India number crunches as it is poised on the cusp of a fintech revolution

The industry is estimated to grow to $160 billion by 2025, says a FICCI-BCG report, aided by strong customer demand, diverse capital flows, strong tech talent and enabling policy frameworks.

One of the fastest-growing fin-tech hubs in recent years, India has seen a phenomenal rise in the sector over the past few years.

Of the more than 2,100 fintech companies that operate in India currently, 67% have been set up in the past five years – with India’s fintech ecosystem continuing to be aided by strong customer demand, diverse capital flows, strong tech talent and enabling policy frameworks.

And thanks to the pandemic, concepts such as paperless lending, mobile banking, secure payment gateways and mobile wallets have become common parlance among the public.

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It therefore hardly comes as a surprise that a new report has estimated India’s fin-tech industry to be worth $160 billion by 2025.

According to the report unveiled by the Federation of Indian Chambers of Commerce & Industry (FICCI) and the Boston Consulting Group (BCG), the size, value-creation potential and imperatives for India's FinTech growth offer an exciting opportunity for investors in the next few years.

“The Fin-Tech industry in India has been growing at a fast clip. Fin-Tech players are redefining the business models across different segments of the financial services industry, helping improve service delivery and contributing to digital financial inclusion,” said Dilip Chenoy, Secretary General of FICCI. “This is a clear area of focus for us in FICCI and through our multiple initiatives, we will continue to promote this industry both in India and abroad,” he said.

Industry valued at $60 billion

While the current valuation of the industry is estimated at $60 billion, the industry's growth has been undeterred by the pandemic, as it has seen the emergence of 3 new Unicorns and 5 new Soonicorns since January 2020. But more significantly, over the next five years, the FinTech industry is expected to score a massive jump in its strong upward trajectory.

“We believe India's FinTechs are at the precipice of significant value-creation of $100 billion over the next five years,” said Prateek Roongta, Managing Director and Partner, Boston Consulting Group India. “To actualize this potential, the industry would require investments to the tune of $25 billion till 2025. Consequently, the number of Indian FinTech Unicorns will more than double over the next few years,” he said.

That growth will certainly be helped by the internationalization of Indian FinTechs, with 39% of them having a presence outside India and the rest actively considering international expansion opportunities – with south-East Asia was the most sought-after destination for international expansion, followed by North America.

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“The landscape will be defined by FinTechs that pursue their strategic play with deep, relentless discipline,” said Ruchin Goyal, Managing Director & Senior Partner, Boston Consulting Group India. “Tomorrow's FinTech winners are expected to 'master the core' – by innovating on product, user-experience or through deep-tech capabilities. India will also see the emergence of ecosystem orchestrators and multinational FinTechs, as it evolves into a global FinTech powerhouse,” he said.