Budget 2023: Fintech Industry Seeks Implementation Of National Digital ID System

One of the most significant areas of focus in the Budget is likely to be the use of technology to increase financial inclusion

The government is expected to announce measures to promote a more consistent and predictable regulatory environment for fintech companies.

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The fintech industry is one of the fastest-growing sectors of the economy, and there is a lot of anticipation surrounding the upcoming Budget for 2023. According to a recent report, the fintech market is expected to reach Rs 9.2 billion at a CAGR of 24.96 per cent between 2022 and 2027. Indeed, the industry is expanding at breakneck speed as a result of evolving trends and technology, and the market is seeing an increase in digital payments. In this Budget, the government is expected to continue its support for the fintech industry and to announce a number of measures to promote its growth and development.

Let's look at some major expectations of the fintech industry from the upcoming Union Budget:

Financial Inclusion and Digital Infrastructure

One of the most significant areas of focus in the Budget is likely to be the use of technology to increase financial inclusion. The government has made significant progress in recent years to improve access to financial services for marginalised communities, and hopefully, this continues in the Budget. Measures such as the implementation of a national digital ID system and the development of digital infrastructure in rural areas will assist in bringing more people into the financial system, allowing them to enjoy the benefits of fintech.

Innovation and Research and Development

Another key area of focus is likely to be the use of technology to enhance financial services. With the advent of new technologies such as blockchain and artificial intelligence, there are a growing number of opportunities to improve the efficiency, security, and accessibility of financial services. The government is expected to announce measures to support innovation and research and development in the fintech sector, such as funding for R&D and tax incentives for companies that invest in new technologies.

Supporting Fintech Start-ups

It’ll be a boost as well as a relief to receive grants and subsidies for start-ups and tax rebates for angel investors and venture capitalists. This will attract more investment and talent to the sector and will make it easier for new companies to get started. Additionally, reducing bureaucracy for starting fintech companies in the country can also be a key focus.

Regulatory Framework

One of the key challenges facing the fintech industry is the regulatory environment. The government is expected to announce measures to promote a more consistent and predictable regulatory environment for fintech companies. This can include creating a dedicated fintech regulator or a separate fintech wing within the existing regulator to oversee the industry or even establish a sandbox regime which will provide a safe environment for companies to test and develop new products without fear of heavy fines or penalties. These measures will help to create a more conducive environment for fintech to operate, which will in turn encourage innovation and growth in the sector.

Digital Payments

In addition to these measures, we are also expecting policies that will support the growth of the digital payments industry. With the growing use of mobile phones and the Internet, digital payments are becoming increasingly popular, and it’ll be an advantage if the government announces subsidies for merchants who accept digital payments, and incentives for consumers to use digital wallets.

Cybersecurity

Cybersecurity is an increasingly important concern in the fintech sector, and we need the government to focus on enhancing cybersecurity in the sector. This can include mandating certain cybersecurity standards for fintech companies and providing funding for research and development in the same.

All Things Considered!

In conclusion, the fintech industry is expected to be a major focus of the Budget for 2023. The government is expected to continue its support for the sector and to announce a number of measures to promote its growth and development. Whether it's increasing financial inclusion, enhancing financial services, creating a favourable regulatory environment, supporting digital payments, or enhancing cybersecurity, the government's decisions will have a major impact on the future of the fintech industry in the country.

Abhijeet Sehgal is the co-Ffounder and CEO at 1Pay

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