London,
03
August
2018
|
09:59
Europe/London

City of London Corporation and PwC call on UK and India fintechs to get disruptive

The City of London Corporation and PwC India have today launched a report on the fintech landscape in India and UK.

The joint publication, which is based on new data from PwC, aims to educate payment firms in the UK and India on the opportunities and challenges in each other’s markets, and the huge potential for collaboration between industry in the two countries.

In particular, the report finds:

  • Total financial transactions on retail digital payment platforms in India are projected to grow by 400% from INR 200 billion (circa £2 billion) in 2017-18 to INR 1 trillion (£10 billion) by 2023;
  • By 2020, around 720 billion transactions are projected to be made in India through the use of Unified Payments Interface (UPI) technology. Currently 40% of the total population of India is currently unbanked and more than 80% of the payments in India are still made by cash;
  • The newly introduced Payment Service Directive (PSD2, introduced in 13 January 2018) has led to a high cost of compliance for companies;
  • The UK’s reputation as a leader in cyber security and India’s expertise in software development offers significant cooperation opportunities, however there is currently a gap in skills development that regulators can address.

The publication also makes a number of recommendations for future collaboration between India and the UK, urging regulators in both countries to engage with payment firms to educate them on potential opportunities and challenges.

The document is the first in a series of three research pieces scheduled to be published by the City Corporation and PwC on the UK-India fintech landscape, with the next two reports looking at the areas of Insurtech and Regtech.

The City Corporation has long supported the growth of exchanges in fintech between the UK and India, and is a partner of the Indian High Commission’s Access India programme, through which it is helping UK fintechs set up in the Indian market. As part of this, the City Corporation hosted two UK fintech delegations in Mumbai and Bangalore this year.

Fintech contributes over £5 billion to the UK economy each year, and UK payment systems in 2017 dealt with more than 21 billion transactions worth around £75 trillion. There are 76,500 fintech related jobs in the UK, a number which is set to grow beyond 100,000 by 2030.

Sherry Madera, Special Adviser for Asia at the City of London Corporation said:

“The UK and India have much to gain from collaborating more closely in fintech, particularly in the payments sector.

“Last year in the UK, cards accounted for the majority of transactions, while in India 80% of payments in India are still made by cash.

“This report- the first in a series of three- shows how firms in both countries can take advantage of opportunities this situation presents. I hope it will help educate and encourage the fintech industry in the UK and India.”

Shiva Iyer, Financial Services Risk Assurance Global Risk and Regulation at PwC India, said:

“The fintech payments ecosystem has been rapidly growing in India since the past 3 years with a potential to leap frog over the next 5 years as one of the largest Fintech growth market across payments and lending owing to the regulatory framework being put in place and technological advancements and growth in smart phone users that further augments easy to operate mobile payments.

“On the other hand the UK Fintech ecosystem and London in particular has made considerable progress in digital payments due to the existence of a strong regulatory environment that supports innovation and an equally strong digital ecosystem being put in place over the past 5-7 years. The introduction of Open banking under Payment Services Directive (PSD2) is set to democratise the availability of financial services products to the end customers in a manner that prioritises consumer needs over products and pricing.

“There is clearly an opportunity for both these Fintech markets to leverage from each other's products and developments and seek to identify challenges where solutions and capabilities could be developed and deployed.”

Sanjay Jain, CIO at the ‎Centre for Innovation Incubation and Entrepreneurship, IIM Ahmedabad, and Member of the City of London Indian Advisory Council said:

"Beyond size, the Indian payment platforms are also leading the world on innovation in instant payments.

“The landscape is evolving rapidly, bringing in many more customers, and creating significant opportunities."

The City of London Corporation has run a representative office in Mumbai since 2007 to enable long-term relationship building with financial sector stakeholders across India. Around 10-15 Indian financial firms are based in the Square Mile which the City Corporation works closely with, and there are many more based across London.

The report can be found here.