What's Driving Growth For India's Fintech? | Startup Street | CNBC TV18

Summary

The Indian fintech ecosystem is set for explosive growth, with revenues projected to reach $190 billion by 2030, potentially increasing to $250 billion. India ranks third globally in fintech companies and unicorns, supported by a national digital strategy and a large underbanked population. The shift from payments to lending technologies is driving this growth, with lending expected to contribute 30% of fintech revenues. The report from BCG's Global Fintech Fest highlights the need for substantial investment in emerging technologies and the potential for a highly interconnected ecosystem, including banks, fintechs, and public digital infrastructure.

Takeaways

• 🌟 Global fintech revenue is projected to grow five-fold by 2030, with India having the third-highest number of fintechs and fintech unicorns.
• 🚀 India has the potential to achieve $190 billion in fintech revenues by 2030, with an additional upside of $60 billion.
• 📈 Lending tech is expected to be a significant driver of growth, with fintechs focusing on this area more than payments.
• 🌐 The fintech ecosystem in India is supported by a national strategy on digital infrastructure, providing a fertile ground for innovation.
• 💡 The underbanked population and the success of digital payments in India are key factors in the fintech growth.
• 🏦 The Banking Technology and Digital (BTD) space is particularly exciting, as it helps banks become more effective.
• 📊 The contribution of fintech to overall banking revenue is expected to rise from 5% to 20% by 2030.
• 🔄 There is an evolving, highly interconnected ecosystem in India, involving multiple layers including banks, fintechs, and public players.
• 💼 India faces a funding gap of $100-120 billion for critical and emerging technologies, requiring substantial public and private investment.
• 🏗️ Investment in fintech is not only about providing solutions but also about developing intellectual property, particularly in AI and blockchain.
• 🔮 The report suggests that India needs to catch up in technology maturity, with an emphasis on software as a service solutions and solid intellectual property.

Q & A

What is the projected growth of global fintech revenue by 2030 according to the BCG study?

The BCG study projects that global fintech revenue will experience a five-fold increase by 2030.

Where does India rank in terms of the number of fintechs and fintech unicorns globally?

India ranks third in terms of the number of fintechs and fintech unicorns globally.

What is the potential revenue India could achieve from fintech by 2030?

India has the potential to achieve $190 billion in revenues from fintech by 2030, with an upside of another $60 billion.

What is the current focus of the fintech ecosystem in India, according to the report presented at the GFF?

The current focus of the fintech ecosystem in India is on lending tech, which is expected to account for about 30% of the revenues of the system by 2030.

What is unique about India's national strategy on digital that fosters fintech innovation?

India's national strategy on digital is unique due to its digital public infrastructure and other measures, which provide a fertile ground for fintech innovation.

What is the significance of the underbanked population in India for fintech growth?

The large underbanked population in India presents a significant opportunity for fintech growth, as it indicates a large market that can be served by fintech solutions.

What is BTD and why is it an exciting area for fintech in India?

BTD stands for Banking Technology and Digitization. It is exciting because it serves banks by helping them become more effective, unlike the rest of the world where the segment is more evolved.

How does the fintech ecosystem in India differ from the rest of the world in terms of revenue contribution from exchange foreign exchange?

In India, the revenue contribution from exchange foreign exchange is expected to increase from 5% to 20% of the overall banking revenue by 2030, indicating a significant growth potential.

What is the current funding gap for critical and emerging technologies in India's fintech sector?

India has a funding gap of 100 to 120 billion dollars that needs to be filled in for critical and emerging technologies in the fintech sector.

What role does the public sector play in the fintech ecosystem in India?

The public sector in India plays a significant role by providing a digital infrastructure that supports fintech innovation and by being a part of the interconnected ecosystem with banks and fintech companies.

How does the report suggest that fintech companies in India should focus on intellectual property and technology?

The report suggests that fintech companies in India should focus on developing solid intellectual property in areas like AI models and software as a service solutions to offer advanced technological solutions.

Outlines

00:00

🌟 Indian Fintech Ecosystem Growth Potential

The script begins with a discussion on the burgeoning Indian fintech ecosystem, highlighting a projected five-fold increase in global fintech revenue by 2030. Sarah Tripathi, a global leader at BCG, joins the conversation to discuss a report presented at the Global Fintech Fest (GFF). The report forecasts a $190 billion revenue potential for India's fintech industry by 2030, with an additional $60 billion upside. Key drivers of this growth are identified as lending technology, which is expected to account for 30% of the fintech revenue, and the shift from payments to revenue generation. The Indian fintech ecosystem is unique due to its national strategy on digital infrastructure, a large underbanked population, and innovative payment history. The Banking Technology and Digitization (BTD) space is particularly exciting, as it serves banks to become more effective, unlike in other parts of the world where this segment has already evolved significantly. The potential for growth in foreign exchange and digital currency is also mentioned, suggesting a shift from the current 5% to 20% of overall banking revenue by 2030.

05:01

🚀 Funding and Innovation in Indian Fintech

The second paragraph delves into the funding and innovation aspects of the Indian fintech sector. It emphasizes the need for India to bridge a $100 to $120 billion funding gap to support critical and emerging technologies. The discussion points out that fintech will increasingly rely on software as a service (SaaS) solutions and intellectual property, especially in AI models. The report suggests that to catch up with more mature fintech systems like those in the US and China, India requires substantial investment, which is expected to be a mix of public and private funding. The role of public infrastructure and digital solutions is highlighted, along with the need for investment in universities and publicly funded research to foster more innovation-driven fintech solutions. The conversation concludes with the acknowledgment of the time constraint and thanks to the guest for sharing insights on the Indian fintech landscape.

Keywords

💡Fintech Ecosystem

The fintech ecosystem refers to the network of financial technology companies and services operating within a particular region. In the video, the focus is on the Indian fintech ecosystem, which is noted for its rapid growth and innovation, supported by a national strategy on digital public infrastructure. This ecosystem includes various players such as lending tech, payment solutions, and tech servicing banks.

💡Global Fintech Fest (GFF)

The Global Fintech Fest is a significant event where industry leaders gather to discuss trends and innovations in the fintech sector. In the video, a report presented at GFF highlights India's potential to achieve $190 billion in fintech revenues by 2030. The event serves as a platform for sharing insights and driving the growth of the fintech industry globally.

💡Revenue Potential

Revenue potential refers to the projected earnings that a sector or industry can achieve over a specified period. The video discusses India's fintech industry's potential to reach $190 billion in revenues by 2030, driven by advancements in lending technology and other fintech innovations.

💡Lending Tech

Lending tech involves financial technology solutions that facilitate the lending process. This includes platforms and services that streamline loan applications, approvals, and disbursements. The video indicates that lending tech is expected to be a significant driver of growth in India's fintech sector, contributing substantially to the projected revenue increase.

💡Digital Public Infrastructure

Digital public infrastructure refers to the foundational digital systems and frameworks provided by the government to support technological innovations and services. In the video, India's unique digital public infrastructure is highlighted as a key factor enabling the rapid growth and innovation within its fintech ecosystem.

💡Underbanked Population

The underbanked population includes individuals and businesses that have limited access to traditional banking services. The video mentions that India's large underbanked population presents a significant opportunity for fintech companies to expand their services and drive financial inclusion through innovative solutions.

💡B2B Fintech

B2B (Business-to-Business) fintech refers to financial technology solutions designed to serve other businesses, particularly banks, by enhancing their efficiency and effectiveness. The video notes that this segment is expected to grow rapidly in India, helping banks improve their operations and customer services.

💡Funding Gap

The funding gap is the shortfall in the necessary financial resources required to support critical and emerging technologies. The video highlights that India needs $100 to $120 billion in funding to advance technologies like blockchain and AI, with a significant portion expected to come from private investment and public offerings.

💡API

API (Application Programming Interface) refers to a set of protocols and tools for building and integrating software applications. The video emphasizes the importance of APIs in the Indian fintech ecosystem, with a simple lending journey involving around 50 different third-party APIs, illustrating the interconnected nature of the industry.

💡Public and Private Investment

Public and private investment involves financial contributions from both government and private sector entities to support industry growth. The video discusses the necessity for substantial investments in India's fintech sector, particularly in advanced technologies and digital solutions, to achieve the projected revenue goals.

Highlights

Global fintech revenue is projected to experience a five-fold increase by 2030.

India ranks third in terms of the number of fintechs and fintech unicorns.

India has the potential to achieve $190 billion in fintech revenues by 2030.

The fintech ecosystem in India is expected to grow rapidly, with lending tech becoming a key focus area.

By 2030, lending is expected to account for about 30% of the fintech industry's revenues.

India has a national strategy on digital infrastructure, providing a fertile ground for fintech innovation.

The large unbanked population in India presents a significant opportunity for fintech growth.

The BTD (Banks Technology and Digitization) space is an exciting area with potential for rapid growth.

The fintech ecosystem in India is expected to evolve into a highly interconnected system with multiple layers.

A simple lending journey in India involves about 50 different APIs, the highest in the world.

India needs a $100-120 billion funding gap to be filled in critical and emerging technologies.

Public and private investment is needed to support the growth of fintech in India.

Only the current 22 fintech unicorns are expected to go public in the next six years.

India has mastered the idea of building market scale, but needs to focus on critical technologies like blockchain and AI.

Fintech in India will increasingly rely on software as a service solutions and intellectual property in AI models.

Investment in fintech is also needed in public infrastructure and university research to drive innovation.

Transcripts

foreign

[Music]

sporting segment today we put the

spotlight and the state of the Indian

fintech ecosystem especially in the

light of the recently concluded Global

fintech Fest now globally fintech

revenue is projected to experience a

five-fold search by 2030 a study by BCG

finds that not only does India rank

third in terms of number of fintechs and

fintech unicorns it also has the

potential to achieve 190 billion dollars

in revenues from 2030. joining me now to

talk about this is Sarah tripathi the

global leader financial institutions

practice at BCG sir welcome to Startup 3

thank you for your time yeah you know

recently you presented uh you know a

report at the GFF about this 190 billion

dollar Revenue potential for the

industry with an upside of another 60

billion dollars uh you know give us a

sense of what is going to drive this

growth because increasingly is a bulk of

that expected to come from lending Tech

which is the area that fintech seemed to

be focusing on away from payments

um Revenue

and uh by 2030 they are expected to be

about 30 of the revenues of the system

about 30 percent of the time and over

this time frame we expect the center of

gravity of the entire filter ecosystem

the word ship takes

expectations accounted for about 600

billion dollars

India is wanted he has got a national

strategy on digital it's a very unique

in the world with digital public

structure and and other such measures

which provide a very fertile ground for

uh fintech Innovation including the fact

that there is a very large amount of

Underpants population our payments of

History has been one of the biggest

things lending is the big thing now that

management will come issue attack will

come I think there is opportunity in

almost every space as far as we have

concerned for one of the space give a

very very

um excited about was the BTD space which

is the printer which actually serves the

banks or help the banks become more

effective unlike the rest of the world

Indian ecosystem this segment is not yet

as revolved as we see in other parts of

reports

separate to grow really rapidly and it

will also allow for ten thousand dollars

from exchange foreign exchange as the

engine Google

so uh sort of you know what would this

mean in terms of Revenue contribution

you expect that to go up from five

percent to 20 of the overall banking

Revenue by 2030 isn't some of this going

to come at the cost of banks even though

of course the pie is going to get larger

yeah

it's a very interesting point that I

think is

the word authentic ecosystem is going to

evolve over next

and the interesting thing is markets

like India which are getting disrupted

by its manner with a lot of support in

government and the regulator are going

to get some sort of a benchmark for uh

how a bank ecosystem which they should

look like it will be a highly

interconnected ecosystem with multiple

different layers but together

I will just give you an example a simple

lending journey in India

involves about 50 different API third

parties this highest in the world that's

because

rapidly and there are a lot of services

that the bank needs to provide simple

services to the customer now that is how

the language ecosystem

and

also have another layer which is the

EDC there which is the public player

which indicates that there with the bank

so there will be three layers operating

together

by using

of anything

sharing this will automatically come

down but it doesn't mean that 20 will

not get a lower value but then a lot of

value will be created in layers around

time

sort of uh you know the report also

finds that India needs a 100 to 120

billion funding Gap to be filled in

critical and emerging Technologies and

it also needs substantial both public

and private investment in this how much

could come by a public offerings alone

you're saying only the current 22

unicorns will probably IPO in the next

six years

so you know this is a very important

Point everyone very distinctive

difference between the impact ecosystem

of India and that's the world is that we

have mastered the uh idea of British

Market scale and which of course gives a

lot of value but on uh critical

Technologies like blockchain or AI blue

have fundamental uh IPS indicated

product system and we believe that in

future the fintech will rely a lot on

software as a service solutions and some

of them will need to have solid

intellectual property in terms of AI

models and others to be able to offer

them and so we estimated that if India

were to catch up uh in different people

systems maturity us and China all these

advanced technology need an investment

over 100 million dollars now a lot of it

obviously they have to be in private

investment and it's limited by digital

public infrastructure that we are

setting up and that will uh that will

have 80 20 type of allocation in public

in private

are also supported by a lot of ethno

digital Solutions

but that investment is still needed and

by public investment the idea also means

the investment they should come to the

root of universities and publicly funded

research you know to provide more

fundamental ground or more it driven

fintech yeah not just provide solutions

to show solve through problems but more

uh intellectual property

sure

sort of uh unfortunately we've run out

of time though thank you very much for

sharing your thoughts here uh it was a

pleasure speaking with you

thank you very much

moving on