The Boom of FinTech Industries in India - A Statistical Data Analysis

Anagha S Anagha S
Aug 1, 2021 5 min read
The Boom of FinTech Industries in India - A Statistical Data Analysis

It might be surprising to know that India is the world's largest growing industry of fintech companies. Fintech the short form for financial technologies and FinTech companies are those companies that sell technologies and services related to financial transactions.

With the world shrinking to one's fingertips and everything from education to business shifting to the online mode, there is absolutely no limit to the extent to which fintech companies are growing across the world and especially in India.

Most of the firms today are investing in or are planning to invest in financial technologies heavily. It is expected that by 2023 the global fintech market will be valued at over $305 billion.

Humble Beginnings and Powerful Growth
Growth Unhindered
Multifaceted Support From the Government
The Future of Fintech Industry in India
FAQ

Humble Beginnings and Powerful Growth

The growth of fintech industries in India has been really humble. It started to gain momentum in the country only after the government initiated liberalisation of the banking industry and the incorporation of technology.

Slowly more funds were received by the banking sector for Financial innovation. The sector started to experience the ripple effects of the financial technology revolution in the US and UK in the 2000s.

This enabled the Indian banking industry to slowly begin by offering services that are consumer-centric. In the early 21st century FinoPay Tech and EKO India were two startups that were curated in the Banking Correspondent Model (BCM). And that was just the beginning only to witness the emergence of revolutionary fintech startups like Paytm, FreeCharge, Mobikwik et cetera from 2005 onwards.

Since then there have been no turning back for the industry with a plethora of companies mushrooming across different segments like lending, investments, personal finance management et cetera.


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Growth Unhindered

According to the reports by Boston consulting group (BCG) and FCCI India's fintech companies are going to be valued thrice than what they are valued today within the next five years.

It is estimated that Indian fintech companies will reach a valuation of more than $160 billion by 2025.

The establishment of fintech companies and their growth have been phenomenal in the last five years than ever before. This dynamic industry has more than 2100 companies among which 67% of them were launched in the last five years alone. The biggest achievements of the industry do not stop there.

Apart from the booming businesses of fintech industries, the covid-19 pandemic also facilitated more investments in the Industry as digital and contactless payments took on to the centre stage while most of the offline business transaction pathways were completely shut down.

In the first seven months of 2020, fintech companies in India received total investments worth $1.47 billion which was 60% more than what it had been in 2019. Among the trends and new answers of the industry, online brokerage was gaining more popularity and thereby encouraged investors to buy more equities, mutual funds, ETFs et cetera.

All these lead to increased activity in the industry as a whole which resulted in huge investments in the industry like never before. It saw the emergence of three new unicorns companies and five new soonicons (Companies that have a valuation of $500 million or more) just from the beginning of January 2020.

There is a total of 21 unicorns in India and out of which one-third of the companies are fintech companies, which is not a surprise anymore. Among the unicorns Paytm is the highest valued one at $16 billion.

Multifaceted Support From the Government

Among the activities of the Indian finch industries, online payments have always been at the forefront. In 2018 digital payment crossed over 24 .13 billion in 2018. These transactions are valued at over $3.5 trillion.

One of the major reason for the tremendous growth of Fintech companies in India is because of various government policies that allow and facilitate people to get on to the digital platform for storing and transacting money.

The extensive use of Aadhaar has made verification easier and policies like PMJDY (Pradhan Mantri Jan Dhan Yojana) Β has pulled more people onto the digital platform than ever. The introduction of the Unified Payment Interface or UPI has also introduced a large amount of unbanked population in India into the digital financial services which have further boosted the growth of fintech companies.

Apart from that demonetisation has opened vast opportunities for fintech companies for better service provisions and thereby making customers comfortable within the technologies like AI, blockchain, IOT et cetera.

Reports say that the introduction of such industry 4.0 technologies into the industry gave a jump of nearly a hundred per cent from an earlier $1.8 billion valuation in 2018.

The Future of Fintech Industry in India

The fintech industry in India will continue to conquer greater heights as it has already started to partner with various banks. Using these collaborations and the nuances of consumer behaviour, Fintech companies are all set to further use technology to capitalise on better levels of trust among people.

In 2021 and from then on it is expected that hybrid banking will become more mainstream. The performance of fintech industries in India in the first seven months itself has proved this to be true. In an environment of hybrid banking, more financial institutions that operate offline will take on to virtual banking as well.

There are also various government initiatives that aim at establishing fintech hubs along with an allocation of Rs.15 billion to boost digital payments alone. All these will further strengthen and immunise the industry in the years to come. With the incorporation of newer technologies into the industry, it is expected that by 2025 there will be more than 30 billion connected devices ranging from thermostats to refrigerators to lightbulbs.

The breakthrough advent of cryptocurrency and blockchain technology is also expected to be a game-changer in the industry, especially regarding money transactions, consumer payments et cetera. However, it will be completely dependent on the stand of the Indian government.

FAQ

How many Fintech companies are there in India?

At present there are more than 2,000 fintech companies in India.

When did the FinTech sector rise in India?

In 2015, the Indian fintech sector saw the emergence of numerous fintech startups, incubators, and investments from public and private investors.

How big is the fintech market in India?

The Indian Fintech market is currently valued at $31 billion and is expected to grow to $84 billion by 2025, at a CAGR of 22%.

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