April 2017 to March 2018

Koichiro Ohira(Senior Fellow, Institute for International Socio-Economic Studies)

   In the financial sector, efforts are increasingly being made to use ICT in order to improve existing services and create new services. Advanced ICT technologies such as mobile terminals, big data, and cloud computing are being fused with financial services to create new kinds of service. As a result, financial technology (fintech) companies are gaining momentum as well as existing banks, securities companies and insurance companies.

   In the final report of this fiscal year, we report on the results of studying the situation in India, which aims to promote fintech with the full participation of government and central banks, and where cashless payment using smartphones has started to gain popularity even though the development of infrastructure by existing financial institutions has not yet been fully completed.

   The biggest changes in India’s fintech market are in the payments sector, where the shift from cash to mobile payments via smartphone apps has begun. This change was triggered by the announcement in November 2016 that some of India’s high-value banknotes would be withdrawn from circulation. Among the independent fintech companies, Paytm, MobiKwik, Freecharge, and Citrus Pay are the leading providers of mobile wallets, and have been funded by venture capital firms and other sources, accelerating their efforts to acquire customers. In addition, banks and communication carriers also offer their own mobile wallets. Public institutions play an important role in the construction and operation of India’s payment systems. In particular, the efforts of the National Payments Corporation of India (NPCI) have had a significant impact on promoting cashless payments.

   In the lending sector, there is a shortage of banks prepared to lend to SMEs and private individuals, and online lending is gradually being used to fill this gap.