UK Fintech needs to look beyond payments for an Indian summer
Nothing like a well-timed meeting between two political powerhouses to showcase the importance of India to Britain post-Brexit. But while last month’s carefully crafted photo op between May and Modi inevitably grabbed the limelight, it is by no means the only blossoming relationship between the two nations.
By Fraser Bell, Chief Commercial Officer at BSO
The City of London Corporation has teamed up with the High Commission of India in an attempt to support the development of, you guessed it, Fintech. But like so many new initiatives surrounding perhaps the buzziest of business buzzwords, this particular link revolves around a familiar area — payments. It is easy to see why. After all, with cash accounting for the majority of transactions in India, and around one fifth of the population still without banking, the door is wide open to support a financial digital revolution across India.
This is all well and good, but investors need to understand that fintech is about much more than just payments. As such, political partnerships need to broaden their horizons beyond one specific part of the financial sector. There is endless tech innovation taking place within financial markets at the moment. And it is not like there is a shortage of firms in this space that would benefit from stronger ties between the UK and India. As a case in point, there is a growing need for specialist technology and services to support the growth of currency trading in India. The rupee, for example, is currently tied with the Russian ruble as the 18th most frequently traded currency in terms of FX turnover — valued at $58 billion daily according to the Bank of International Settlements (BIS). On top of this, the Securities and Exchange Board of India (SEBI) recently allowed the Bombay Stock Exchange to open a few futures contracts for major currencies against the rupee.
All this provides numerous profit-making opportunities for those trading the Asian currency markets. This in turn gives the chance to more specialist Fintech providers to get in on the act. When trading in and out of the region, traders will be seeking new tools that help deliver the fastest possible access to pricing. In addition, as volumes start to rise, the most reliable and scalable underlying IT infrastructure will be required. The latter is ultimately fundamental to the continued liberalisation of currency trading across the region.
With national annual GDP growth hovering around the 7 per cent mark, coupled with ongoing market appetite for alternative investment opportunities following Trump’s tariff threats on China, clear growth opportunities will emerge in Fintech beyond payments. Due to its less sexy appeal, market infrastructure and technology may not be receiving the same level of attention currently given to payments. This has to change. For new commercial doors to open, political partnerships need to go above diplopic visits this summer and start properly recognising the opportunities for UK Fintech firms throughout the financial markets.