Digital payment in India has witnessed a steep growth curve in the past few years where 48 billion digital transactions alone were recorded in the calendar year (CY) 2020 despite the COVID-19 pandemic and its effect on the economy, according to PwC. Indian banks and financial institutions are leaving no stone unturned to adopt advanced, flexible, and secure solutions to fulfill the expectations of an evolving customer. Realising a demand for this, recently fintech major Razorpay announced its acquisition for an undisclosed amount to I -Zealiant Technologies, a leading fintech startup that provides mobile-first, API-enabled, and cloud-ready payment processing products for banks and financial institutions.

Failed digital payments with Indian banks 

The steep rise of digital payments in India can be owed to the increasing number of mobile device users. According to PwC, digital transactions in 2019-2020 amounted to Rs 3434 Crores and grew at an annual growth rate of 44.1 percent. The months of November and December 2020, alone witnessed more than 2.2 billion UPI transactions. However, with daily high volume digital transactions taking place, there are several incidents of failed digital payment due to technical issues arising from infrastructure, network outages, and server downtimes that affect customer confidence and satisfaction. In 2020, five of the top ten banks had a technical decline rate of 1.8 percent 2020. An RBI report necessitated the improvement of system design, monitoring, and architectural changes to address the issues of technical decline. 

2022 has been a watershed year for India’s tech industry that according to Nasscom’s recent strategic review report has registered a revenue growth of 18.7 percent to $13 billion. Tech industry’s revenue growth in 2022 has been by far the highest y-o-y in a decade at 30 percent. In addition to this, the domestic consumption of the tech industry alone clocked a growth multiple of 1.2x over pre-pandemic levels to reach about $50 billion and not to forget the exports that contributed 17.2 percent growth year-on-year with a revenue of $178 billion. The digital transformation in Indian businesses was supposed to happen within 9-10 years but has been catapulted by the pandemic that forced the majority of Indian enterprises to pivot their business models to online mode, adapt products and services to emerging markets and customer needs and collaborate efficiently in remote work culture. 

Factors behind the growth of India’s tech industry

• Increase in the adoption of cloud: Platformisation and XaaS in 2022 have been instrumental in accelerating tech adoption As per a report by research and consulting company Gartner, Indian companies will spend an estimated $105.2 billion on IT in 2022 which is 5.5 percent more than the amount spent in 2021. A majority of large organisations and Indian CIOs will depend on external consultants to develop their cloud strategy. Therefore, one can expect increased spending on IT services by 9 percent from 2021. As Gartner’s report cloud-based software consumption alone will be one of the biggest contributors towards the 15% growth in the software segment in India, while the demand for data centre technologies will reach up to 4% in 2022. Several tech startups will enter into a scale-up mode where mainly the e-commerce space will invest more in tech to achieve operational excellence. E-commerce recorded a growth of 39 percent to reach $79 billion in 2021-22.

• Upping the hiring game: India’s tech industry witnessed the biggest hiring of 4.5 lakh in 2022 out of which women were along 2 lakh thereby taking the total workforce upto 51 lakh. The industry’s people-first employee-centric” approach saw tech firms quickly adapt to hybrid work models to scale up the industry’s digital capacity/capability building program. The share of digital to total revenue currently stands at 30-32% with 1 in 3 employees being digitally skilled stamping India’s position as the Global Digital Talent Nation. 

• Investment in deep tech startups has grown: The deep tech startups have attracted the investor’s attention. According to Venture Intelligence, the investment in deep tech startups has grown from $5 million in 2020 to around $11 million in 2021. The range of India’s deep tech startups is wide that is focused to solve challenges that the world is currently dealing with in space, biotech, EV s, and quantum tech. Data has become the pulse of any business and is valued more in B2C startups.