Indian fintech firms hold 14 percent of global funding share: Report

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India’s fintech industry has expanded at an exponential rate, enabling it to gain a significant share of the global fintech market, according to Boston Consulting Group’s ‘State of the Fintech Union 2022’ report.

According to a recent estimate, the Indian fintech market has received $29 billion in funding across 2,084 deals so far, garnering 14 percent of global funding,

Also, India’s CAGR in the fintech sector grew by 20 percent, which was higher than that of the US, UK and China which witnessed growth of 16 percent, 15 percent and 10 percent respectively, according to the fintech report.

With 7,460 fintech companies, India is now third behind the US (22,290 fintech companies) and China (8,870). Additionally, the Indian fintech ecosystem has 23 unicorns (out of a total of 106) in this sector, compared to 172 in the US, 30 in the UK and 36 in China.

Read also | Indian fintech to reach $200 billion in revenue, to see 10x growth by 2030: Report

In addition, the volume of digital payments increased from 125 million in 2021 to 165 million in 2022, registering a growth of 32 percent. While the volume of digital investments in the country increased by 100 percent from 4.5 million in 2021 to 9 million in 2022. Meanwhile, neobank volume rose from 2.5 million to 4 million, reporting a growth of 60% in just one year, report enlightened.

Currently, India has reached a scale to establish a strong position in the global financial services market and be benchmarked for its speed of innovation, customer inclusion and growth.

“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 critical to the $5 Tn Indian economy,” the report said.

Also several large ones fintech began operating in 2008, with neobanks being the latest participants. While the number of fintech companies increased between 2014 and 2021, funding was limited until 2015, when the sector received a significant financial boost.

Furthermore, the Covid-19 pandemic increased the payment area, leading to a 210 percent increase in funding between fiscal years (FY) 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 added.

Read also | UPI and growing data access among the key factors shaping fintech in India: Report

The report further 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 fintech, aggregators and financial service providers. “

However, it mentioned that “More than 70 percent of respondents believe that most fintechs cannot 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 that needed.”

To continue making innovative investments and growth, fintech companies will need to reassess their financial position and implement cost containment if necessary, the report noted.

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