FinTech: India’s Fintech Industry Represents A $100B Value Creation Opportunity (BCG Report)

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“The number of Indian FinTech Unicorns will more than double over the next few years.”

Boston Consulting Group (BCG) conducted a study of the Indian fintech industry in collaboration with the Federation of Indian Chambers of Commerce and Industry (FICCI). The report titled “India Fintech: A USD 100 Billion Opportunity,”  said India’s fintech was a vibrant ecosystem on a high-growth trajectory, having raised USD 10 billion over the past five years, and currently poised at an estimated valuation of USD 50-60 billion.

Since January 2020, Indian fintech has spawned 3 new Unicorns and 5 new Soonicorns (USD 500Mn+ valuation), indicating the industry did not skip a beat due to the pandemic.

BCG: Why Indian fintech has been successful

A key factor has been the large addressable demand in the country for digital financial services. The number of Indians with internet access has risen from 95 million in 2016 to 694 million in 2020. At the same time, the average internet tariff has crashed from USD 76/GB to USD11/GB.

This has tied with fast-growing digital adoption from the pandemic, favorable regulatory environment, and India’s world-beating digital infrastructure represented by the Aadhar, UPI, and GST initiatives.

The sector has also benefited from the extensive tech talent pool available in the country from its strong education infrastructure and competitive human resource costs.

These factors have attracted venture capitalists and angel investors, enabling funding for fintechs with promise.

Unsurprisingly, India ranks third among the top five global fintech investment decisions in terms of funding.

Meanwhile, Dilip Chenoy, Secretary-General, FICCI, appreciated that Indian fintechs are “redefining the business models across different segments of the financial services industry, helping improve service delivery and contributing to digital financial inclusion.”

BCG on the outlook for Indian fintech – $100B

Prateek Roongta, Managing Director and Partner, Boston Consulting Group India said, “We believe India’s fintechs are at the precipice of significant value-creation of USD 100 billion over the next five years. To actualize this potential, the industry would require investments to the tune of USD 20-25 billion till 2025. Consequently, the number of Indian FinTech Unicorns will more than double over the next few years.”

What will separate the men from the boys?

According to Ruchin Goyal, Managing Director & Senior Partner, Boston Consulting Group India, the winners would be disciplined and strategic players that are masters of innovation on the metrics of product and user experience, as well, possess deep-tech capabilities.

The report also said that several Indian fintechs are well-positioned to establish a global footprint owing to their transplantable business models and proven track record of success.

Related Story: Asian Development Bank To Invest $137M In India’s Fintech Hub At GIFT City

Feature image (added text): Flickr                                                  

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