Finance Minister Nirmala Sitharaman has lauded India's fintech sector for its pivotal contributions in two critical domains: catering to new-to-credit customers and spearheading the adoption of UPI-enabled QR code payments. 

Addressing the audience at the Global Fintech Fest 2023, held at Mumbai's Jio World Convention Centre on September 5, Sitharaman emphasized the evolving significance of fintech in the country's financial landscape. The event, spanning three days, was jointly organized by the National Payments Corporation of India (NPCI), Payment Council of India (PCI), and Fintech Convergence Council (FCC), with this year's theme focusing on "Global Collaboration for a Responsible Financial Ecosystem: Inclusive, Resilient, and Sustainable." 

Sitharaman underscored the gradual shift in traditional banks' approach to serving new-to-credit customers, traditionally reliant on income statements. Recent trends have seen banks collaborating with fintech companies to extend their reach to new-to-credit individuals based on social and other spending data. 

Regarding payments, Sitharaman pointed out that fintechs currently command a substantial 93 per cent share in UPI transaction values, in contrast to banks' modest 7 per cent share. She emphasised the stark contrast in these figures, highlighting PhonePe, Google Pay, and PayTM as the top three UPI apps, with PhonePe leading at 50 per cent, followed by Google and PayTM. While many fintech have attracted customers through cashback incentives, traditional banks have largely refrained from such practices. 

Sitharaman stressed the importance of global collaboration among major economies to address the challenges of today's ever-changing world, advocating cooperation in strategic, economic, and other realms. She cited a BCG report to support her argument, revealing that fintechs hold a 36 per cent share of new-to-credit customers in lending, compared to traditional brick-and-mortar banks' 22 per cent. This demonstrated fintech's ability to reach a broader customer base in a domain traditionally dominated by banks. 

The absence of a merchant discount rate or transaction costs for customers and merchants has deterred traditional banks from promoting their UPI apps. However, banks are actively targeting these payment customers to offer a comprehensive range of services, with UPI reaching 10 billion transactions in August. 

In the broking sector, fintech companies currently claim an impressive 80 per cent market share, while traditional players account for the remaining 20 per cent. Equity broking, in particular, has seen significant disruption from new-age players who have introduced margin lending models on top of discount broking. Notably, Zerodha has achieved substantial success in attracting customers and subsequently offering them various financial products. 

Sitharaman emphasised the imperative of constructing a responsible financial ecosystem, cautioning against potential disruptions caused by a single laggard. She reiterated India's call for global cooperation and the establishment of a regulatory framework to address emerging threats, including those posed by cryptocurrencies. Currently, crypto assets remain unregulated in India.