Global Fintech Fest 2024: PM Modi Highlights India's Fintech Revolution

What’s in today’s article?

• Why in News?
• Fintech
• Key highlights of speech delivered by PM Modi at GFF 2024

Why in News?

PM Modi addressed the Global Fintech Fest (GFF) 2024 at the Jio World Convention Centre in Mumbai, Maharashtra.

GFF is jointly organized by the Payments Council of India, the National Payments Corporation of India and the Fintech Convergence Council. It aims to showcase India’s strides in Fintech and bring together key stakeholders of the sector.

Fintech

• About
  • Fintech, or financial technology, refers to the use of technology to deliver financial services in a more efficient, accessible, and user-friendly way.
  • It encompasses a broad range of innovations that aim to improve and automate the delivery and use of financial services, often through digital platforms.
• Applications
  • Digital Payments
    • Platforms that allow people to make payments, transfer money, and conduct financial transactions online or through mobile devices (e.g., UPI, Google Pay).
  • Lending and Borrowing
    • Online platforms that offer loans to individuals or businesses, often using data-driven algorithms to assess creditworthiness (e.g., peer-to-peer lending, digital loan apps).
  • Wealthtech
    • Platforms and tools for investment management and financial planning, including robo-advisors, online brokerage services, and digital asset management.
  • Blockchain and Cryptocurrency
    • Technologies that facilitate secure, decentralized financial transactions, including cryptocurrencies like Bitcoin and blockchain-based financial services.
  • Regtech
    • Technologies that help financial institutions comply with regulations in an efficient and cost-effective manner, often using AI and big data.
  • Neobanking
    • Digital-only banks that offer banking services without physical branches, often through mobile apps or online platforms.
• Benefits
  • Financial Inclusion
    • Through digital platforms, fintech companies have brought banking and financial services to the underserved and unbanked populations, especially in rural and remote areas.
    • Mobile banking, digital wallets, and micro-lending platforms have empowered millions of people, enabling them to participate in the formal economy, save money, access credit, and invest.
  • Job Creation and Economic Growth
    • The fintech sector has become a major driver of job creation in India, offering opportunities in technology, finance, marketing, and customer service.
    • As fintech companies grow, they contribute to the economy by generating employment and stimulating demand for various ancillary services.
    • Additionally, by streamlining financial processes and reducing transaction costs, fintech has improved business efficiency.
    • It supported the growth of small and medium-sized enterprises (SMEs), further boosting economic development.
  • Digital Payments Revolution
    • India’s fintech revolution is perhaps best exemplified by the widespread adoption of digital payments.
    • It has increased transparency, reduced corruption, and made financial transactions more secure and efficient.

Impact on Urban and Rural Divide

• Fintech has helped bridge the urban-rural divide by providing equal access to financial services regardless of geographic location.
• Through mobile technology, people in rural areas can access the same financial tools and resources as those in urban centers, thereby promoting economic equity and reducing regional disparities.
• Concerns
  • Fintech Companies and Money Laundering Concerns
    • A Parliamentary Committee highlighted that fintech companies were being exploited by scamsters for money laundering purposes.
    • An example cited was the Abu Dhabi-based app called Pyppl, which was reportedly administered by Chinese investment scamsters.
    • This situation posed challenges for Indian law enforcement agencies in tracking the flow of illicit funds gathered through scams on the platform.
  • Fraud Trends and Ratio
    • Despite an increase in the volume of transactions over the past five years, the ratio of fraudulent transactions to total transactions has remained relatively low.
  • Impact on UPI Users
    • The percentage of UPI users affected by frauds stood at 0.0189%.
    • Despite concerns about fintech platforms being used for illegal activities, the overall impact on users remained relatively low compared to the total volume of transactions.

Key highlights of speech delivered by PM Modi at GFF 2024

• India's Fintech Revolution
  • Global Recognition: Modi emphasized how India’s fintech diversity is now as impressive as its cultural diversity to foreign visitors.
  • Investment and Growth: The sector has seen over $31 billion in investments in the last decade and a 500% growth in startups.
  • Infrastructure Development: The increase in broadband users from 60 million to 940 million and the widespread adoption of Aadhaar and Jan Dhan accounts have been key drivers of this revolution.
• Jan Dhan, Aadhaar, and Mobile Trinity
  • Digital Transactions: The combination of Jan Dhan accounts, Aadhaar, and mobile technology has facilitated half of the world’s digital transactions in India.
  • Impact of UPI: India’s Unified Payments Interface (UPI) has revolutionized 24/7 banking, even in rural areas.
• Financial Empowerment
  • Women Empowerment: Modi highlighted the role of Jan Dhan Yojana in empowering women, with over 29 crore bank accounts for women and significant benefits for rural women through self-help groups.
  • Mudra Yojana: The scheme has disbursed Rs 27 trillion, benefiting 70% women, demonstrating the role of fintech in financial inclusion.
• Transparency and Governance
  • Curbing Parallel Economy: Fintech has introduced transparency in financial transactions, particularly through Direct Benefit Transfer (DBT) in government schemes, reducing leakages.
• Social Impact of Fintech
  • Urban-Rural Gap Bridging: Fintech has transformed access to financial services, enabling farmers, fishermen, and middle-class families to manage their finances through mobile phones.
  • Democratization of Financial Services: Fintech has made credit, investments, and insurance more accessible, benefiting even small vendors through schemes like PM SVANidhi.
• Advancements in Digital Banking
  • Neobanking and Digital Only Banks: Modi discussed modern concepts like neobanking and the shift from currency to QR codes, highlighting innovations such as Digital Twins technology and Open Network for Digital Commerce (ONDC).
  • Account Aggregators and e-RUPI: These tools are improving financial management for small businesses and are applicable globally.
• Cybersecurity and Regulation
  • Policy Support: The government is facilitating fintech growth by removing Angel Tax, investing in research, and implementing the Digital Personal Data Protection Act.
  • Cyber Fraud: Modi emphasized the importance of digital literacy and robust regulatory measures to combat cyber fraud.
• Sustainable Economic Growth
  • Green Finance: The government prioritizes sustainable growth, focusing on green finance and financial inclusion to strengthen markets with advanced technologies.
• Future Outlook
  • Modi expressed confidence in the future of India’s fintech ecosystem, predicting it will significantly enhance the quality of life globally and committed to participating in the 10th edition of GFF.

Q.1. What were the key highlights of PM Modi's speech at the Global Fintech Fest 2024?

PM Modi emphasized India's fintech achievements, including a 500% startup growth, the widespread adoption of UPI, and the role of Jan Dhan, Aadhaar, and mobile technology in driving financial inclusion and transparency.

Q.2. How has India's fintech sector contributed to economic growth?

India's fintech sector has driven economic growth by enhancing financial inclusion, creating jobs, improving business efficiency, and enabling digital payments, which have reduced corruption and bridged the urban-rural divide.

Source: India’s fintech system will improve ease of living for entire world: Prime Minister Modi | PIB | The Hindu