‘Understand when to stop’: KV Kamath and Ashishkumar Chauhan provide word of advice to fintech firms

Veteran banker and Jio Financial Services chairman KV Kamath at the Moneycontrol Fintech Conclave held in Mumbai on December 18

Two of India’s top financial leaders urged caution among the country’s rapidly growing fintech companies, warning that many startups are burning through cash without a clear path to profitability and advising entrepreneurs to stay grounded and focused on their goals.

The financial services sector, powered by technology, has been rapidly growing in the past few years, leading to the mushrooming of fintech firms related to payment and other services.

However, veteran banker and Jio Financial Services chairman KV Kamath advised fintech entrepreneurs to be cautious. He said that the country still has a long way to go in terms of technology, pointing out that tech contributes 35 percent of GDP growth in China, while in India, it is less than 5 percent.

He was speaking at the Moneycontrol Fintech Conclave held in Mumbai on December 18, which was attended by the who’s who of the fintech industry.

Kamath said that the biggest mistake fintechs are making today is burning too much money because it is easily available to them. “Fintechs are burning money without understanding when to stop. There is no endgame in sight,” he said.

Kamath recalled a meeting with a fintech entrepreneur who had more than 1,000 software engineers. The banker said he was expecting the answer to be 25 engineers.

“They could stop the burn as they are growing well. Fintechs are burning money because of too many engineers. They need to understand business, too,” Kamath said.

Kamath also believes that, despite playing a crucial role, India’s older software services companies are not the future, adding that India’s share of technology in its GDP is expected to grow significantly in the next 5-7 years.

“We need new discovery companies in technology, not just consumer internet companies,” Kamath concluded, stressing the need for innovation beyond the consumer tech space.

NSE managing director and CEO Ashishkumar Chauhan advised entrepreneurs to remain ‘grounded’ and “not believe in their bluff”.

“You need to be grounded. I am a serially failed entrepreneur, so I can tell from my experience,” Chauhan said at the same conclave.

Chauhan also said that it takes hard work and adaptability to succeed in the fintech sector and had a word of advice for young founders. He said, “When I meet young founders or people in fintech, I empathize with the pressure they face. But that’s how life is. You have to run very hard just to stay in the same place, like being on a treadmill.”