India Ranks as the Third Largest Global Fintech Hub
The fintech sector has emerged as a lucrative investment opportunity in 2019, attracting attention in major markets around the world. While established markets like the United States and the United Kingdom dominated the majority of fintech deals, India surprised many by making significant strides in this space.India Ranks as the Third Largest Global Fintech Hub
According to Accenture, fintech investments in India nearly doubled in 2019, reaching a total of $3.7 billion, up from $1.9 billion the previous year. This places India as the world’s third-largest fintech hub, following closely behind the US and UK. Accenture’s analysis is based on data from a CB Insights report, which indicated that investments in payment companies in India more than tripled, soaring from approximately $660 million in 2018 to a whopping $2.1 billion. Additionally, funding in insurtech companies also saw substantial growth, increasing by 74% to reach $510 million.
Sonali Kulkarni, Managing Director of Financial Services at Accenture in India, commented on this trend, saying, “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 the 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.”
The majority of the funds raised in India in the previous year were channeled into payments startups, accounting for a substantial 58% share. Insurtech startups secured 13.7% of the investments, while fintechs specializing in lending received 10.8% of the total funding, as revealed by data from CB Insights.
Several notable fintech deals took place over the past year. One of the standout transactions involved PayTM’s parent company, One97 Communications, raising a staggering $1.66 billion through two separate transactions. In another significant development, PhonePe secured approximately $210 million in funding, while Razorpay raised $75 million. PolicyBazaar, a prominent player in the insurtech sector, received a substantial investment of $282 million, and CRED, a credit card payments company led by Kunal Shah, secured $120 million in funding.
As India’s fintech landscape continues to evolve rapidly, other players are keen to enter the fray. Swiss financial institution UBS, for instance, has revealed its plans to launch a venture fund aimed at investing in fintech startups and expanding its outreach to startups in India. UBS is particularly interested in the micro-payments sector, an area that has gained significant attention from the Indian government in recent times.
Similarly, during the 2020 World Economic Forum, Bob van Dijk, CEO of Naspers, expressed optimism about India’s fintech sector. He announced that the venture capital fund would double its investments in India’s tech startup ecosystem, with a special focus on emerging credit and financial products.
Fintech companies, once perceived as disruptors to traditional financial institutions, are now basking in the spotlight due to their innovative capabilities. The question remains: Will their successful journey continue?
In conclusion, the fintech sector in India has witnessed remarkable growth and investment in recent years, positioning the country as a significant player on the global fintech stage. This surge in funding, particularly in payments and insurtech startups, underscores the growing confidence of investors in India’s fintech potential. With the involvement of global financial institutions and venture capital funds, India’s fintech landscape is poised for further expansion and innovation, promising a bright future for this dynamic sector.