A fintech revolution is sweeping India. Recent research from the Boston Consulting Group (BCG) and the Federation of Indian Chambers of Commerce & Industry (FICCI) has found that nearly two-thirds of the 2100+ fintech companies in the country came into being in the last five years. Government policy, regulatory support, rapidly growing smartphone penetration, and a robust talent ecosystem from India’s legacy as an IT services hub have all contributed to where Indian fintech stands today – an extremely promising emerging market with a predicted sector evaluation of USD 150-160 billion by 2025.
More than a year into the pandemic, the excitement continues unabated. Fintech was the top-funded Indian start-up sector by number of deals in Q1 2021, and right behind e-commerce in terms of funding. BCG-FICCI research has found that while investments dropped from USD 3.7 billion to USD 2.2 billion in 2020, the country remains neck-to-neck with China as the fifth largest fintech destination worldwide. Since Jan 2020, the sector has seen three new unicorns and five new soonicorns.
A host of ecosystem enablers
Capital flows into fintech will continue, says Shishir Mankad, Managing Partner and Head – Financial Services, at Praxis Global Alliance, a global management consulting firm. While Covid has been a major road bump, the advantage of a young demographic is expected to fuel 10-12% nominal GDP growth within the country. Coupled with untapped potential such as 70% of transactions still taking place in cash, this is a market that investors cannot afford to ignore for the coming decade at least.