The Present Condition of the Fintech Industry of India

The fintech industry of India is growing fast, attracting the global din tech giants to build their set up in India.

The fintech industry of India is the fastest-growing compared to the rest of the world. Of the 2,100+ FinTechs existing in India today, over 67% have been set up in the last 5 years. The Indian Fintech market is currently valued at $31 Bn and is expected to grow to $84 Bn by 2025, at a CAGR of 22%. The Fintech transaction value size is set to grow from US$ 66 Bn in 2019 to US$ 138 Bn in 2023, at a CAGR of 20%. The Indian Fintech ecosystem sees a wide range of subsegments including Payments, Lending, Wealth Technology (WealthTech), Personal Finance Management, Insurance Technology (InsurTech), Regulation Technology (RegTech), etc.

The Current Scenario

Despite the first two waves of the Covid-19 pandemic, that wreaked havoc across most sectors, the innovations brought about in the fintech space have helped India maintain a cutting edge. The exponential growth across the segment has also resulted in a significant capital inflow and made a rising investor interest. Fintech continues to dominate the country's investment landscape. During the period of Jan-May 2021, the sector accounted for 88 of the 502 funding deals and raised more than $2 Bn which is almost of 4 times increase from $495 Mn raised by the sector, in the first five months of 2020. Given the growth scenario, it is not surprising that global fintech companies such as Tide, Revolut, and Wise are also setting up their bases in India.

The Path of Advancement

Among India's 50+ FinTechs with more than $100 Mn valuation, there are 4 Wealth and Broking FinTechs, 5 InsurTechs, and 8 SaaS FinTechs. UPI is expected to grow significantly with the participation of domestic and international players (Paytm, Walmart and Google) continuing to dominate the segment, with a heavy focus on the development of the payment's infrastructure through investments. Neo-banks in India is an emerging key segment for the growth in the space – with over 15 Neo-banks currently in India, several of them under development or in beta stages. The segment has been growing steadily, with several private banks partnering with these Fintechs to explore synergies and better means of service delivery.

The Challenges Faced by the Industry

However, the sector has its challenges,  bottlenecks, and cybersecurity concerns that are topping the list. According to a report by Florida-headquartered ACI Worldwide (a payment systems company), India had clocked 25.5 Bn real-time payment transactions in 2020, the highest in the world. The report also noted that, with this rise in transactions, cyber frauds related to real-time payments were increasing as well. According to its estimates, out of the fraudulent incidents in India, 11.6% were identity theft cases and 6.2% were digital wallet hacking.