customers' eagerness to adopt digital platforms.

Challenges to navigate. Opportunities to capture.

Each industry has its own set of challenges. Similarly, fintech has its own hurdles to overcome, especially during the pandemic. The three most prominent challenges that fintech startups are trying to overcome are - transforming the age old BFSI industry practices to agile and customer-first processes, changing perceptions of users who prefer cash over digital payments, and increasing the penetration of digital banking and payments services in tier-2,3 and rural areas. Some other areas where fintech companies are driving improvements include, improving operational efficiency of BFSI organizations, risk and fraud mitigation, cyber-crimes, and increasing adherence to regulatory compliance.

Fintech startups are playing a crucial role in driving innovation across the banking and financial sector. There has been a notable increase in user acceptance and penetration of digital payment services across different tiers. Countries across Asia, including India, have witnessed 60% increase in contactless payments usage and paperless B2B payment flows grew eightfold. Fintech startups are helping develop scalable digital infrastructure for leveraging the full potential of emerging technologies such as cloud, AI, machine learning, among others. They are also collaborating with BFSI companies to explore new growth areas such as enabling gig-economy and neo-banking. Using the platforms and solutions developed by these fintech startups, banks and FSIs are modernizing their core, i.e., replacing their legacy systems with modern and agile systems that improve their banking processes, customer engagement, social engagement, etc.

Paisabazaar.com, India's largest digital marketplace for lending products, has developed 'Paisabazaar Stack' using Microsoft Azure technologies and Azure AI. The Stack is integrated with Paisabazaar's partner banks and NBFCs to enable consumers to access credit products through end-to-end presence-less and contactless processes. It is also enabling banks and NBFCs to disburse unsecured loans digitally, within 3 to 5 hours as compared to 3 to 7 days earlier.

Fintech startups are helping the BFSI industry shift its focus from conventions to convenience. For example, Icertis, a contract lifecycle management solutions provider has built as AI-infused solution that simplifies the enterprise contract lifecycle management process. The solution uses Azure AI to extract data from both financial and non-financial sources, and then automates bookkeeping functions such as categorizing expenses, paying bills, invoicing customers etc. to help financial companies proactively manage their obligations and uncover hidden insights in contracts reduces time in contract negotiations.

How Microsoft empowers fintech startups

Banking and financial services industry is the fastest growing segment for Microsoft with 43% Q-o-Q growth. At Microsoft, we encourage startups to explore the use of emerging innovations and digital commerce capabilities in new ways. Through access to Azure technologies, AI, machine learning, and Internet of Things, we empower fintech companies to create new user experiences to advance how consumers, businesses, and governments exchange value. Microsoft provides an unmatched technology portfolio, go-to-market support, mentoring and networking support to fintech startups empowering them to cater to requirements of their customers seamlessly.

Microsoft recently announced the AI for Startups program that will support over 40 AI startups, including those in fintech, and enable them to scale operations, drive innovation, and build industry expertise. The program will also enable them to reach out to new customers and geographies with Microsoft's sales, partner and marketplace support. The selected startups will have access to industry deep-dive sessions and AI masterclasses by industry experts, mentoring by unicorn founders, skilling and certification opportunities, among other benefits.

India's fintech startups are emerging as innovation leaders, by reinventing the banking and financial services industry. They are modernizing transactions for everyday users, making it easier for them to pay and receive money while ensuring high levels of customization and security. These startups are playing an important role in supporting BFSI companies with their long-term vision on what they intend to achieve with digital transformation. The platforms and solutions built by these fintech startups are also enabling financial inclusion by allowing people from non-urban areas to avail access to the same innovative banking and financial services available across metros and tier -1 cities. We at Microsoft are proud to help fintech startups ramp up their tech intensity and achieve more.