Emerging Opportunities and Challenges of Digital India in 2020

By Srikanth
7 Min Read
Naveen Chava

Digital India has given rise to unprecedented opportunities for the nation be it technologically, industrially and economically. In this year’s union budget, the Finance Minister launched National Mission on Quantum Technologies and Applications with an outlay of $1.2 billion with an objective to elevate India’s technology prowess at par with developed countries like US and China and to stimulus digital priorities for next-gen services.


Currently, India is facing a lockdown to combat Covid-19 and businesses are resorting to Al and ML-backed technologies to ensure safety, connectivity, business continuity and minimize its adverse impact on profits and growth. In this backdrop, it is evident that emerging and opportune technologies would evolve in every industry vertical, including IT/ ITeS, BFSI, healthcare, education, retail, ecommerce etc., to keep the business and economy abreast. As we analyze deep into fintech industry, the opportunities and challenges are immense.  

Over the years, the banking and financial space has witnessed a paradigm shift. Startups with differentiation, innovative process or technology in the areas of lending, payments, insurance, fraud protection and digital security, personal finance and wealth management are pushing boundaries for Fintech industry. Today, India stands at third-position for nestling largest startup ecosystem in the world and the transformation is expected to be driven by 3000+ startups. With the right platforms combined with government initiatives to create future FinTech unicorns, the country is all set to hold a remarkable position in the Global FinTech Hub Index.

Disruption can also come from transformation and efficiency in the processes of digital transactions, onboarding, signatures, e-filings and security. Also from empowering both the banks or corporates and their customers with better digitalization and digital innovation which will change the customer behaviour plus making the long term changes that will affect Digital India. NASSCOM predicts that India’s fintech software market will touch US$ 2.4 billion by means of 2020, doubling of the present rate of growth. 90 per cent of the UPI transactions in FY19 were accounted for by consumer-facing fintech apps. The large increase in the FinTech investments from investor community has boosted the confidence on the FinTech market.  Investments doubled to $3.7 billion in 2019 with over 2000 startups and India being the 3rd largest country after US and UK to receive the investments.


  • There will a large movement of digital banking, contactless cards/PoS and mobile wallets penetrating into tier 2 and 3 markets. Explosive growth in PoS market is expected in 2020. Similarly, small retail businesses and credit will also boom.
  • With the growth of digital payments and usage of digital identification, the threat of cyber of digital attacks is going to get higher. There is a lot of scope for Indian FinTechs to focus and execute their ideas upon. Cyber threat incidents like phishing, network and website hacking have been doubling every year. AI/ML, Blockchain technologies can have a large play in digital security. Blockchain itself has over $ 5bn business value potential in the next 5 years globally.
  • India being the largest consumer of data bandwidth already and mobile handset penetration will continue to increase to 90 per cent and above in 2020. With the advent of 5G, the payments, eRetail and eCommerce will continue to grow along with the mobile usage and growth. Mobile access is the fastest way to reach new users and grow B2C business.
  • AI will play a big role and in banking sector. Banks will continue to reap benefits of voice chatbots and robot tellers at its branches. Digital app based improved customer experience through innovation can give better service than established banks where there are higher operational costs and friction.  They also help higher outreach to customers, increase adoption and customer movement to digital channels
  • ML will also play a large role in credit rating in the lending space on credit underwriting, big data based risk assessments.
  • India Fintech has a large opportunity in the South Asia due to similar culture and also in Africa/South America due to similar economic conditions. And these are the countries where there is larger potential for similar financial technologies.
  • Crowd funding is another vertical to watch out for in the FinTech industry which has seen good growth with many creative solutions


  • Regulation has been a key but there is large room for correction in the space. For example: Aadhaar has gone through multiple regulations and uncertainties in terms of data privacy and protection. Regulators are having a tough time balancing the data security and privacy. Due to lack of clarity, uncertainty has caused backward progress in some cases
  • Funding for early stage startups who might have very innovative products but lack revenues which is one of the primary criterion for funding
  • lack of skilled technical labour to keep up with the technological needs and advances
  • Digital adoption in India has a long way to go as 40 per cent of population does not have bank accounts and 87 per cent of payments are cash driven. This is due to our conservative financial preferences. But adoption has been very high at 59 per cent compared to the global average of 33 percent in the last few years
  • Unavailability of robust technology to mitigate unknown risks coming with AI based credit lending or trading
  • Too many players lacking single solutions

By Mr. Naveen Chava, CEO, IDSign


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