Studying the Indian Fintech Market
The Indian market has recently become the emerging front-runner in the fintech world. The last five years have shaped the market in a way that has helped India gain steady momentum to become one of the world’s fintech leaders.
Facts and Figures
– There are more than 6500 fintech startups in India
– The Indian market is expected to cross $150 billion in valuation by 2025
– There is a wide variety of fintech startups in the country that have brought a diverse range of fintech services, like payments, investments, stock trading, credits, insurance technology, regulation technology, asset management, UPI (Unified Payments Interface), and much more
– India has one of the highest numbers of fintech unicorns
– The country has the highest fintech adoption rate in the world
Indian Fintech Market Insights
The Indian market boasts of one of the highest numbers of smartphone users in the world. The banking and financial institutions in India started moving towards technological supplements a few years back. Around the same time, fintech startups started emerging in the country, offering different services and platforms for digitalized payments, easy investments, stock trading, etc., which gained considerable success owing to their ease of use and aggressive marketing.
During the pandemic, amidst the heavy restrictions where people compulsorily had to look for contactless and cashless options, the fintech industry got propelled into a different dimension, where now fintech has become a part of people’s everyday lives in India.
Factors Influencing the Astronomical Growth of Fintech
With India robustly moving its way to the top of the fintech pyramid, it is essential to analyze the factors aiding in this aggressive growth.
Government
The Indian government focuses on creating an empowered and strong economy, because of which, startups all over the country receive tremendous support not only on the regulatory front but also in providing adequate financial and logistical support that would ensure lesser obstacles. By stressing Make In India, the government has opened doors for people to create and build their small and big businesses using the resources available in the country. To enable fintechs to have a broader reach, the government has done exemplary work in extending internet access to all corners of the country. The government is also targeting to increase the rate of digital literacy in the country, which would help increase the involvement of people. Several Government programs are helping build a strong, and independent economy.
Investments
The influx of investments in the country has immensely helped the growth of fintech. The valuation of the fintech market in India is expected to grow by more than $150 billion by 2025. Out of the 189 unicorns in the world, 21 of them are from India. Housing more than 6500 startups, India has become a lucrative fintech investment option for investors.
Population and Demand
The demographics in India are also a big reason for the immense success of the fintech industry. India has the largest youngest population in the world, which combined with the highest number of smartphone users makes it ideal for industries like fintech, where the demand for innovative, convenient, and easy options is extremely high. India has also clocked in the highest number of minutes spent on fintech applications, which reflects the perfect ecosystem for a blooming fintech market.
Major Fintech Areas in India
The Indian market has a broad spectrum of fintech, where organizations are targeting different categories to provide innovative solutions. The main areas that are most dominant are:
Digital Payments
The digital payments industry is growing at a competitive rate, and it is expected to cross $10 billion by 2026. The success of digital payments has been inspiring for onlookers, with digital payments significantly replacing cash payments. Going by this replacement rate, almost 65% of the transactions will be digital payments by 2026.
E-Payments in India have had the most successful journeys compared to other segments. This category includes different platforms like wallets, automated bills, QR codes, UPI, etc. The integration of third-party applications with financial institutions using APIs is one of the most popular concepts that has materialized into an independent market. The largest players in this area are Paytm, Razorpay, PhonePe, Mobikwik, and Google Pay.
Credit
The demographics in the country have heavily contributed to the success of the lending business. The youth wants to make purchases, where they have options of instant credits, Buy No Pay Later, EMIs (Equated Monthly Instalments), etc. The credit industry in India includes all types of lending, including peer-to-peer lending and platforms that get loaners and borrowers together. Because of the elaborate lending system, some fintechs are solely focused on offering credit score services. RazorPay, Mswipe, and Google Pay are leading the credit market in India.
Investment Management
The investment market is another major sector that has gained tremendous ground in the past few years. Various applications in India are offering services, like stock broking, portfolio management, easy trading, financial advising, investments in digital gold, mutual funds, and more. With such applications, people can have easy access to market data, ready trends, reports, future predictions, and customized news. The leaders in this field are Zerodha and Smallcase.
Digital Banking
Digital banking has taken over the Indian market by storm. Numerous third-party applications are partnering with traditional banks and financial institutions to bring neo banking and open banking services to the people. Services like automated onboarding, customer background checks, eKYC (Know Your Customer), and others, are changing the face of banking altogether. YONO and Krazybee are the dominant stakeholders in this space.
InsurTech
InsurTech is a rapidly growing area in the Indian market. PolicyBazaar is the pioneer of building an insurance comparison platform that ties up with different insurance providers and advises the users on the best suitable insurance packages available. Not only this, there are different types of insurance services covered like electronic insurance, employee insurance, life insurance, asset insurance, etc.
RegTech
The compliance segment in fintech is an integral part of the industry overall. As more focus grows on systematizing the regulatory field the world over, the Indian market too is readying itself. RegTech is still an emerging field in India, but it is not an ignored field. Numerous fintech organizations are competing in this space, and sooner or later, we will see Indian RegTech unicorns too.
Final Thoughts
The Indian market is a key fintech player that is rapidly expanding in terms of valuation, innovation, and opportunities. Prerequisites like a young, internet-dependent population, together with the government support, available talent, and pouring investments, make an ideal setup for fintechs to flourish. The success of the Indian fintechs is already on the rise, and it is only with time that we’ll see if the Indian market makes it to the top or not.
