Demographic Dividend And Growth Of Fintech

With more than 65 per cent of its population under the age of 35, India is the youngest country in the world. The young population of the country provides it with humongous human resources bustling with energy and skills. This population has education, training and access to technology. These people are full of new ideas and aspirations. It is this population which been the primary reason behind the rapid growth of the Indian economy in the past few years. Almost every sector of the economy has benefitted from the demographic shift in the country’s population in the past few decades; however, one sector that stands out from the crowd is the fintech sector. 

The Fintech sector in the country has seen an exponential rise in the past 5 to 7 years. Whether it’s digital banking, digital payments, digital borrowing or lending, crowdfunding or cryptocurrency, every sector has seen significant growth. There have been several reasons behind the growth of the sector. A robust economic environment, availability of finance, the emergence of technology, favourable demographics, government support, etc are some of the important reasons behind this growth. Although every factor in itself is very important, the role of favourable demographics lies at the core. 

Attitude

In the past few decades, there has been significant growth in the per-capita income of the Indians. Today many people are earning more in a month than their parents were earning in an entire year. The higher income has not only led to the improvement in the lifestyle but also increment in the aspiration. A few decades ago, availing of financial services like loans or buying products on EMI were considered taboo, however, the generation today considers these services as a means of fulfilling their needs and desires. Due to this, the digital lending sector has gained significant momentum. The cryptocurrency was an unimaginable concept a few years ago. Today millions of Indians have invested thousands of crores in crypto-currency. 

Another important change in the attitude of the Indians is about entrepreneurship and investments. Earlier, Indians were risk-averse and more inclined towards having safe jobs. However, the millennials are now open to taking the risk and venturing into entrepreneurship. This change in attitude coupled with the higher dispensable income has greatly contributed to the growth of the fintech industry in the country. There are hundreds of fintech start-ups in the country which have been started by the younger generation. 

Ability to learn and adapt

The role of digital technologies in the growth of the fintech sector is well known to everyone. However, besides the technological advancements, the younger generation’s ability to learn new technology and adapt to the changing scenarios. This has led to the creation of a new market for financial services aided with digital technologies. The younger generation buys things, makes payments, borrows, invests and avails several other financial services online. This is only possible due to their affinity with digital technologies and ability to adapt to the rapid changes happening in the fintech landscape. 

Millennials are today always connected to the internet. They leave digital footprints on social media and other places on the web. These digital footprints play an important role for the fintech companies to decide the creditworthiness of individuals. AI and ML technologies in Fintech analyse the digital footprints, like shopping behaviour, travel patterns etc to determine the creditworthiness of the potential customers. Since, the millennials are the ones leaving maximum digital footprints, in a sense, they are contributing to the rise of fintech.

The combination of technology with financial services is a match made in heaven. When the energy and skills of the millennium generation join hands with it, the result is high paced growth which the fintech sector is witnessing. Not only India’s favourable demographics are contributing to the growth of the fintech sector as customers but also as investors, innovators and entrepreneurs. 

Sunit Gajbhiye

Guest Author The author is CBO and Co-Founder, Financepeer