India is one of the largest global consumer markets, with shoppers going more digital every single day. The government’s goal of becoming a $1 trillion digital economy is being fueled by robust public infrastructure and a growing digital-first user base. India currently leads the world in digital payments with more than 40% of payments made digitally.This affinity to shop and pay online has created an immense shift in Indian retail, most noticeable with the rise of D2C businesses nationwide.
However, this widespread digital adoption has also led to a shadow industry of online fraud. Even well-informed and digitally savvy citizens are now falling prey to online scams. Today, fraud has become creative, sophisticated and hard to catch. In India, as per one study, nearly 30% of citizens have had their identity stolen online.
As digital India grows, there is an immediate need to amp up its security – an area where fintech is proving to be a game-changer. As a sector, fintech combines top-notch tech with regulatory compliance and security expertise. It is also at the right touchpoint, connecting growing businesses with their consumers online. In the current ecosystem, fintech products and players are empowering businesses to be more secure and protect consumers from fraud.
Why it matters now more than ever
At the outset, fraud leads to widespread financial losses. As per one study, in India, every Rs.1000 lost to fraud costs businesses Rs.4000. But beyond that, as more individuals go online for their consumption, their exposure to malicious agents increases. India is one of the most prominent victims of online fraud worldwide. If not rectified, these outcomes could lead to an erosion of public trust in digital businesses.
This gap, however, presents a massive opportunity to invest in building security products that safeguard consumer assets and business trust. Fintech is taking up this task.
Over the last ten years, fintech has grown organically with the country’s digital revolution. It has enabled traditional businesses to go online and empowered the growth of new, digital-first brands. By working with entities across sectors and scales, fintech companies understand the unique needs of businesses – whether it’s connecting with consumers or processing transactions. This expertise also puts fintech in the right place to empower businesses with better security against fraud.
Harnessing compliant technology to make a difference
Fintech’s strength comes from understanding how technology and regulatory compliance interact to make innovative, scale-able solutions. As businesses in the country evolve, fintech has kept pace to leverage emerging technologies to meet their needs better. Here are the ways fintech is making Indian businesses safer:
Making identity verification safer:
One of the first points of security when opening an online account is verifying the identity of the user. Fintech is leveraging advancements in biometric security, such as face recognition software, to make the opening of digital accounts safer through accurate identity verification.
Making risk-management easier:
Identifying fraudulent activity requires tracking large amounts of data. By leveraging AI-backed algorithms, fintech products are built to scan thousands of transactions in real time to identify payments and accounts linked to fraudulent activities.
Making risk-profiling proactive:
To be proactive about online security, it’s important to identify accounts and entities with a history of suspicious behaviour. Fintech products can create risk profiles for accounts with a high chance of fraudulent activity. When businesses have access to this information, they are in a better position to decide how to safeguard their consumers and assets.
In one study, 26% of Indian businesses surveyed lost over $1 million to online fraud. When I connect with merchants trying to move to digital services, they often share their concerns over fraudulent activity and apprehensions about security.
Trust is the cornerstone of any financial system. With better security products, fintech can enhance public trust in digital India to catalyse the country’s economic growth further. By building on this foundation, fintech has the potential to emerge as the anchor of India’s digital safety.