Analysis of Fintech Startups in India-Dissertation

Analysis of Fintech Startups in India
Influence Processes for Fintech Services Breakout: An Elaboration Likelihood Model
A Project Report Submitted in Partial Fulfilment of the

Requirement for the Award of Degree of
MASTER OF BUSINESS ADMINSTRATION - FULL TIME
Under the Guidance of

DR. PANKAJ SINHA
Submitted By:
SAURABH SINGH
ROLL NO: F-365
MBA (FT) 2017-19
AREA CODE: FIN
Faculty of Management Studies

University of Delhi
Delhi-110007
January 2019
1
CERTIFICATE
This is to certify that the project titled “Analysis of Fintech Startups in India- Influence Processes
for Fintech Services Breakout: An Elaboration Likelihood Model” submitted in the partial
fulfilment of the requirements for the degree of Master of Business Administration is a record of
original research work carried out by myself. Any material borrowed or referred to is duly
acknowledged.
Saurabh Singh
Roll No. F-365
MBA FT 2017-19
University of Delhi
This is to certify that the aforementioned project titled “Analysis of Fintech Startups in India-
Influence Processes for Fintech Services Breakout: An Elaboration Likelihood Model” submitted
by Saurabh Singh, MBA (FT), Batch of 2019, Roll No. F-365 has been carried out under my
supervision.
Dr. Pankaj Sinha
Project Guide
University of Delhi
2
ACKNOWLEDGEMENT
First and foremost, I would to like to thank Dr. Pankaj Sinha for giving me an opportunity to work
under her in an area of mutual interest. I express my deepest gratitude for her able guidance.
Her continued supervision and encouragement has made it possible for me to complete this
dissertation.
I also would like to thank all the individuals who spared their precious time to share with me their
views and suggestions pertaining to my dissertation. I would also like to thank all the faculty
members and staff of FMS Delhi for their continuous support and help. Most importantly I would
like to thank the Dean, FMS for facilitating a smooth process for pursuing the dissertation.
Finally, I am indebted to my family for their love, patience, and support during the entire time of
my studies.
Saurabh Singh
MBA (FT) 2017-19
Roll No. F-365
FMS Delhi
3
Table of Contents
LIST OF ABBREVIATIONS ....................................................................................................................... 6
EXECUTIVE SUMMARY .......................................................................................................................... 7
Research Objective .................................................................................................................................... 7
INTRODUCTION ........................................................................................................................................ 8
FinTech...................................................................................................................................................... 8
Fintech in India........................................................................................................................................ 10
Indian FinTech segments......................................................................................................................... 11
Need Gap for Fintech in India ................................................................................................................. 13
Credit gap in the MSE segment ........................................................................................................... 14
FinTech Investments ............................................................................................................................... 15
Global Funding in FinTech.................................................................................................................. 15
Indian FinTech Growth Drivers .............................................................................................................. 15
LITERATURE REVIEW ........................................................................................................................... 18
Prior Research ......................................................................................................................................... 18
Elaboration-likelihood model (ELM) ...................................................................................................... 18
LASIC ..................................................................................................................................................... 21
HYPOTHESIS DEVELOPMENT.............................................................................................................. 23
Factors Analysis ...................................................................................................................................... 26
RESEARCH MODEL ................................................................................................................................ 28
Research Design ...................................................................................................................................... 28
Results of Path Analysis-SPSS Model .................................................................................................... 31
INSIGHTS .................................................................................................................................................. 33
Breakout FinTech Segments ................................................................................................................... 33
Indian Fintech Breakout-Framework Design .......................................................................................... 34
Fintech Adoption-Other Customer Insights ............................................................................................ 35
IDENTIFYING BREAKOUT SEGMENTS IN FINTECH ....................................................................... 37
Alternate Lending .................................................................................................................................... 37
Evaluation using Proposed Framework ............................................................................................... 37
Peer-to-Peer Lending ........................................................................................................................... 37
Peer-to-Peer Lending-Results from Consumer Survey........................................................................ 38
Peer-to-Peer Lending-Results from Stakeholder Interviews ............................................................... 39
Payments ................................................................................................................................................. 40
4
M-Wallets and PPIs ............................................................................................................................. 40
Merchant Payments and PoS Services ................................................................................................. 42
Cross border payments ........................................................................................................................ 42
Investment Management ......................................................................................................................... 43
Online Financial Advisors ................................................................................................................... 43
Roboadvisory ....................................................................................................................................... 43
Discount Brokers ................................................................................................................................. 44
Banktech .................................................................................................................................................. 44
Customer Onboarding.......................................................................................................................... 44
Blockchain ........................................................................................................................................... 45
Big Data, AI and Robotics ................................................................................................................... 45
InsurTech................................................................................................................................................. 46
Insurance aggregators .......................................................................................................................... 46
IOT and Wearables .............................................................................................................................. 47
Personal Finance Management ................................................................................................................ 48
CONCLUSION ........................................................................................................................................... 49
REFERENCES ........................................................................................................................................... 50
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LIST OF ABBREVIATIONS
PE Private Equity
GP General Partners
LP Limited Partners
LBO Leveraged Buyout
M&A Mergers & Acquisitions
MBO Management Buyout
MBO Management Buy-in
DCF Discounted Cash Flow
FCFF Free Cash Flow to Firm
WACC Weighted Average Cost of Capital
EV Enterprise Value
EBITDA Earnings before Interest, Taxes, Depreciation and Amortization
E Earnings
P Price
IS Income Statement
BS Balance Sheet
CF Cash Flow Statement
DS Debt Schedule
RA Return Analysis
LTM Last twelve Months
EBT Earnings before Taxes
SG&A Selling, general and administrative
R&D Research & Development
CAGR Compounded Annual Growth Rate
NFDP Net Financial Debt Position
WCN Working Capital Needs
CAPEX Capital Expenditures
NOPLAT Net Operating Profit Less Adjusted Taxes
IPO Initial Public Offering
LIBOR London Interbank offered Rate
NWC Net Working capital
PPE Property, plant and equipment
GAAP Generally Accepted Accounting Principle IRR Internal
EMEA Europe, Middle East and Africa
APAC Asia and Pacific area countries
ROA Return on assets
ROE Return on equity
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EXECUTIVE SUMMARY
Fintech has been attracting significant investment in VC capital over the recent
times but, there's a relative lack of studies on the factors induce the acceptance or denial of
Fintech services. For example, there's no analysis that explains what data points measure best in
influencing user perceptions and why, whether or not such influence applies equally or
differentially across user populations, and whether or not these influence effects are temporally
persistent.
Research Objective
1. Provide a picture of India’s Fintech business

2. Establish the key drivers for nursing an enabling Fintech scheme in the country.
RQ1. What influence processes form user acceptance of latest Fintech and how?
RQ2 Do the consequences of those influence processes vary across a user
population, and how?
RQ3. How ¿persistent are the consequences of those influence processes over
time?
3. Benchmark the current state of these drivers in India across Fintech segments.
4. Develop Framework for Fintech Service Segments Adoption in India. Identify Key
Breakout Fintech Segments for the Indian Market.
5. Share a roadmap for strengthening the drivers and developing a Fintech ecosystem
in India.
Understanding the dynamics of acceptance-related influence processes is important for

theoretical as well as practical reasons. This paper examined the acceptance of Fintech services
through a combination of supply side and demand side drivers. The objective of this research is
to identify the factors that compel users to accept Fintech services. In order to achieve this goal,
this study aimed to develop a model on Fintech service acceptance by utilizing the Elaboration
Likelihood Model (ELM) proposed by Petty and Cacioppo [1] and selecting variables of the
Technical Acceptance Model (TAM) proposed by Davis [2] and several other variables. In
addition, it adopted Concern for Information Privacy (CFIP), an increasingly aggravating
problem in India’s financial industry, and self–efficacy as moderating variables to examine their
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impact on intention to use.
At Supply side we have looked at the LASIC principle which defines five important attributes of
business models that can successfully harness financial technology to achieve the objective of
creating a sustainable social business for financial inclusion. The five attributes are: low margin,
asset light, scalable, innovative and compliance easy.
Understanding the dynamics of acceptance-related influence processes is very important for

theoretical in addition to practical reasons. This paper looks at the acceptance of Fintech services
through a mix of supply and demand side drivers. The target of this analysis is to spot the factors
that compel users to just accept Fintech services so as to attain this goal, this study aimed to
develop a model on Fintech service acceptance by utilizing the Elaboration likelihood Model
(ELM) proposed by Petty and Cacioppo [1] and choosing variables of the Technical Acceptance
Model (TAM) projected by Davis[2] and several other variables. Additionally, it adopted Concern
for information Privacy (CFIP), an exasperating drawback in India’s monetary business, and
self–efficacy as moderating variables to look at their impact on intention to use.
In order to assess the breakout potential, as well as the timing of breakout, this paper has
developed a customized FinTech breakout assessment framework for the Indian FinTech market,
drawing from the learnings of the study. “
INTRODUCTION
FinTech
The term “FinTech,” that is that the short variety of the phrase finance technology, denotes
corporations or representatives of corporations that mix money services with fashionable,
innovative technologies.
Fintech may be a service sector that uses mobile-centered IT technology to reinforce the potency
of the national financial economy. As a term, it's a compound of “finance” and “technology”, and
conjointly refers to industrial changes achieved from the convergence of monetary services and
IT. It's an innovative service that provides differentiated money services through new
technologies, like mobile, social media, and IoT (Internet of Things). A recent example is the
mobile-based payment and settlement system, that is that the most representative service of its
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kind in India. In terms of trade, it refers to the development wherever a non-financial business
uses innovative technology to produce services, like remittal, payment and settlement, and
investment, while not operating with a financial company. Major examples include PayTM and
PhonePay.
In addition to giving services within the banking sector, there also are FinTechs that distribute
insurance and alternative monetary instruments or offer third party services. In an generous sense
of the term, “FinTech” encompasses corporations that merely offer the technology (such
as software system solutions) to financial service suppliers.
Figure: Fintech Services
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Fintech in India
FinTech is one in every of the quickest rising areas in banking and financial services. It's creating
the expertise of banking and finance a lot of intuitive, customized and empowering. The
convergence of economic services and exponential technologies are going to be key to make a
robust digital economy, and lead India’s transformation. Armed with new knowledge and
analytics capabilities, plus light-weight platform and nearly zero process prices, FinTechs
services are complementing and in some cases questioning the standard banking and money
services establishments globally.
FinTechs hope to achieve the aim for providing cashless digital payments services. On the
disposal facet, low penetration of retail and MSME credit alongside the promise of higher
expertise and quicker turnaround have created sturdy propositions for patrons. Fintechs in most
of the opposite segments as well as Investment Management, Personal Finance Management,
BankTech and InsurTech have initiated the market creating method and presently target specific
market niches.
Figure: Popular areas of Funding in FinTech(US $m)
Technology has been a key enabler within the growth of a digital economy. Over the years,
Indian banks and monetary services suppliers have bit by bit adopted technology to boost reach,
client service and operational effectiveness with evolving market and technological advances.
However, the pace of technology adoption has not been in proportion to with it's potential and
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therefore there are gaps within the penetration of monetary services. For instance, there's a credit
demand offer gap within the small and little Enterprise (MSE) section significantly for small
enterprises
Indian FinTech segments
In the Indian context, FinTech can be broadly aligned across the following twenty segments,
across six broad financial services areas.
Among these segments, Digital Payments are at the forefront of leading India’s FinTech sector.
Correspondingly, digital payments have conjointly garnered the lion’s share of VC funding as
compared to alternative segments. Post the Government's demonetization initiative the growth in
digital payments is exclusive, as payments stay associate degree innovation cluster wherever
penetration is very low and there are still areas of friction that new FinTech players will right to
supply price.
The retail disposition phase, wherever there's a convergence to the regulated regime as most of
the FinTech players during this space, as well as P2P lenders, various Credit marking platforms
and Crowd Sourcing platforms, aer eventually being brought into the restrictive ambit. The
MSME disposition space is witnessing new FinTech players addressing the structural problems
with data spatiality and reducing turnaround times for underwriting loans to tiny businesses.
Expectedly, the plus facet of the banking business remains a white area wherever there are
restricted innovations, with the exception of Peer-to-peer disposition platforms.”
Areas FinTech Segments Brief Description

Credit “01. Peer-to-Peer Lending •” All forms of lending
market places including Peer-
02. Crowd Funding
to-Peer lenders and market
03. Market Place for Loans places that connect borrowers
04. Online Lenders – on-book with both, institutional and
lending by NBFCs lenders;
05. Credit Scoring Platforms” • Also includes crowd

funding and equity funding
platforms”
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• NBFCs that use alternative
scoring and digital channels
for acquisition”
Payments 06. “M-wallets and PPIs • “Services that enable
transfer of funds for various
07. Merchant Payments and
use cases - P2P (Person-to-
PoS Services
Person), P2M (Person-to-
08. International Remittance Merchant), G2P
09. Crypto Currencies” (Government-to-Person) etc.
• Services targeted at both
Payees and Merchants by
enabling requisite payment
infrastructure through mobile
or other technologies”
Investment Management 10. “Robo Advisors “Wealth advisory services
delivered through technology
11. Discount Brokers
governed rules and
12. Online Financial investment strategies”
Advisors”
Personal Finance 13. “Tax Filling and • “Tools and services for
Management Processing 14. Spend active management of
Management and Financial individual financial profiles
Planning (e.g. spend, investments,
credit profile, etc.) “
15. Credit Scoring Services”
Bank tech 16. “ Big Data “Services that utilize many
data points such as financial
17. Blockchain
transactions, spending
18. Customer Onboarding patterns to build the risk
Platforms” profile of the customer. This
provides an alternate to
traditional underwriting
methods that are unable to
serve people with limited
credit data.
• There is significant value in
unstructured data. However,
it is difficult to derive value
from unstructured data,
owing to challenges in
analyzing it. A number of
new tools are being
developed to derive value
from large data sets.”
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InsurTech 19.” Insurance Aggregator “Small business insurance
20. IOT, Wearables and • Usage based insurance”
Kinematics”
Need Gap for Fintech in India
Figure: Finance Infrastructure in India
Traditional Banks and associated financial establishments have viewed technology as an enabler
to business propositions, instead of making new business propositions themselves. Financial
Technology (FinTech) corporations however area ever-changing that role by leverage digital
technologies to form new business propositions and target new market segments that up to now
weren't reaching their potential.
FinTech within the truest sense is that the application of technology to supply new Financial
product associated services to new market segments in an economically viable manner. From a
business model perspective, the FinTech sector is marked by technology corporations that either
shall disintermediate, or partner with incumbent Banks and monetary establishments looking on
strategic narrative and market landscape. Hence, FinTech is progressively turning into a vital
focus space for all the key stakeholders in India’s monetary Services trade – Regulators, ancient
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Banks, NBFCs, Payment Banks, Investors, Payment Service suppliers, Broking and Wealth
Management corporations, Insurance suppliers and pureplay FinTech players.
Credit gap in the MSE segment
Revenue No. of Credit Bank Credit Credit

Segment(INR) Units(Mn) Demand(INR Supply(INR 000 Gap(INR
000 crore) crore) 000 crore)
<15 Lakh 41.4 414 92 322
15 - 30 Lakh 5.6 168 62 106
30 lakh - 1.5 4.5 477 203 274

Crore
1.5 Crore - 3 1.3 234 103 131

Crore
3 Crore - 18 1.8 720 357 363

Crore
Total 54.6 2013 817 1196
Note: Credit Demand is calculated based on revenue using appropriate multipliers
BANK
HARDWARE PROVIDERSS
NBFC
SOFTWARE PROVIDERS
PAYMENTS FINANCE FinTech TECHNOLOGY
CLOUD PROVIDERS
WEALTH MANAGEMENT
PLATFORM PROVIDERS
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FinTech Investments
Global Funding in FinTech
≥ $500m ≥ $100m ≥ $10m < $10m
Indian FinTech Growth Drivers
India remains one of the largest markets where the structural enablers to setup and incubate
FinTech companies have come together strongly.
01. Combination of steady economic process with low penetration of monetary services:
India’s GDP value is anticipated to grow at 6-8% for ensuing decade, therefore driving financial
gain and consumption levels of households still as businesses. including low penetration of home
credit in tier two and three cities, mortgage, investment and plus management services, the
banking and money services market is probably going to grow at 2-2.5 times of real value
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growth, therefore sustaining each incumbents and new FinTech entrants. Further, improvement
in digital infrastructure (E.g. net and smartphone penetration) outside urban and tube centres can
drive adoption of digital money services
02. Giant public sector banks and insurers insulating market growth:
Public sector banks and insurance companies’ are step by step however incessantly losing market
share to non-public banks and insurers severally, because of their inability to outgrow the
market. However this steady loss, Public sector banks still account for seventieth market share of
deposits and credit. Going forward, new personal sector banks, together with new differentiated
banks area unit doubtless to be the beneficiaries of rising market opportunities. In conjunction
with the differentiated banks, rising FinTech players within the areas of payments, loaning and
investment management also will have the benefit of low penetration and target niche areas.
Figure: VC-Backed FinTech Deals Figure: Number of Fintech Companies Launched
03. Regulative forbearance toward FinTech:
Indian regulative authorities together and in association with RBI and SEBI have adopted an
accommodative stance toward a rising FinTech sector, while not forcing in preventative tips to
overregulate the world. Despite catching up with the speedily evolving eco system, Indian
regulators have adopted an informative approach and are proactively foreseeing the necessity for
adequate rules, particularly within the areas regarding public funds i.e. peer-to-peer disposition,
crowd sourcing and various currencies.
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04. India Stack and Net knowledge proliferation to enhance Financial services utility
infrastructure and property to support digital money services:
India Stack may be a set of Application Programming Interfaces (APIs) that permits FinTech
corporations, developers and governments to utilize India’s distinctive digital Infrastructure
towards presence-less, paperless, and cashless money service delivery though Bharat stack,
hopped-up by Jan Dhan, Aadhaar & Mobile trinity, will modify incumbent banks and money
service suppliers, however its true power is controlled by FinTech corporations in considerably
reducing prices of acquisition. UPI is often considered a game changer, because it has mass
attractiveness, attributable to its universal acceptance and safety features. Aadhaar, that currently
extends to ~1.1 Bn Indians are often levied for effective identity verification of economic
transactions. It’s proving to be associate degree optimum digital identity, and it offers users the
flexibility to firmly utilize their life science, once enterprise money transactions
India Stack
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LITERATURE REVIEW
Prior Research
Prior analysis on individual Fintech acceptance has been familiar by the dominant theoretical
views. The primary perspective, focused on the Theory of reasoned action [6] and also the theory
of planned behavior[7], has centered on individual perceptions because the primary drivers of
acceptance intention and behavior. IT-specific variants of those theories embrace the technology
acceptance model[5] , the Decomposed theory of planned behavior[8], and also the unified theory
of acceptance and use of technology [4].
Collectively, these theories counsel that users' IT acceptance intention and behavior square
measure formed by salient user cognitions associated with the target IT like its perceived quality
and simple use, users' view toward IT acceptance, social norms associated with acceptance, and
conditions sanctionative or restrictive acceptance[4]
Elaboration-likelihood model (ELM)
One theoretical perspective that may facilitate inform our standing of influence processes in IT
acceptance is that the elaboration-likelihood model (ELM). The ELM classifies influence
mechanisms or routes into central and peripheral varieties supported the sort of knowledge
processed by a given user (e.g., task-relevant arguments or easy cues), explains circumstances
that that user is also additionally influenced by one route than the opposite, and discusses the
semi-permanent effects of every influence route.[12]
While there could also be extra theories of influence, the ELM seems to be unambiguously suited
to our exploration of the "black box" of influence inside the Fintech acceptance context that till
now has for the most part eluded the acceptance literature, and fills a living gap in Fintech
acceptance analysis.
The role of influence processes in shaping human perceptions and behavior has been examined
by dual-process theories within the psychology literature. The same as IDT, dual-process
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theories recommend that external data is that the primary driver of perspective amendment and
sequent behavior amendment.
Such information introduces us to new prospects, causes them to canvass their previous beliefs
and attitudes, and probably changes existent behaviors. However, unlike IDT, dual-process
theories counsel that social judgments aren't continually supported strenuous process of
judgment-relevant information, however will typically be supported by the less strenuous process
of heuristic cues. These two different processes of angle formation, particularly a lot of versus
less strenuous process of data, form the core of all dual-process theories. Further, dual-process
theories additionally specify conditions that when each of the two different processes is probably
going to be invoked.
Figure: Elaboration-likelihood model
ELM is created supported the results data processing via the subsequent two methods in line with
the attitude of users: a message recipient through the central path completely examines new
information, and assesses its blessings and downsides, and implications, whereas in distinction,
an individual receiving the peripheral path chooses to fleetly settle for or deny a service while
not active thinking. Receiver’s with the peripheral path conduct broad psychological feature
thinking, however they're invariably stricken by the peripheral cue, that modify them to create
speedy choices.
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The central route needs an individual to suppose critically concerning issue-related arguments in
an informational message and scrutinize the relative connection of these arguments before
forming an enlightened judgment concerning the target behavior. In Fintech acceptance contexts,
such arguments could ask the potential edges of system acceptance, comparison of other
systems, convenience and quality of system support, and/or prices of and returns from system
acceptance.
The peripheral route involves less cognitive effort, wherever subjects consider cues concerning
the target behavior, like variety of previous users, endorsements from Fintech specialists, and
likeability or affinity toward the endorser, instead of on the standard of arguments, in perspective
formation.
The central and peripheral routes area unit distinct in a minimum of 3 ways. First, the 2 routes
method differing types of knowledge. The central route processes message-related arguments,
whereas the peripheral route processes cues.
Second, the cognitive effort concerned in informatics is way higher within the central route than
within the peripheral route. The central route needs thoughtful comprehension of the arguments
given, analysis of the standard of these arguments, associate degreed combination of multiple
and typically conflicting arguments into an overall appraising judgment, whereas the peripheral
route is a smaller amount exacting in this it simply needs subjects' association with salient
positive or negative cues associated with the perspective object[11].
Third, perception changes evoked via the central route area unit typically are a lot more stable,
show a lot of enduring character, and a lot of long behaviors since they're supported deliberate
and thoughtful thought of relevant arguments[7]. In distinction, changes evoked via peripheral
cues tend to be less persistent, liable to counterinfluence, and fewer prophetic of future
behaviors.
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LASIC
PRINCIPLE ATTRIBUTES
“Low profit margin is a key characteristic of successful FinTech businesses. In

a world where there is widespread internet access, where information and
services are readily available for free, users not only search for lowest prices,
but in many cases, are even unwilling to pay for some services or products,
such as video streaming or internet games. High network effects exhibited in
such technologies require an initial phase of critical mass accumulation. This is
a costly process that demands much marketing effort. Once critical mass is
built, monetization becomes possible through channels such as advertising,
subscription fees or consumer data analysis. Constant effort is needed to ensure
lock-in of users through the reinforcement of network externalities and the
increase in switching costs. Profit margins will remain low at the user level.
The idea is to obtain a large mass of users and attain profitability through low
margins and high volumes. Alternatively, the subsequent buildup of big
consumer data can be monetized either through third parties or by creating new
products “
Asset light “Asset light businesses are able to be innovative and scalable without incurring
large fixed costs on assets. This results in relatively low marginal costs, which
reinforces the first principle of “low profit margin.” One can add on to an
existing system (such as the mobile phone) that depreciates quickly but offers
an alternative revenue source (such as an internet phone messaging service) at
low marginal costs. By riding on existing infrastructure, fixed costs and initial
setup costs can be minimized. “
Scalability “Any FinTech business may start small but needs to be scalable, in order to
reap the full benefits of network externalities as described above. One has to be
mindful of the fact that when developing technology, it needs to be able to
increase in scale without drastically increasing costs or compromising the
efficiency of the technology. As more business gets conducted online, the need
21
for physical outlets is greatly reduced. This makes businesses easier to scale.
However, developers need to be mindful and ensure that the technology itself is
scalable. One such example is the Bitcoin protocol. Although very innovative,
the protocol’s implementation is hard to scale, as it is unable to manage a
massive amount of transactions at an instantaneous speed. This is also hard to
change because of the way the protocol was implemented.”
Innovative “Successful FinTech businesses also need to be innovative, both in terms of

products and operations. With the increasingly widespread use of mobile
phones and internet services, much innovation can be made in mobile
technologies (such as contactless technologies) in the FinTech space.”
Ease of “Businesses that are not subject to high compliance regimes will be able to be
compliance innovative and have lower capital requirement. While financial stability and
consumer protection are important for a market to function, tight regulatory
environment has its trade-off.
In addition to the advantages of a “compliance easy” environment, businesses

that receive subsidies or incentives aided by social, financial and economic
inclusion agenda brought bout by an anti-income/wealth inequality regime will
have an added advantage. The main advantage of operating in a lightly
regulated environment is that fewer resources are spent on compliance activities
and it encourages innovation.”
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HYPOTHESIS DEVELOPMENT
H1: “Personal mobility of payment-type Fintech services has a positive (+) effect on
intention to use. ”
P. G.Schierz, O. Schilke, and B. W. Wirtz, “Understanding Consumer Acceptance of

Mobile Payment Services: An Empirical Analysis”, Electronic Commerce Research and
Applications, vol.9, no.3, pp.209-216, 2010.
In an analysis conducted by Schierz[4] on the acceptance intention of individuals in European

Union who were capable of using mobile devices, quality had a positive impact on acceptance
intention. More analysis additionally found that quality affected the acceptance intention relating
to mobile services
H2. “Perceived usefulness of payment-type Fintech services has a positive (+) effect on
intention to use.”
A.Bhattacherjee, and C.Sanford, “Influence Processes for Information Technology

Acceptance: An Elaboration Likelihood Model”, MIS quarterly, vol.30, no.4, pp. 805- 825,
2006.
Perceived utility is also outlined because the level of utility an exact product or service has for a
user. Thus, during this study, the subjective level of utility of payment-type Fintech in existence
or task is also outlined as “perceived usefulness”. In studies by Bhattacherjee and Sanford [6] it
was found that once a user feels “usefulness” through varied factors, this includes a high impact
on “intention to use”.
H3: “Perceived ease of use of payment-type Fintech services has a positive (+) effect on
intention to use.”
J. E.Lee and M. S.Shin, “Factors for the Adoption of Smartphone-based Mobile Banking:
On User’s Technology Readiness and Expertise”, Journal of Society for e-Business Studies,
vol.16, no.4, pp.155-172, 2011.
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Perceived easy use is also outlined by the number of effort a user dedicates to an IT platform.
However as a result of time may be a constraint condition on users, it refers to once a user feels
it's easier to use a particular technology compared to others when time is controlled. In terms of
mobile banking, the study by Lee and Shin [8] claimed that technology readiness and specialized
information affected easy use, that successively had a sway on intention to use
H4: “Credibility of payment-type Fintech services has a positive (+) effect on intention to
use.”
S. L.Jarvenpaa, J.Tractinsky, and M.Vitale, “Consumer Trust in an Internet Store”,

Information Technology and Management, vol.1, no.1/2, pp.45-71, 2000.
Jarvenpaa [9] explained credibleness was the major reason variable concerning acceptance. This
study proposes the subsequent hypothesis supported a look that adopted credibleness as an
element for mobile net services.
H5: “Social influence of payment-type Fintech services has a positive (+) effect on intention
to use”.
Y. S.Foon,and B. C. Y.Fah, “Internet Banking Adoption in Kuala Lumpur:An Application

of UTAUT Model”,International Journal of Business and Management, vol. 6, no. 4, pp.
161,2011.
One of Fintech services most salient strengths is its large user base. This opens the means for
users to simply approach Fintech services and check with the feedback from numerous users,
that makes it extremely at risk of social influence. A study by Foon and Fah [11] explicit that in
conjunction with promotion conditions and believability, social impact had a big impact on
intention to use within the acceptance of net banking.
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H6: “Concern for information privacy of payment-type Fintech services has a negative (-)
effect on Intention to use.”
C.Van Slyke, J. T.Shim, R.Johnson,and J. J.Jiang, “Concern for Information Privacy and
Online Consumer Purchasing”, Journal of the Association for Information Systems, vol.7,
no.1, pp.415-444, 2006
Payment-type Fintech service will be outlined as a service supported mobile banking, however
the employment of mobile banking raises considerations of outpouring or contraband use of
private info. In an exceedingly analysis investigation the link between CFIP and intention to use,
Van Slyke [12] found a causative relationship through a medium known as ‘credibility’.
H7: “Self-efficacy of payment-type Fintech services has a positive (+) effect on intention to
use.”
M. Igbaria and J. Iivari, "The Effects of Self-Efficacy on Computer Usage." Omega,vol.23,

no.6, pp.587-605, 1995.
Igbaria and Iivari [14] conducted an analysis on the result of self-efficacyon use and simplicity use
in an study on the connection between self-efficacy and use of a computer on computer users in
European country. A study on intention of use of electronic communication services allotted by
Shanghai [15] claimed that self-efficacy had a controlling effect on perspective.
H8: “Concern for information privacy regarding Fintech services has a moderating effect
on intention to use”
C.Van Slyke, J. T.Shim, R.Johnson,and J. J.Jiang, “Concern for Information Privacy and
Online Consumer Purchasing”, Journal of the Association for Information Systems, vol.7,
no.1, pp.415-444, 2006.
C. M.Angst and R.Agarwal, “Adoption of Electronic Health records in the Presence of

Privacy Concerns: The Elaboration Likelihood Model and Individual Persuasion”, MIS
quarterly, vol. 33, no. 2, pp.339-370, 2009.
25
In an analysis on the connection between privacy of a closed type SNS and continuous intention
to use, Lim & Kang [12] found that privacy issues had a weakening result on perceived
psychological privacy, believability and advantages. Perceived expectation and self-efficacy
compel positive perspective when deciding an explicit action, and within the finish, have an
impression on user satisfaction and intention to use. Angst and Ararwal [16] conducted a study on
the consent intention of Electronic Health Records and located that CFIP had a weakening result
on subject range, issue participation and perspective. Within the study on the connection between
privacy and continued intention to use expressed that privacy issues had a weakening result on
perceived psychological privacy, believability and advantages.
H9: “Self-efficacy of Fintech services has a moderating effect.”
C. A.Murphy.“Assessment of Computer Self-efficacy: Instrument development and

validation”, ERIC Document (2nd Ed.), 1988.
Murphy [18] claimed that expectations associate with self-efficacy in an individual’s state of mind
enabled him to own a positive perspective to decide on a behavior, and as a result, they'd a
control on user satisfaction and intention to use. Moreover, once employing a bound system,
someone with high self-efficacy can demonstrate high confidence in usage capability, fancy
asking queries and check out to interpret data in keeping with one’s own judgment. Against this,
someone with low self-efficacy can show low confidence in one’s capability to use the system
and can be powerfully inclined to simply accept a definite piece of data conferred as is than
question it.
Factors Analysis
Among the on top of determinants of Fintech acceptance, social norm and service credibleness is
are associated with external influence. Social norm (also referred to as subjective norm or social
influence) is outlined because the extent to that members of a social network (e.g., peers,
colleagues, members of the family, or different referents) influence one another's behavior to
evolve to the community's activity patterns [12]. Davis[4] removed social norms from TAM on
grounds that it's by trial and error, nonsignificant and doubtless less relevant within the Fintech
acceptance context, however resultant studies have other it back to the model. Significantly,
26
social norm suggests that community norms concerning a target behavior ought to exist before
new users are often liberal into that behavior, and therefore it cannot justify why new
technologies, that community norms might not however exist, are often accepted by a user
population. TAM's inclusion of "external variables" as predictors of user perceptions left open
the likelihood that external influence from secondary sources, like amendment agents or
structure managers, should still impact Fintech acceptance, albeit mediated by user perceptions.
Still, TAM/TPB based mostly analysis doesn't justify why any such external influence might
occur or explicate the social science method of influence.
This communication is plausible to form potential adopters' perceptions of key innovation

attributes like its relative advantage, complexity, and compatibility with existing work
procedures, thereby motivating their acceptance selections.
Subsequent IDT analysis has examined a spread of mass media channels (e.g., news media,
experts) and social channels (e.g., colleagues, family members) that function the conduits of data
and influence, and studied the impacts of those channels on perceived Fintech attributes.
IDT additionally suggests that communication channels might have differential effects across the
user population in this that a lot of innovative early adopters are possibly actuated by mass media
whereas the less innovative late adopters swear upon the efficacy of a lot of on social channels.
27
RESEARCH MODEL
Research Design
An extensive literature review was conducted to gather information and comprehensive analysis
of all existing publicly available information was referred in the report.
The approach that was followed for the needs of this analysis was the inductive one. For the
needs of this analysis, comprehensive interviews were used. Comprehensive interviews were
personal/unstructured interviews with the aim of developing an in-depth understanding of all key
challenges and opportunities within the sector.
The hypothesized ELM-based influence model of Fintech acceptance was tested by trial and
error employing a survey study conducted on-line. The strategy of purposive sampling was
employed to develop the sample of the analysis under discussion.
The seven constructs of interest to this study were personal mobility, Usefulness, Relative Ease
of Use, Service Credibility, Social Influence. All constructs were measured using multiple-item
perceptual scales, using pre-validated instruments from prior research wherever possible, and
reworded to relate specifically to the context of Fintech acceptance. Individual scale items are
listed within the appendix.
Relative utility was measured using five item Likert scaled things that tapped into subjects'
perceptions of productivity, performance, and effectiveness gains from Fintech acceptance, and
overall utility. Service quality was assessed employing a changed version of five-item Likert
scale. 3 things from the initial scale that tapped into subjects' perception of the source’s wisdom,
expertise, and trustiness were maintained, whereas the dependableness item was modified to
quality. Finally, Self-Efficacy and Concern for Privacy info were measured with 2 item Likert-
scaled items.
28
Based on the hypotheses formed in this study, the below research model was developed for
evaluating the customer insights:
Concern for
Information H6(-)
Privacy
Personal
Central Mobility
Route
Relative H1(+)
Usefulnes
s
H2(+)
Relative
Ease of
Use
H3(+)
Accessibility
H4(+)
Intention
to Use
H4(+)
Peripheral Service
Route Credibilit
y
H5(+)
Social
Influence
Self Efficacy H7(+)
The subsequent step for our data analysis was to examine the strength and significance of each of
our hypothesized independent variable effects. This analysis was done using two PLS models.
The first model examined hypotheses H1 through H7for their main effects, while the second
29
model assessed the moderating effects specified in H8 through H9. Results of the analysis for
each phase, including standardized path coefficients, path significances, and variance explained
(R2 value) for each dependent variable, are presented below
Table 1: Result of Path Analysis
Path Results
Estimate t
H1 Personal-Mobility-> 0.069 1.353
Intention of Use
H2 Service Usefulness -> 0.231 3.760
Intention of Use
H3 Ease of Use -> 0.232 4.553
Intention of Use
H4 Credibility -> 0.218 3.410
Intention of Use
H5 Social Influence -> 0.102 0.044
Intention of Use
(Moderator)
H6 CFIP -> Intention of -0.090 -1.950
Use
H7 Self-efficacy -> 0.011 0.231
Intention of Use
(Interaction)
H8 Personal Mobility* -0.086 0.643
CFIP -> Intention of
Use
Usefulness*CFIP-> -.0124 1.793
Intention of Use
Ease of Use*CFIP - 0.086 0.517
> Intention of Use
Credibility*CFIP -> 0.165 0.299
Intention of Use
Social Influence* 0.088 0.845
CFIP -> Intention of
Use
H9 Personal Mobility* 0.137 1.696
Self efficacy ->
Intention of Use
30
Usefulness*Self 0.052 1.347
efficacy -> Intention
of Use
Ease of Use*Self 0.094 2.094
of Use
Credibility*Self 0.102 2.114
of Use
Social Influence* 0.102 2.087
Self efficacy ->
Intention of Use
Results of Path Analysis-SPSS Model
Mobility is one in all the foremost crucial factors in mobile services. However, the very fact that
quality failed to have a sway on intention to use implies that it's not essentially appealing to a
user once finishing up a transaction.
31
The most crucial factors in acceptance during this study were utility and simple use, and that
they support the research [7]. What is more, it implies that swift registration, simple use and a
convenient UI/UX surroundings might be the most important factors in acceptance for potential
users of Fintech services. That being the case, an easy usage procedure and improved
convenience, beside enhancements like liberation of economic services, are imperative in
promoting this sort of Fintech service.
In addition, self-efficacy incorporates a vital impact on intention to use and, as a results of this
study, it had been additionally found to own a moderating impact. This means that the IT-savvy
generation might like Fintech. In keeping with the results of the Millennials Disruption Index, a
three-year study conducted by Scratch, media big Viacom’s artistic practice division, in 2014
(73% of users had high expectations for money services of IT businesses, like Google), and
increasing convenience and effectiveness in Fintech services were seemingly to fulfill the
expectations of potential shoppers.
Lastly, social influence and intention to use had a positive relationship. The characteristics of the
social influence variable are connected to it of a platform. This is often as a result of all services
are influenced by network externalities. In alternative words, if the put in base will increase, a lot
of users would adopt them. Considering this, a policy to decisively connect completely different
services and lower entry barriers is critical
Through this we have seen that central path had a comparatively higher impact compared to the
peripheral path. So as to invigorate payment-type Fintech services, convenience and value ought
to be unceasingly improved [9] .This demand the deregulating of various sectors, together with
monetary services, communication, e-payment and e-banking.
32
INSIGHTS
Breakout FinTech Segments
All the segments of Indian FinTech have started gaining ground albeit to totally different extents,
thanks to totally different underlying characteristics that impact measurability, adoption and
viability. Moreover, not all the segments are seemingly to breakout at identical time. So as to
assess the breakout potential, in addition because the temporal arrangement of breakout.
The breakout assessment framework for the Indian FinTech market, drawing from the learnings
of this paper. For instance in 2017, the digital payments phase has clearly witnessed a breakout
thanks to a bunch of business, market and extraneous regulative reasons as well as a push
towards digital payments post conclusion. The digital payments phase weighs absolutely on most
of the characteristics within the framework. The framework qualitatively grades the twenty
FinTech segments across the seven characteristics on 3 parameters (High, Medium and Low)
The framework aims to handle the issues across a spread of business aspects together with
measurability, business and in operation model alignment, addressing new market opportunities,
ability to form and serve new market segments, collaborating and partnering with banks.
Using the framework, we've analyzed numerous aspects of companies and consulted trade
participants to grasp their breakout potential. The areas marked in darker shades indicate the next
chance of breakout when put next to different FinTech segments. Supported the careful analysis
lined after, digital payments and alternate disposal emerge because the FinTech segments with
the stronger breakout potential. A couple of the segments together with crypto currency and
InsurTech rank lower within the Indian market context, however globally these segments most
likely have a similar chance of breakout when put next to a couple of segments that area unit
rated higher within the Indian context.
33
Indian Fintech Breakout-Framework Design
LASIC PRINCIPLE- ELM BASED- FINTECH BREAKOUT STRATEGIC

SUPPLY SIDE CONSUMER SIDE THEME
DRIVER DRIVER CHARACTERICS
FinTech companies that are addressing areas and Unique

Low Profit Margin Accessibility functions where customer friction meets largest Value
profit pools (economic value) Proposition
FinTech companies that employ business models Accessible

Business
Asset Light Usefulness that are platform based, modular, data intensive,
Model
and capital light to start with Design
FinTech companies that actively shape customer Fostering

Innovative
Innovative Ease of Use and user behaviors, thus resulting in long-term
Customer
structural change of the financial services industry Behavior
FinTech companies operating with significant Overall

Compliance legacy issues , prevalence of conventional Market
Easy business models, that lack scalability Growth
FinTech providers that offer services to the Scale of

Colaboration
Scalable underserved population using sophisticated
between
capabilities on viable basis stakeholders
FinTech companies that actively collaborate with

Social Banks and other FIs and also operate within the Government
Regulations
Influence regulatory purview of regulators
FinTech companies that target customers and Leveraging

Service make curated offers through Data and
Credentials
use of analytics and alternative / big data sources Analytics
34
Fintech Adoption-Other Customer Insights
INDIA
India
Money Transfer and
Payments
80%
60%
40%
Insurance Financial Planning
20%
0%
Borrowing Savings and Investments
Figure: Fintech Adoption among digitally active customers
AGE BRACKETS INCOME BRACKETS

Age Brackets Income Brackets
>65 >80
45-64 30-80
25-44 15-30
18-24 <15
0% 20% 40% 60% 80% 0% 20% 40% 60% 80% 100%
The above analysis provides 2 key insights relating to influence processes:
(1) External influence plays a vital role within the formation of potential users' Fintech
acceptance perceptions and ultimately in shaping their acceptance behaviors
(2) Identical influence could engender totally differential effects across different user teams.
35
Despite these insights, previous analysis still provides terribly restricted understanding of the
character, patterns, and outcomes of influence method for a minimum of 3 reasons. First, it
doesn't justify what varieties of data are simplest in influencing user perceptions. IDT
distinguishes between mass media and social channels, however doesn't distinguish between the
informational content communicated by those communication channels (e.g., what quantity
Fintech-related detail is required to win over a possible adopter) or data sources inside every
channel (e.g., the person writing the review). Presumably, not all detail content or information
sources are equally effective in shaping users' perceptions regarding new technology. As an
example, some tend to be influenced a lot of by experts' suggestions, whereas others could
believe a lot of on the explanation or proof provided.
Hence, info content and supply can also be as necessary in motivating Fintech acceptance
because the communication presenting such content.
Second, IDT observes that totally different user teams (early versus late adopters) respond
otherwise to different channels (mass media or interpersonal), however doesn't make a case for
why. The key distinction between early and late adopters is their originality, that is outlined as an
outcome variable reflective adopters' temporal arrangement of adoption (i.e., a lot of innovative
users square measure early adopters), instead of a causative driver of their adoption behavior.
Further, IDT cannot make a case for why some people could also be early adopters of a Fintech
service however late adopters of others.
Hence, IDT is of restricted facilitate in predicting ex ante however Fintech acceptance patterns
might vary across a population of potential users supported the character of external influence.
In summary, previous analysis acknowledges that external influence might play a crucial role in
shaping users' perceptions associated with Fintech acceptance, however doesn't cut into into the
dynamics of the influence method and is so of restricted help in unraveling the complexities of
influence patterns and effects. This study addresses the higher than gaps within the TAM/TPB
and IDT literatures by elaborating 2 various suggests that of influence, explaining that influence
method is only for a given usage context, and presenting an easy however helpful theoretical
model that may function the idea for more exploration of the role of influence in Fintech
acceptance.
36
IDENTIFYING BREAKOUT SEGMENTS IN FINTECH “
Alternate Lending
Evaluation using Proposed Framework

Areas Fintech Unique Accessible Fostering Overall Scale of Government Leveraging
Value Business Innovative Market Collaboration Regulations Data and
Segments Proposition Model Customer Growth between Analytics
Design Behavior stakeholders
Credit Peer-to-Peer
Lending
Crowd Funding
Market Place
for Loans
Credit Scoring
Platforms
HIGH MEDIUM LOW
Within alternative lenders, peer-to-peer lenders and market place lending platforms are likely to
breakout faster, as these lenders target profitable niches of Indian borrower segments, pioneer
new business models by having only digital presence, target underserved market segments, and
shape user behavior by gaining trust. “
Peer-to-Peer Lending “
Peer-to-peer lending is an innovative model for transferring credit risk from banks and financial
institutions, dispersing it among individual lenders. These lenders are typically individuals and
households with surplus funds and savings who are seeking better returns. Online P2P platforms
significantly address the key areas of customer friction. “
P2P platforms have been able to attract borrowers mainly due to an easy supplication process
and quicker turnaround times. Moreover, the convenience offered by these platforms is valued
by borrowers and as inferred from borrower responses, interest rates are not the sole criteria for
37
borrowers. “ However as expected, financial returns (from lending) remain the top most reason
why individual lenders use P2P platforms, along with seeking diversification in investment
avenues. “
Peer-to-Peer Lending-Results from Consumer Survey
REASONS FOR REASONS FOR

USING THE USING THE
SERVICES-EASE SERVICES-
OF USE USEFULNESS
Reasons for Using the Services-Ease of Use Reasons for Using the Services-Usefulness
90% 80%
80% 70%
70% 60%
60% 50%
50% 40%
40% 30%
30% 20%
20% 10%
10% 0%
0%
OTHER FACTORS DRIVING ADOPTION

Other Factors Driving Adoption
Recommendation from Banker/Advisor

Distrust of Banks
Recommendation from Friend/Colleague
Competitive Rates
0% 10% 20% 30% 40% 50% 60% 70% 80%
38
Peer-to-Peer Lending-Results from Stakeholder Interviews “
Two different business models have emerged in the P2P lending segment. Currently players have
adopted either the ‘direct disbursal model’ or the ‘partner assisted disbursal model’.
01. Direct disbursal model – The P2P platform directly matches the requirements of
borrowers and lenders and is similar to global P2P platforms. Its current focus is on the
personal loans segment for urban, educated and middle class customers, who understand
the marketplace model and transact online.
02. Partner assisted disbursal model – In this model P2P platforms tie-up with a field partner
(local NGO or Micro Financer) to manage customer acquisition, disbursement, and
collections for a fee. The P2P platform is primarily responsible for onboarding lenders
and offering matching services. “
Figure: P2P Business Models in India
Direct Disbursal Partner Disbursal
Lender Return 14.5-17% 8-10%
Net Platform Operating Cost 4-4.5% 0.5-1%
39
Platform Margin 1.5-2% 1-2%
Partner Commission - 9-10%
Interest Rate available to 20-24% 19-23%

borrower
Payments “

Payments M-Wallets and

PPIs
Merchant
Payments and
PoS Services
International
Remittance
HIGH MEDIUM LOW
M-Wallets and PPIs
Digital payments in India are undergoing a revolution. A combination of factors are disrupting
the payments landscape, as India, in the black swan event of “demonetization”, transitions to a
‘less cash society’. Payments infrastructure in India has significantly evolved in the past 12-18
months, with new payments modes and interfaces including UPI, BHIM and Bharat QR Code
being introduced to drive digital transactions. Average monthly digital transactions have crossed
a Billion transactions in 2017. Excluding NEFT transactions, PPI transactions contribute nearly a
40
quarter in digital retail transactions. Average monthly PPI transactions have grown more than
five times in the past year. “
Figure: Online Transaction Share
100% growth in digital transactions post demonetization, resulted in India’s cash to GDP ratio
coming down to single digits from the pre demonetization figure of 10.6%.
Figure: Monthly M-Wallet Transaction Volume(INR B)
Few payments FinTech companies are leveraging these developments to pivot their business
models and change their focus from consumer payments to enabling banks, merchants, and other
payment intermediaries. “ Moreover, all of these newly introduced instruments, channels, and
interfaces do offer a better and effective payments architecture, but still are mere enablers to the
payments business. None of these in themselves are likely to create new business propositions –
something payments FinTech companies aspire and aim for. “
41
Merchant Payments and PoS Services
The payments sector in India has relatively low barriers to entry compared to other financial
services, and perhaps, that could be one of the reasons for the fast pace of innovations in this
“segment. Going forward, partnerships with large merchants and an unerring focus to drive the
unit transaction cost to near zero, will be the two decisive factors for payment FinTech
companies.
Cross border payments
In the past 2-3 years, few Indian FinTech players have setup bitcoin exchanges in India to
facilitate the purchase and use of bitcoin as an alternate currency for paying for mobile credit,
data card and DTH bills. Global block chain startups including Ripple have partnered with
Indian FinTech Companies to offer their proprietary blockchain enabled currency – XRP. Ripple
uses the same currency (XRP) to undertake international remittance business by setting up
exchanges in host markets.” Unlike other popular cryptocurrencies, XRP is a pre-mined currency
used for settlement and it has the advantage of increased settlement speed over other
cryptocurrencies. “The use case of international remittance for blockchain technology is one of
the promising use cases for the Indian market. India is the biggest market for remittances, with
over $62 Bn sent to India from abroad in 2016. The likely benefits of using blockchain in
enabling cross border payments are described in the illustration below: “
Figure: Blockchain-Benefits under Cross-Border Payments
42
Investment Management “

Investment Robo Advisors

Management
Discount
Brokers
Online
Financial
Advisors
HIGH MEDIUM LOW
Online Financial Advisors
With innovation, advisory services are likely to break off from the product. As customers move
to automated platforms, fewer investment management products will be sold through own
advisory channels. This is likely to result in increased competition amongst existing players in
specialized segments or services. Data is seen as a major disruptor in investment management,
empowering investors and service providers alike. “
Roboadvisory
The current penetration of investment management services is very low, as most investors prefer
to channel their savings in deposits, through banks. Driven by technology evolution, a few
FinTech companies have introduced services, offering automated financial advisory services “
based on a pre-defined set of rules and algorithms at a significantly reduced cost. These
platforms leverage customer information and run algorithms to develop automated portfolio
allocation. The share of assets managed by robo-advisers in India is still low (less than 1% of
assets), and their services are mostly targeted toward younger and financial savvy investors. “
43
Discount Brokers
These FinTech companies offer complete online and digital trade execution facilities, at a
fraction of the fees, as compared to traditional brokers. Discount brokers have no overheads of ”
physical branches, large research and onboarding teams, and pass on the benefits to the investors
who can trade paying a very small fees. Specialized discount brokers have developed customized
APIs that are extended to sub-brokers and retail investors for setting up customized trading
platforms. A few of the discount brokers have also partnered with specialized equity screeners, to
offer investor stock screening services, based on thematic and strategic research. “
Banktech “

Big Data, AI
and Robotics
BankTech
Blockchain
Customer
Onboarding
Platforms
HIGH MEDIUM LOW
Customer Onboarding
A few of the FinTech companies focusing on customer onboarding and authentication solutions
in India have received recognition, not only from partner banks and NBFCs, but also from
regulatory authorities. FinTech companies are also deploying Artificial Intelligence (AI) and
blockchain to authenticate, validate identity and undertake background checks on customers.
44
These capabilities are likely to improve the overall quality of digital onboarding for both,
incumbent banks, as well as, other FinTech companies. “
Blockchain ”
Within the bank-tech segment, globally, blockchain remains one of the breakout candidates in
the short term; however, in India, application of blockchain is currently limited to a few proof of
concepts conducted by the regulator and a few private banks. Apart from trade finance,
blockchain technology can be used for facilitating cross border payments, insurance claim
processing, equity trade settlements, syndicated loans with multiple lenders, and asset
hypothecation. In addition to the benefits, most of these use cases will result in cost optimization
across the financial services industry. “
Figure: Use Cases of Blockchain Technology in Banking
Big Data, AI and Robotics
Emerging FinTech segments in the areas of Artificial Intelligence (AI), Machine Learning (ML)
and robotics are emerging, albeit in the nascent stages. Most of these FinTech companies are
working with banking partners to improve current operations and servicing. A few private sector
“ banks have been working with FinTech companies to automate certain customer servicing
activities in call centers. Globally, financial services are also adopting AI for compliance, anti-
45
money laundering and risk management. However, some of these underlying technologies
remain a niche in India.”
InsurTech

Insurance
Aggregators
Insure
IOT and
Tech Wearables
HIGH MEDIUM LOW
Despite strong improvement in penetration and density in the last 10 years, India largely remains
an under-penetrated market.” The market today is primarily dependent on push, tax incentives,
and mandatory buying for sales. InsurTech primarily aims at enabling a better reach of insurance
products & services, as well as a greater personalization of insurance products, and proactive
management of key risks.
Insurance aggregators
Insurance aggregators are essentially a digital distribution channel allowing customers to

compare scope of coverage, term, premium, and terms relevant for customers to enable them to
46
make an informed decision. With a penetration of over 400 Mn Smart Phones by 2020, the
digital insurance channel will be an important medium for distribution of Insurance products. “
IOT and Wearables
“Increasing adoption of connected devices e.g. telematics, and wearables presents an opportunity
for Insurers to better understand customers and personalized customer engagement. This will
require Insurers to work closely with device and service providers. It will require close
partnerships between insurers, re-insurers and product/ platform companies.” For example, Max
Bupa recently announced an alliance with GOQII, a wearable and a fitness technology player,
and Swiss RE, a global re-insurer.
Figure: Evolving Nature of Insure Tech
47
Personal Finance Management “

Personal Tax Filling and

Finance Processing
Management
Spend
Management
and Financial
Planning
Credit Services
HIGH MEDIUM LOW
Personal Finance Management refers to a a platform that helps the user manage his/ her money.
Managing, spending, and investing money are important decisions that have a profound impact
on the financial health of the individual.
Most customers know the basics of money management, but are not financially savvy enough to
manage on their own. This is where the personal finance management app comes into the
picture. These apps have gained popularity in the last couple of years and they assist customers
in keeping a watch on their expenses at a single place. Key enablers in support of the personal
finance management app are: “
01. Regulations: The RBI, in its guidelines has instructed banks to send notifications on
every transaction to customers. Personal Finance Management apps have leveraged this,
to provide an overview of all spends of a customer.
02. Data scraping: Another important factor in the development of the personal finance
management app is the technology of data scraping. Data scraping has enabled personal
finance management apps to read messages of customers, and analyze transactions.
48
CONCLUSION
Indian FinTech companies could address a few of the critical structural issues afflicting Indian
financial services - increase outreach, improve customer experience, reduce operational friction
and foster adoption and usage of the digital channel. Legacy prone processes and higher
operating cost models of incumbent banks and financial service providers will give digital
FinTech companies an edge, as banks play catch-up with these more nimble and innovative start-
ups. The opportunity for FinTech lies in expanding the market, shaping customer behavior, and
effecting long term changes in the financial industry. Indian FinTech companies have the
potential to reshape the financial services landscape in three ways:
• The FinTech startups are likely to reduce costs and improve quality of financial services.
Not being burdened with legacy operations, IT systems, and expensive physical networks,
benefits of leaner operating models can be passed on to customers.
• The FinTech industry will develop unique and innovative models of assessing risks.
Leveraging big data, machine learning, and alternative data to underwrite credit and develop
credit scores for customers with limited credit history, will improve the penetration of
financial services in India.
• FinTech will create a more diverse, secured and stable financial services landscape. FinTech
companies are less homogenous than incumbent banks, and offer great learning templates to
improve, both, capabilities and culture.
Just as incumbents have a lot to learn from emerging FinTech companies. Fintech companies can
also learn and adopt best practices around risk and internal controls, operational excellence,
compliance culture, and employee engagement, that has stood the test of time for most the banks,
and financial services providers in India.
49
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52

Analysis of Fintech Startups in India-Dissertation

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Analysis of Fintech Startups in India

Influence Processes for Fintech Services Breakout: An Elaboration Likelihood Model

A Project Report Submitted in Partial Fulfilment of the

MASTER OF BUSINESS ADMINSTRATION - FULL TIME

Under the Guidance of

AREA CODE: FIN

Faculty of Management Studies

Roll No. F-365

Faculty of Management Studies

Dr. Pankaj Sinha

Faculty of Management Studies

MBA (FT) 2017-19

Roll No. F-365

1. Provide a picture of India’s Fintech business

Understanding the dynamics of acceptance-related influence processes is important for

Understanding the dynamics of acceptance-related influence processes is very important for

Figure: Fintech Services

Figure: Popular areas of Funding in FinTech(US $m)

Indian FinTech segments

Areas FinTech Segments Brief Description

05. Credit Scoring Platforms” • Also includes crowd

Need Gap for Fintech in India

Figure: Finance Infrastructure in India

Credit gap in the MSE segment

Revenue No. of Credit Bank Credit Credit

<15 Lakh 41.4 414 92 322

15 - 30 Lakh 5.6 168 62 106

30 lakh - 1.5 4.5 477 203 274

1.5 Crore - 3 1.3 234 103 131

3 Crore - 18 1.8 720 357 363

Total 54.6 2013 817 1196

Note: Credit Demand is calculated based on revenue using appropriate multipliers

Global Funding in FinTech

≥ $500m ≥ $100m ≥ $10m < $10m

Indian FinTech Growth Drivers

Figure: VC-Backed FinTech Deals Figure: Number of Fintech Companies Launched

03. Regulative forbearance toward FinTech:

Elaboration-likelihood model (ELM)

Figure: Elaboration-likelihood model

“Low profit margin is a key characteristic of successful FinTech businesses. In

Innovative “Successful FinTech businesses also need to be innovative, both in terms of

In addition to the advantages of a “compliance easy” environment, businesses

P. G.Schierz, O. Schilke, and B. W. Wirtz, “Understanding Consumer Acceptance of

In an analysis conducted by Schierz[4] on the acceptance intention of individuals in European

A.Bhattacherjee, and C.Sanford, “Influence Processes for Information Technology

S. L.Jarvenpaa, J.Tractinsky, and M.Vitale, “Consumer Trust in an Internet Store”,

Y. S.Foon,and B. C. Y.Fah, “Internet Banking Adoption in Kuala Lumpur:An Application

M. Igbaria and J. Iivari, "The Effects of Self-Efficacy on Computer Usage." Omega,vol.23,

C. M.Angst and R.Agarwal, “Adoption of Electronic Health records in the Presence of

H9: “Self-efficacy of Fintech services has a moderating effect.”

C. A.Murphy.“Assessment of Computer Self-efficacy: Instrument development and

This communication is plausible to form potential adopters' perceptions of key innovation

Self Efficacy H7(+)

Table 1: Result of Path Analysis

Results of Path Analysis-SPSS Model

Breakout FinTech Segments

LASIC PRINCIPLE- ELM BASED- FINTECH BREAKOUT STRATEGIC

FinTech companies that are addressing areas and Unique

FinTech companies that employ business models Accessible

FinTech companies that actively shape customer Fostering

FinTech companies operating with significant Overall

FinTech providers that offer services to the Scale of

FinTech companies that actively collaborate with