Financial Innovations: A Deeper Literature Review with Focus on India

Abstract

Indian financial system has seen considerable changes in the recent past when compared to the previous decade. This is because of a number of financial innovations taking place in the sector and also across sectors. India is considered to be an epicenter of growth and have a strong regulation the evidence is the economy resilience of India during the 2008 economic crisis. And the present scenario in India propelling the growth story at a faster rate earlier the growth became stagnant as the opportunities were very minimal.Post liberalization of Indian economy, the banking system development took a steady pace so as the population. With the growth in the population, the requirements and challenges also increased so as the developments in the banking and payment system. To tackle the problem Indian government designed so many strategies to bring mass population of India (accounting to about 1.3 Billion, second most populous country behind China). The government of India started financial inclusion program to have a sustainable growth through which the social issues like removing poverty, education for all, well balanced society through which the financial system can be much more strengthened. But the results were minimal and still a large part of population are not having any bank accounts and cash transactions are done leading to leakages in the system and resulting scams.But the present scenario is fruitful to India as India possesses the advantage of demographic advantage, technological advancement, and financial literacy, increased penetration of Internet technology and much more increased penetration of mobile technology because of smart phones. The demographic dividend playing a crucial role clubbed together with almost 850 Million mobile subscriptions (4 times of Internet penetration which is standing at about 205 Million).This scenario much lead to the further changes in banking and payment system in Indian Financial system with development in the necessary infrastructure. This further lead to the development of payment systems outside of the banking institutions propelling a stiffer competition and banks also looking to exploit and provide better service through innovations, re-organizing, re-thinking apart from the conventional banking methodology.The paper envisages on the recent innovations with the technological advancements in the case of financial services in India and the tries to assess the advantage of electronic payments and benefits.