Emerging Technologies in Financial Services

Background

The FinTech market in India has been witnessing a constant growing curve for over past five years. In a span of 5 years (January 2013 - October 2018), India has seen the rise of about 2000 FinTech companies, starting an entrepreneurial movement (Figure 1). With an increase in the availability of Fintech solutions, customers adapted to the digital transformation, like fish takes to water. This further resulted in India (2018), ranking second globally after China (83.5%), in FinTech adoption rate with 57.9% FinTech users. This rate is more than any developed countries. A robust technological network as its backbone and a large market-base with low penetration of financial services (FS) further exhibits a great potential for the Indian FinTech industry.

Figure 1.

Entrepreneurial activity on the rise in India Y-o-Y number of Fintech Companies founded (2013-2018), Source: Traxcn 2018

The industry saw a total transaction value of $66.1 billion in 2019, predicted to jump to $137.8 billion by 2023, growing at a CAGR of 20.18% (Figure 2). The total transaction value in the global FinTech space was $5.49 trillion in 2019, being predicted to grow to $9.82 trillion by 2023, with a CAGR of 15.64% (Figure 3).

Figure 2.

India Fintech transaction value projections 2019 to 2023 (USD million), Source: Statista 2019

Figure 3.

Global Fintech transaction value projections, 2019-2023 (USD trillion), Source: Statista, 2019

Funding Prospects In India

Constant venture capital (VC) investments in the Indian FinTech market have been seen during the past few years. In 2018, India completed 97 deals with a value of $1.79 billion through VC funding. This created a record high, in terms of the number of deals, however, $2.4 billion was raised in VC funding in 2017 with a total deal count of 48. As per a CB Insights report, FinTech companies being backed by global VC increased to almost $39.57 billion across 1,707 deals, both of which created a new record in the Fintech market.

Figure 4.

Global VC-backed FinTech funding and deal count, 2014 - 2018 (USD billion)