At $29 billion, Indian fintech sector now has 14% global funding share: Report
New Delhi, Aug 22 (IANS): The Indian fintech market has received $29 billion in funding across 2,084 deals to date (January 2017-July 2022), garnering a 14 percent share of global funding and No. 2 in deal volume, it said in a new report.
India’s CAGR in the fintech sector grew by 20 percent, which was higher than that of the US, UK and China which experienced growth of 16 percent, 15 percent and 10 percent respectively, according to the ‘State of the Fintech Union 2022’ report by Boston Consulting Group (BCG) and Matrix Partners India.
With 7,460 fintech companies, India is now third behind the US (22,290 fintech companies) and China (8,870).
The Indian fintech ecosystem has 23 unicorns (out of a total of 106) and has reached a scale to establish a strong position in the global financial services market and be benchmarked for speed of innovation, customer inclusion and growth, the report noted.
“With a value of over $800 billion in annual payment transactions, fintechs have made a strong contribution to the Indian economy, playing a strong role in the delivery of full-fledged financial services to all Indians. We see this collective segment as business critical. $5 trillion Indian economy,” it said.
Many major fintechs had started operations from 2008, with Neobanks being the recent entrants.
While the number of fintechs scaled up between 2014 and 2021, funding was low until 2015, after which the sector received a rapid funding boost.
Covid further increased the range of payments, leading to a 210 percent increase in funding between CY 2020 and 2021.
“With rising funding and valuations, we have seen an acceleration in the speed at which Fintechs have become unicorns compared to the past,” the report said.
The report said that “we have a game changing 5 years ahead as the financial services landscape is expected to have many strong players on the scene, such as large incumbents, niche as well as diversified non-banks, new-age and mature fintechs, aggregators and financial service providers”.
However, it mentioned that “more than 70 percent of respondents believe that most Fintechs may not be profitable in the next 2-3 years. While scale is an important driver of profitability, early focus on ‘economy of unit’ is a critical orientation needs”.
The volume of digital investments in the country grew from 4.5 million in 2021 to 9 million in 2022, with a growth of 100 percent.
Neobank volume simultaneously rose from 2.5 million to 4 million, reporting a 60 percent growth in just one year, the report noted.
