Online financial services market to hit Rs 15000 crore by 2020

Online financial services in India is expected to be a Rs 15,000-crore market by 2020, up about 15 times from Rs 1,063 crore in 2014, led by a surge in usage of mobile wallets and insurance services, among others, according to a report from investment bank MAPE Advisory Group and consulting firm MXV.
The mobile wallets business, led by Oxigen and Paytm, has the potential to be worth Rs 5,793 crore in the next four years, from a meagre Rs 179 crore in 2014, the report said. Insurance services are estimated to grow to Rs 4,600 crore, from Rs 484 crore. The number of transactions through mobile wallets has risen more than seven times to 256 million, from 33 million in the last two years. That has outpaced mobile banking transactions, which grew to 172 million from 53 million between 2014 and 2015.
“Mobile wallet is getting a boost from e-commerce and its ability to aggregate multiple payment modes is expected to further amplify adoption of alternative payment systems,” Jacob Matthew, MD and co-founder of MAPE, said.
Fintech can be defined as technology being used by companies as a key tool to make financial systems more efficient. And while doing so, they are disrupting in cumbent financial services companies that still look at technology as an enabler.
Globally, the fintech industry saw investments of $22 billion in 2015, up from $16.5 billion a year earlier.The US accounted for about 70% of the investments. Though the investment figures in India are still small, the number is expected to go up by 2020 as more Indians have access to the internet and smartphones, an identification number through Aadha ar, and a bank account through Jan Dhan Yojana.
In the last two years, about $1.3 billion has been invested in the Fintech segment in the country , with a majority of it, $964 million, going to payments companies such as Paytm, Freecharge and BillDesk. About $50 million was put in wallet companies and mobile point of sale companies (mPoS) Citrus, MobiKwik and Ezetap among others, the report added.Mumbai and Bengaluru are the two major fintech hubs in the country and are fast making their presence felt among other hubs in the world such as Dublin, Berlin, Tel Aviv and Hong Kong.New York, Silicon Valley and London are the well-established places.
“We see the tipping point in 2016, when internet penetration in the country crosses 30%. By 2020, digital transactions are likely to account for more than a quarter of the transactions in the banking sector. By 2022, digital banking will have more than 50% penetration levels. Mobile banking adoption rates are already outpacing web banking,” the report said.