The FinTech industry which disrupted the financial services sector in the country is all set to witness tremendous growth in the next couple of years. According to a study, the Federation of Indian Chambers of Commerce & Industry (FICCI) and Boston Consulting Group (BCG) the country is poised to realize a FinTech sector valuation of $150-160 billion by 2025. This will translate to an incremental value-creation potential of approximately $100 billion.
The report titled ‘India FinTech: A $100 Billion Opportunity’ released on Saturday details the findings from the study that BCG and FICCI undertook to size the value-creation potential and identify imperatives for India’s FinTech growth.
Commenting on the findings of the study, Dilip Chenoy, Secretary General, FICCI said: “The FinTech industry in India has been growing at a fast clip. FinTech players are redefining the business models across different segments of financial services industry, helping improve service delivery and contributing to digital financial inclusion.”
The study also stated that in the next five years, Indian FinTech companies are set to become 3X as valuable. The FinTech industry has 2100 companies of which 67 per cent have been set up over the last five years alone. The total valuation of the industry is estimated at $50-60 billion.
“The Fintech industry’s strong growth is due to India’s deep-rooted customer demand, diverse capital flows, strong tech talent and enabling policy frameworks. Over the next 5 years, India’s FinTech industry is expected to continue its strong upward trajectory,” added the study.
The industry’s growth has been undeterred by the pandemic, as it has seen the emergence of two new Unicorns ((Pine Labs, Razorpay and Digit Insurance) and 5 new Soonicorns (over $500 million valuations) since Jan 2020.
Further, the study said that the industry would require investments to the tune of $20-25 billion till 2025. Consequently, the number of Indian FinTech Unicorns will more than double over the next few years.
“We believe India’s FinTechs are at the precipice of significant value-creation of $100 billion over the next five years,” Prateek Roongta, Managing Director and Partner, Boston Consulting Group India.
Another major theme covered in the report was internationalization of the Indian FinTechs. BCG and FICCI conducted the BCG-FICCI FinTech survey 2021 and it reveals that 39 per cent of Indian FinTechs surveyed have a presence outside India and 73 per cent of FinTechs surveyed are actively considering international expansion opportunities.