India’s Fintech Sector Holds $400B Value Creation Potential by 2030: Report
- ByStartupStory | August 31, 2023
Elevation Capital, in collaboration with McKinsey & Company, has released a comprehensive report titled “The Bottomline: Elevation Fintech Report 2023,” shedding light on the dynamics of India’s fintech ecosystem. The report projects that India’s fintech sector, currently contributing to 18-20% of the addressable financial services revenue pool, is poised to achieve an annual revenue scale of $70 billion by the fiscal year 2030. The study draws insights from a survey of over 70 industry experts and dialogues with more than 20 industry leaders, including figures such as Ajay Rajan (Head of Digital and Transaction Banking, Yes Bank), Anup Agarwal (Co-founder and CEO, Mintifi), and Vijay Shekar Sharma (CEO, Paytm), among others.
The report anticipates a remarkable value creation of $400 billion within the fintech domain by the year 2030, indicating a fourfold growth from the current levels. India boasts the third-highest number of fintechs globally, with fintech funding doubling since 2018 and securing a 14% share of startup funding in 2022. Mridul Arora, Partner at Elevation Capital, highlights that India is becoming a global frontrunner in innovative fintech and financial services models, driven by its digital-savvy population, Digital Payments Index (DPI), and proactive regulators.
Survey findings indicate that approximately 84% of respondents foresee fintechs dominating the future, particularly in SME lending, retail lending, fintech SaaS, and wealth management categories, which are expected to experience substantial growth. Nonetheless, the report emphasizes that to sustain this growth trajectory, fintechs must address challenges related to sustainable profitability, regulatory compliance, risk management, and security standards.
Noteworthy findings from the report reveal that fintechs are responsible for 70% of digital payment transactions, marking a growth of 2.3 times in FY22. Moreover, the sector holds a 50% share of active broking accounts on NSE, demonstrating a fourfold growth from FY19 to FY22. Insurtechs, particularly in motor insurance, have expanded fivefold from FY19 to FY22, while fintechs are capturing 5% of the gross written premium underwritten. This share is predicted to witness significant growth over the coming decade.
The report underscores how fintechs have made substantial contributions to India’s financial services landscape, securing notable market share in areas such as payment gateways, small-ticket personal loans, and Buy Now Pay Later (BNPL) lending. These entities have not only broadened access but have also redefined customer experiences, set efficiency benchmarks, and propelled the modernization of India’s financial sector through innovative technological solutions.
With over 200 million users conducting transactions via smartphones, nearly the entire population (99%) possesses digital IDs through Aadhaar, and monthly electronic Know Your Customer (eKYC) transactions exceed 300 million. The Unified Payments Interface (UPI) has surged to over 8 billion transactions per month, and Bharat Bill Payment System processes payments for more than 100 million bills. Additionally, the system handles 2 million account aggregator consent requests each month. Fintechs have significantly shaped the financial services landscape in India, commanding significant share in pivotal categories like payment gateways, small-ticket personal loans, and BNPL lending.
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