According to a study conducted by the expert panel at Risers Accelerator, a conglomerate of India’s top entrepreneurs established to empower startups, fintech startups have performed brilliantly amid the pandemic – a time when most of the sectors suffered quite a bit. The panel at Risers Accelerator noticed that among all the requests it received from startups from different sectors for support, nearly 45% were from fintech startups.
According to a study conducted by NASSCOM in May of 2020, more than 70% of the startups had less than three months of cash runway. It piques one’s curiosity as to how the fintech sector managed to not only survive but grow tremendously amid such unfavorable circumstances.
Several reasons are being cited for this anomaly. Ever since the pandemic hit our shores, the entire country slipped into a financial crisis. Close to 12 crore Indians lost their jobs during the lockdown period and since a majority of our population has nothing in terms of savings, being out of a job meant being out of money. People needed small loans and they needed them to be disbursed quickly.
Since banks have a rather lengthy and often quite strict screening process, many people would have never got the loans. This is where India’s NBFCs (Non-Banking Financial Companies) came into the picture. With a relatively easy screening process, quick disbursals, and overall user-friendly attitude, fintech startups managed to support the population during the tough times.
Another major reason for the sudden upsurge in the fintech sector was a concerted push for contactless systems. People have become quite wary regarding touching the surfaces that may potentially be housing the dreaded Covid-9 strain.
Naturally, paper money changes hand many times over and is, therefore, an agent for transmission. Even WHO (World Health Organization) and RBI (Reserve Bank of India) have encouraged people to use contactless payments and rely more on digital methods. Moreover, fintech companies are also adept at offering digital banking services like e-applications, e-KYC, online approvals, and disbursals, etc. This helps people avoid face-to-face interactions.
Talking about the unexpected upsurge of the fintech sector, Rachit Chawla, Director, Finance and Technology, said, “Even though most of the sectors have suffered during the pandemic, it shouldn’t come as a surprise that the fintech sector has done better than the rest. While it hasn’t been Covid-resistant, it has been Covid-compliant”. Mr. Pravin Khandelwal, Director, Leadership & Motivation at Risers Accelerator further adds, “By leveraging the latest technologies that have been looming on the horizon, the sector has managed to offset the negative effects of the pandemic and has made banking and finance easier than ever. At Risers Accelerator, we are delighted to have received so many requests for support from fintech startups, and as always, we will do our best to ensure that they realize their full potential.”
