2 minute read 8 Aug 2022
Fintech adoption in India

How is the fintech sector in India poised for exponential growth?

By Pratik Shah

EY India Financial Services Risk Leader

With over 20 years of experience across governance, risk and compliance, Pratik is enabling leaders across various global banks and financial institutions formulate strategies and build efficiencies.

2 minute read 8 Aug 2022

Fintech in India has entered a new era with the highest fintech adoption rates globally.

In brief

  • The promising fintech sector in India is home to 20+ FinTech unicorns already.
  • It is expected to reach $1 Tn in throughput and $200 Bn in revenue by 2030.
  • The Indian Neo-banking space has witnessed a 5x uptick in funding in the last year and is expected to hit $215 Bn mark by 2030.

FinTech has had a significant impact on the global financial services industry over the last decade. India is recognized as a strong FinTech hub globally, and as the Indian entrepreneurial landscape continues to evolve, more FinTech use cases-led businesses will be developed and more investors back these businesses.

The promising India FinTech market is expected to reach $1 Tn in throughput and $200 Bn in revenue by 2030. The FinTech funding recorded a 3X jump in 2021. This growth has been driven by an organic and collaborative ecosystem, while being supported by key government initiatives. India stack and innovation by FinTechs has powered the financial inclusion drive being witnessed in the country.

We are glad to partner with Chiratae Ventures for this report that delves into the Indian FinTech ecosystem and emerging trends across regulatory innovation, technology advancements, new business models, industry convergence, inclusive digital financial services and India emerging as a talent hub. Our insights are based on our work with both established companies and start-ups on their business and technology strategies, which tell us that Indian FinTechs have converted market challenges into opportunities through a focus on innovation, which has led to FinTech and non-FinTech players building super apps to engage customers across a wider product suite. Even as digital lending and buy now pay later model have become mainstream, massive opportunities are emerging in InsureTech and WealthTech with future potential to be tapped in Agri+FinTech and Prop+FinTech. Through the intersection of FinTech with Health sector, the major gap of unaffordability in the HealthTech value chain can also be addressed.

In the report, we also look at the role of the regulators who have actively encouraged innovation through regulatory sandboxes, new distribution models, and the launch of innovative products.  Even as a few regulatory challenges need to be addressed, it is anticipated that regulators will continue pushing for a digital agenda. Finally, we explore the role of the huge availability of tech talent in India which has seen 5X growth, which also makes India the world’s biggest talent market and key for talent acquisition for global companies.

To conclude, due to emerging technology, changing cultural trends and a favourable regulatory landscape, FinTech has been growing beyond boundaries. FinTechs can expect future technology breakthroughs to propel the expansion of the market even further and revolutionize the manufacturing, delivery, and consumption of financial products and services in the coming years.

  • FinTech is expected to be $1 Tn in AUM and $200 Bn in revenue by 2030; FinTech funding in India recorded a 3X jump in 2021.
  • More than $9Bn in investments were made in digital lending in the last 5 years and the market is expected to grow to $515 Bn in book size by 2030.
  • Buy Now Pay Later has become mainstream and is on an accelerated growth trajectory, emerging strong not only in B2C but also B2B payments space.
  • Innovation happening in wealth tech to serve new class of investors; new asset classes, NFTs and Cryptos will continue to drive more investor interest.
  • Owing to significant untapped insurance opportunities and innovative InsurTech models, the space is seeing growth in funding and is expected to hit $88 Bn in size by 2030. Innovation in health insurance coupled with the government’s digital efforts will fuel market growth.
  • Surge in digital financial services has attracted global neo-banking players such as Revolut and Tide, established domestic players will level the field.
  • Regulators are actively encouraging innovation through regulatory sandboxes, new distribution models, and the launch of innovative products.
  • India stack and innovation by FinTechs have powered the financial inclusion revolution being witnessed across the country. Innovative solutions are being deployed to serve Tier 3+ market.
  • With 5X growth in digital tech talent, India has the opportunity to address the global digital skill gap and establish itself as the destination of digital and tech talent.
  • Due to emerging technologies, changing cultural trends and a favourable regulatory landscape, FinTech has been growing beyond boundaries. Agri+FinTech and Prop+FinTech are both big bets.

Summary

India is recognized as a strong FinTech hub globally, and as the Indian entrepreneurial landscape continues to evolve, more FinTech use cases-led businesses will be developed and more investors will back these businesses.

About this article

By Pratik Shah

EY India Financial Services Risk Leader

With over 20 years of experience across governance, risk and compliance, Pratik is enabling leaders across various global banks and financial institutions formulate strategies and build efficiencies.