FINTECH'S GROWING CLOUT

The explosion in digital needs—from payments to financial planning—has fuelled the rapid rise of the industry.

- By Rajiv Ranjan Singh

TRANSACTIONS ARE the life and blood of commerce. If one were to look for the epicentre of India's digital revolution in India, the fintech sector will be the most likely answer. Without technology fuelling commercial relationships, a large chunk of mass consumer-focussed start-ups would remain a pipe dream.

A young and digitally savvy population armed with smartphones driven by low-priced data has propelled the fintech revolution in India. Furthermore, the financial inclusion policies of the government have brought in a large population of Indians under the ambit of banking institutions, which boosted the pace of fintech adoption. The digital public infrastructure for financial transactions in India is among the model cases for the world. Digital public goods such as the Unified Payments Interface (UPI), Aadhaar, and ONDC have powered this infrastructure, catapulting India to the world's third-largest fintech market, behind the U.S. and China. The sector boasts of 26 unicorns and 120 potential soonicorns with a combined market cap of more than $120 billion, according to a 2024 report by JM Financial. On a global scale, the sector ranked third in terms of funding received, says the Tracxn Annual India Fintech Report 2024. After receiving $5.6 billion in 2022, the pace of funding slowed down, and in FY23 and FY24 the sector raised $2.8 billion and $1.9 billion, respectively.

The overall fintech market opportunity in India is estimated to reach $2.1 trillion by 2030, at a CAGR of 18%. The high growth potential of the sector, coupled with the large market size, has attracted investments worth over $30 billion from global venture funds between 2014 and 2024. “By collaborating with fintechs, companies and established financial entities can improve their digital offerings, streamline operations, and provide better customer experiences,” says Pratik Shah, national leader, financial services, EY India.