Indian FinTech is one of the top five markets in terms of the value of capital funding and investments in the sector, according to a recent report by Deloitte.
The sector has reported funding of nearly $ 270 million in 2016.
The report further stated that in medium-term, FinTech players will merge their position in urban and metro centres and will extend their functions to rural and semi-urban areas over the next three-five years.
“India remains one of the largest markets where the structural enablers to setup and incubate FinTech have come together strongly and at an apt time,” said the joint report by Internet and Mobile Association of India, and Deloitte.
“Combination of steady economic growth with low penetration of financial services and availability of supporting infrastructures such as internet data access, smartphones along with utility infrastructure including Aadhaar based authentication and India Stack capabilities are likely to provide the required impetus to India’s FinTech sector,” the report explained.
“Payments and lending are the likely candidates for breakout in the short term as the new FinTechs target the quest for offering cashless digital payments services,” it said.
“On the lending side, low penetration of retail and MSME credit along with the promise of better experience and faster turnaround time have created strong propositions for customers, ”it added.
FinTechs in majority of the other segments including investment management, personal finance management, banktech and insurance have commenced the market making process and currently target specific market niches.
“We believe that armed with right value proposition and by gaining the confidence of customers, these segments are likely to witness their own break out moments and it’s just a matter of time, and some entrepreneurial energy and creativity before it happens,” the report said.
Further, the report said that technology has been a key enabler, but the level of adoption has not been proportionate.
“Armed with advanced data and analytics capabilities, asset light platforms and almost zero processing costs, fintech companies are complementing, and in some cases challenging the traditional banking and financial services institutions,” it added.