Friday, 29 January 2016

Change of mindset…to bank you don’t need a Bank always!

Fintech sector is at a very nascent stage in the World and especially in our Country the work in this sector has just started.

The closest Fintech has touched Indian consumer is through the payment wallets (thanks PayTM and Vijay Shekhar Sharma for that!)…but that’s not even scratching the surface of Fintech.

The idea behind Fintech is not to disrupt the traditional banking sector – we believe traditional banking has a role to play in the economy.

Fintech involves using technology to overcome some of the challenges inherent to the traditional banking or economy and making entire financial system agile to consumer need.

Take for example peer-to-peer (P2P) lending – given that this is a market place lending – it is a place where the lenders and borrowers connect with each other without the interference of middlemen. This reduces transaction costs and efficiently allocates capital.

Furthermore, P2P platforms do not have a cost of maintaining capital (unlike traditional banks) and there are no costs for establishing physical bank branches (since all the work is done online) – such savings are also passed on to both the lenders and borrowers by way of effective interest rates.

In July 2014, Morgan Stanley published a report on the growth and development of marketplace lending, underlying that the business model, at least in the US, has doubled every year since 2010 and reached a total of USD 12bn in 2014. With fast growth in Australia, China and the UK, the report envisages that P2P lending can balloon up and command anywhere from USD 150bn to USD 490bn globally in the next four years.

To have success in the Indian market and take advantage of Fintech (like peer to peer lending) the mindset of Indian consumer needs to change and he should be ready to adopt the solutions which are being formulated for his benefit only.

To know more about P2P lending visit


@RupaiyaExchange is a virtual market place for Peer-to-Peer Lending.

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