Fintechs still seem to be better positioned than most other startups; the findings from a FICCI-IAN Survey of 250 startups in India showed that fintech reported the least disruptions to operations by the pandemic. Digital wallets and other e-payment options have seen a surge in their user base as digital shopping for essential commodities and increased preference for no-contact deliveries led to a shift away from cash transactions.

The national average adoption rate of fintech by Indians is at 52%, which is higher than the 33% global average. The adoption rates are 66% in metros, 51% in tier II and III cities, and 33% in rural areas. As India comes out of the peak COVID-19 period, fintech is well poised to aid the economic recovery and to support people’s ability to afford their health needs.

Enablers for the growth of fintech in India

India is a large market for fintech to serve. The penetration of mobile networks across population segments has nearly doubled from 2015 (27% of the population) to 2020 (50% of the population). India also has the epidemiological bonus of youth constituting about 33% of the population in 2020. An unbanked population of 190 million adults presents a sizeable market opportunity. The Reserve Bank of India (RBI) has the target for banking penetration set at 90% by 2021. The government’s push for financial inclusion helps digital lending platforms target previously underserved customer segments.

Small and Medium Enterprises have emerged as an important sector of the Indian economy, employing over 80 million people and contributing 8% to India’s Gross Domestic Product (GDP). However, they are often held back by the lack of credit support offered by traditional financial institutions. Fintech promises solutions to the bottlenecks that are inherent in the traditional financial systems. The algorithms used by fintech also bring days of processing time taken by traditional institutions down to a few minutes, while the entire process is managed online.

Many factors have created an enabling environment for the growth of fintech in recent years. Nonbanking payment institutions such as mobile wallets and payment banks have grown. Artificial Intelligence (AI), blockchain, and Internet of Things (IoT) have brought greater innovation and security to financial transactions. The RBI has taken progressive policies for providing loans to fintech. A host of government initiatives also enable technology-based offerings, including identity formalization through Aadhaar card, the Digital India initiative, the United Payments Interface (UPI), and the National Digital Health Mission (NDHM).

Fintech’s contributions to healthcare in India

Fintechs are serving multiple healthcare affordability challenges in the country. Digital lending is possibly the most prolific space. Arogya Finance is a longstanding player, present in 70 cities across 14 states, providing loans exclusively for healthcare. Arogya Finance uses psychometric tools to assess the creditworthiness and interest rate for unbanked borrowers. The loans are processed within 3 to 48 hours and pay the medical bills in partner healthcare facilities. Arogya Finance also issues preapproved health cards.

Credihealth sanctions small ticket size loans of thirty to fifty thousand rupees within 24 hours. CareCover loan cards allow users to secure instant cash for medical emergencies. Their zero percent interest rate EMO option also covers pre-existing illnesses that are usually not covered under private health insurance. Firms like MyShubhLife and Paisa Dukan use machine learning to determine creditworthiness and provide a set of offerings including medical loans.

ImpactGuru and Ketto are two leading crowdfunding platforms for health needs that allow users to start their own fundraisers within minutes. Impact Guru, founded in 2015, leverages the power of WhatsApp and Facebook for mobilizing funds. With the tagline, ‘Why Wait for a Medical Loan? – ImpactGuru Can Raise Funds,’ this firm has helped raise over USD 200 million through its platform and global partners and helped more than 10,000 patients directly and over 100,000 through its nonprofit partners. ImpactGuru was awarded the Winner for Best use of Technology to Drive/Execute CSR Initiative in Digital Social and Economic Empowerment by the Internet and Mobile Association of India in 2021.

Marketplaces for health-related insurance are helping users easily understand, compare, and access products that traditionally took longer to enroll. A major player in the insurance marketplace is Policy Bazaar. The platform showcases a range of insurance products, including health insurance policies, provides an end-to-end solution to track policies and claims assistance. Over 100 million visitors use the website annually and the company recorded nearly a million sales transactions monthly.  In 2020, PolicyBazaar accounted for about 32% of life and retail health insurance policies in India. Saveo Healthtech is an eCommerce marketplace for pharmacies that aims to organize and aggregate the retail pharmacy market.

Fintech supporting Government initiatives in India

The Digital India initiative by the Government of India has snowballed a set of efforts for financial inclusion in the country. Easy banking facilities for all through the Pradhan Mantri Jan-Dhan Yojana, simplification of procedures relating to financial instruments, unique identification process of Aadhaar, and simplification of tax procedures through the goods and services tax (GST) are some significant measures. The proliferation of fintech options like easy loans have aided the government’s dream for financial inclusion.

Another recent program, the Pradhan Mantri Street Vendor’s AtmaNirbhar Nidhi (PM SVANidhi), launched in June 2020, aims to provide collateral-free working capital loans to street vendors. Under the program, 3 million loans have been approved, of which only 1.1 million loans have been disbursed. This exposes a wide efficiency in the program that can be addressed by fintech. MAKSPay has developed an application that helps street vendors easily enroll for the program and avail the loan in a record time of 15 minutes, compared to the 30 days required for the traditional route. The app has important features, like the pooling of data from the applicant’s multiple IDs to auto-populate the application, and options for daily auto-repayment in affordable amounts such as Rs 50 or Rs 100 instead of a single monthly payment option.

In the health space, the Government launched the National Digital Health Mission in August 2020. The program has proposed health ID for every citizen to access a federated Personal Health Record or repository of all health-related data and a registry of doctors and health facilities. NDHM has fashioned a sandbox environment that enables the testing of new products and technologies for a defined period of time to ultimately ensure the successful deployment of tested products in the market. Healthcare service providers, hospitals, healthcare software vendors, and anyone who wants to build NDHM APIs (application programming interface) can access the Sandbox.

Fintechs can avail the opportunity of such government initiatives to build products for bringing access, affordability, and quality within the reach of all Indians. Limited financial literacy is a key factor for the slow rate of financial inclusion in the country. Alongside the development of futuristic products, fintech should partner with the government to promote financial literacy and awareness among the people.

2021 is a landmark year as the world is getting vaccinated for COVID-19 and recovering the losses to both the economy and the health and morale of the people. Fintech has a great role to play overall, and specifically in improving healthcare affordability in India.