Why do Indian FinTech Companies continue to attract huge FDIs amid the global slump?
Indian FinTech market currently stands somewhere around $31 billion and is expected to touch the $84 billion mark by 2025.
Indian FinTech market currently stands somewhere around $31 billion and is expected to touch the $84 billion mark by 2025. When it comes to the FinTech transaction value size, it is forecasted to grow to $138 billion by 2023 from $66 billion in 2019. Moreover, the Indian FinTech ecosystem is the third-largest in the world with an over 87 percent global adoption rate.
These interesting facts make the Indian FinTech sector one of the most vibrant and lucrative investment options in the world. Henceforth, the sector has attracted over $10 billion in funding in the last five years. Institutional investors, venture capitalists, and private equity have infused a great percentage of funds in the industry. Today, more than 50 FinTechs are valued at over $100 million in India.
One of the foremost reasons for the exponential and rapid growth of the FinTech industry is the widening user base of Internet users in India. Owing to the rising competition in the telecom industry and subsequent lowering of data tariffs, the nation has witnessed a steep growth in smartphones and internet users. This has revolutionized how we perceive finance in the ‘digital era’.
Founder of Gurgaon-based FinTech – PinCap, Praveen Sinha told the Indian Business Times, that India with its mammoth young population and high GDP growth has become a center of attraction for global investors. “We are moving forward towards a cashless economy. Digital payments have grown since UPI was introduced. FinTechs are revolutionizing the standard concept of Finance in today’s era.”
While a couple of years back when only PayTM was seen as the only key player in the digital payment sector, today, global giants such as Walmart, Google, and Facebook have all jumped into the segment. While Walmart acquired PhonePe, Google introduced its interface Google Pay, and Facebook launched WhatsApp Pay, paving the way for a cutting-throat competition in the digital payments segment.
Similarly, what came to become the largest global acquisition in Asia, Prosus NV agreed to acquire India-based online payments service BillDesk for $4.7 billion. With it, Prosus investment in India has crossed the $10 billion mark.
Digital loans, which are forecasted to become a $1 trillion market in a few years to come, have made India a battleground for global companies. Facebook, recently launched a small business loan program where the nation will be the first to benefit from it. Under the program, Facebook will lend from 500,000 rupees to 5 million rupees without collateral.
As the trends suggest, the Indian FinTech industry has attracted global attention to become one of the most vibrant investment opportunities projecting greater returns. We believe, with the expansion of internet users, the Indian FinTech industry will continue to grow while opening up new opportunities for new startups to enter and conquer the market to offer better services to the end-users.