India tops Singapore Indonesia in Fintech study

In a report released last week, India emerged as the top nation in a fintech study of nine South and Southeast Asian countries published by the Robocash Group.

Robocash is a fintech company with offices in Asia and Europe that specializes in providing technological financing solutions for those underserved by the traditional banking system in emerging markets.

The South Asian nation came out on top in several categories, including the most funds raised and total revenue. From 2000 to 2022, the years included in the study, in the four sectors in the survey, USD 25.6 billion was collected, which is 48 percent of all funding received in the region.

India also emerged as the leading county in the Robocash Southeast Asia Fintech Index. The index aggregates points using the following measurements – the share of total funding, the share of total income and the share of total active companies. Singapore was second and Indonesia was third.

The purpose of the Robocash report is to gain an understanding of the development of financial technology in mature and emerging countries in the South and Southeast Asian region, namely India, Indonesia, Singapore, the Philippines, Vietnam, Malaysia, Bangladesh, Pakistan and Sri Lanka.

The following four fintech sectors were selected for the survey – Payments and Transfers, Alternative Lending, E-Wallets and Digital Banking. For the purpose of the study, only those companies based on the territory of a particular country were selected, while foreign entities were excluded.

By the end of 2022, there are 1,254 active fintech companies in the nine countries and four sectors studied. This represents an increase of almost 45 times from the 28 companies that existed before the year 2000. The growth of such companies accelerated between 2015 and 2020, when over 62 percent of the companies in the study were founded.

India has the largest number of such companies operating, with 541, representing 43.1 percent of the total, followed by Indonesia with 165 (13.2 percent), Singapore with 162 (12.9 percent), the Philippines with 125 (10 percent ), Malaysia with 84 (6.7 per cent), and Vietnam 78 (6.2 per cent). Pakistan, Sri Lanka and Bangladesh have the fewest fintech companies among the countries surveyed with 51, 27 and 21 companies respectively.

Among the companies examined, there are the most companies in the Alternative lending sector with 544 (43.4 per cent). This is followed by Payments and transfers with 496 representing 39.6 percent of the total in the study, E-wallets with 118 (9.4 percent), and Digital Banking with 96 companies and a share of 7.7 percent of the total.

Therefore, it is not surprising that Alternative Lending, which includes services such as online microcredit, peer-to-peer loans and point-of-sale financing (for example, installment loans to buyers at the checkout), experienced the highest growth among the four sectors between the years 2000 to 2022 .

The number of companies in this sector grew from 8 to 544. Payments and transfers has the second highest growth (from 15 to 496 companies) followed by E-wallets (4 to 118) and Digital Banking (7 to 96).

Robocash noted that the four sectors studied are by no means the most important fintech sectors in the region. Although they represent 54.3 percent of all fintech companies in the Philippines, the other countries in the survey have more diversified fintech sectors with these four sectors representing only 19.4 percent of all fintech companies in Indonesia and only 10.5 percent in India which the Robocash report says has 5,176 fintech firms.

Over the twenty-two years covered by the study, the four fintech sectors raised a combined USD 53.3 billion, with India at the forefront of investment.

India received a total of US$25.6 billion (48 percent of total funds), followed by Singapore with US$14.7 billion (27.6 percent), Indonesia with US$7.5 billion (14.1 percent), the Philippines 2, 4 billion USD (3.4 percent). per cent), and Vietnam USD 1.8 billion (3.4 per cent).

That India is a major global fintech market should not be a surprise due to its large population with a relatively youthful demographic as well as high technology adoption.

Hemant Gala, Head of Financial Services & Banking at Indian digital payments giant, PhonePe, was quoted in 2021 as saying, “Digital payments have become a way of life in India and we have seen 10-15 million new customers coming to it digital bandwagon in the last 12 months. Two factors that led to this change were demonetisation and the Covid-19 pandemic.”

A research report produced late last year by consultancy EY and published by venture capital firm Chiratae Ventures predicted that India’s fintech sector will continue to rise over the next decade, with total assets under management (AUM) projected to grow at a compound annual growth rate (CAGR) of 28.3 percent to reach US$1 trillion by 2030, and fintech revenues are set to rise to a total of US$200 billion.

Digital lending, InsurTech and WealthTech are among the sub-sectors set to experience the strongest growth, the report says, driven by greater customization of segment-specific solutions, increasing awareness and easier policy purchase and claims processes, and growing demand for investment solutions.

“The Indian Fintech market has been a formidable global force, contributing to the largest share of unicorns in India. We have been a technology-first investor who has believed in the power of both data and technology and has therefore backed companies such as EarlySalary, Kristal. ai, PB Fintech, ShopSe and Vayana among others,” said Sudhir Sethi, founder and chairman of Chiratae Ventures at the launch of the report. (ANI)