India emerges as 3rd largest fintech centre globally

V Bhatia

Fintech has emerged as 2019’s sweet investment spot in most major markets. While established markets like the US and UK garnered majority deals, India was the surprise outswinger that clean bowled many leading players in this space!

According to Accenture, fintech investments in India almost doubled to $3.7 billion in 2019, up from $1.9 billion the previous year. This pegs the country as the world’s third largest fintech centre, trailing behind the US and UK. Accenture analyzed data from a CB Insights report that said that investments in payments companies more than tripled to $2.1 billion from about $660 million in 2018, while funding into insurtechs rose strongly, up 74% to $510 million.

“There’s a lot brewing in India’s fintech ecosystem and this steady flow of funds shows investors’ confidence in the industry’s future growth potential. The increase both in deal value and number of deals is a good indicator of what’s to come and bodes well for the future development of cutting-edge financial technology in India,” said Sonali Kulkarni, MD, Financial Services of Accenture in India.

DEALS IN THE OFFING

A vast majority of funds raised last year in India went into payments startups, accounting for 58% share. Insurtechs raked in 13.7% of the investments, while fintechs in lending accounted for 10.8% of the total, the data from CB Insights revealed.

Some significant fintech deals in the past year included the one where PayTM’s parent company, One97 Communications, raised $1.66 billion from two separate transactions. In another instance, PhonePe raised around $210 million, while Razorpay raised $75 million. PolicyBazaar benefited from an infusion of $282 million investment, while Kunal Shah-led credit card payments company CRED received $120 million in investment.

Looking at India’s rapidly evolving fintech domain, other players are waiting in the wings, looking to enter the fray. While talking to a daily newspaper, Swiss financial institution, UBS announced its plans to launch a venture fund that will invest in fintech startups and bring its startup outreach to India. It is especially keen on the micro-payments space where the Indian government has been focusing of late.

Similarly, at the 2020 World Economic Forum, Naspers CEO Bob van Dijk shared his optimism about India’s fintech landscape. He said that the venture capital fund will double its investments in India’s tech startup ecosystem, particularly focussed on new-age credit and financial products.

Once considered the bane of traditional financial entities, fintechs are finally getting their moment in the sun, because of their innovation capabilities. Will their successful run continue?