The Indian Fintech market is anticipated to record 10 times growth to reach $1 Tn in Assets Under Management (AUM) and $200 Bn in revenue by 2030, revealed by a study titled ‘$1 Tn India Fintech Opportunity,’ published by Chiratae Ventures in collaboration with Ernst and Young (EY).
Much of the growth will be driven by the digital lending market, which is expected to grow to $515bn in book size by 2030.
The report estimates the market to reach $1Tn in AUM with contribution from lending to be highest at 50 per cent +, while from a revenue standpoint payments and lending make 75 per cent + of the pool.
As of March 2022, India is home to 21 fintech unicorns, and favourable demographics, increasing technology use, higher disposable incomes, and an aware consumer are driving this growth.
Moreover, to meet customers’ changing needs, fintech companies have been developing innovative products and methods of delivery.
Besides, government programmes including Smart Cities, Digital India, Unified Payments Interface (UPI) development, and others are fostering the expansion of the Indian fintech industry.
Commenting on the report findings, Sudhir Sethi, Founder, and Chairperson, Chiratae Ventures, said, “The Indian fintech market has been a formidable global force, contributing to the largest share of unicorns in India. We have been a technology-first investor, having backed companies such as EarlySalary, Kristal.ai, PB Fintech, ShopSe, and Vayana, among others.”
“We also expect fintech to continue solving for the substantial and growing sub-markets with novel solutions,” TC Meenakshi Sundaram, Cofounder, and Vice Chairperson, Chiratae Ventures stated.
Additionally, the study found that neo-banking, wealthtech, digital lending, payments, and insurtech, with agro and proptech being big bets, will all contribute to the expansion of the fintech industry.
Reportedly, the buy now pay later (BNPL) model has gained popularity and is expanding quickly, showing strength both in the business-to-consumer (B2C) and business-to-business (B2B) payments space.
Sharing his views, Rajiv Memani, Chairman and Managing Partner, EY India, said, “India is recognised as a strong Fintech hub globally and is increasingly becoming a talent destination for fintech businesses. We are glad to partner with Chiratae Ventures and delve into the emerging trends in regulatory innovation, technology advancements, new business models, industry convergence, and inclusive digital financial services in the Indian fintech space.”
“New asset classes, crypto and NFT, will also continue to attract investor interest as fintechs continue to solve for traditionally underserved customers,” the report noted.
The report further observed that with five times growth in the digital tech talent, India has the opportunity to address the global digital skill gap and establish itself as the destination of digital and tech talent.
The report also emphasised how regulatory backing will help the industry advance as already well-established models go international through collaborations.
Moreover, a favourable regulatory environment has been created by actively fostering innovation through regulatory sandboxes, new distribution strategies, and the introduction of innovative products.