Understanding the Indian Fintech sector: the story so far and what lies ahead

Abstract

The Indian FinTech sector has grown rapidly in recent years, with the sector’s valuation now estimated at $50-60 billion. With a large untapped potential, an enabling regulatory environment, a thriving investment ecosystem, and favourable demographics, the Indian FinTech sector is set to grow to realize a valuation of $150-160 billion by 2025. Starting with payments, the industry has evolved over the years, with start-ups mushrooming in various segments like Lending, InsurTech, WealthTech, AgriTech, and RegTech. AgriTech and RegTech are some of the emerging themes in the industry. The AgriTech segment, in particular, has received a lot of attention, with the global giant Amazon planning to foray into this segment. On the other hand, payments and lending have been the favourites for the investors, with investors pumping in nearly 70% of the total funding which FinTechs have received so far ($10 billion). As the industry evolves, mastering the core offerings, being an ecosystem orchestrator, or going international has proven successful FinTech expansion strategies. Of these, internationalization is of particular interest as many firms across the west have attempted to do this. Some have succeeded, and some haven’t. Business model portability, Product maturity, and Access to market enablers are critical parameters to be evaluated by firms looking to go global. As the industry looks ahead, it is vital that the firms, policymakers, and financial institutions collaborate to create a best-in-class ecosystem collectively that will serve as a solid foundation for the years to come.