India's Fintech Ecosystem To Reach $70 Billion In Annual Revenue: Report The report stated that India has the third-highest number of fintech companies globally, with fintech funding doubling since 2018 and capturing a 14% share of startup funding in 2022
By Teena Jose
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India's fintech ecosystem is expected to reach a scale of ~$70Bn in annual revenue by FY30, accounting for 18-20% of the addressable financial services revenue pool, according to a recently launched report.
The report also revealed a $400 billion in value creation in fintech by 2030, with 4 times growth from current levels. India has the third-highest number of fintechs globally, with fintech funding doubling since 2018 and capturing a 14% share of startup funding in 2022.
Elevation Capital, with McKinsey & Company as Knowledge Partner, released The Bottomline: Elevation Fintech Report 2023, providing a macro view of fintechs in India and their impact on the financial services ecosystem.
"India is today setting the template for the rest of the world with its innovative models in fintech and financial services. Our fast-growing digital population, world-class Digital Public Infrastructure (DPI), and proactive regulators are three key tailwinds underpinning the fintech growth, which will expand into a $400Bn opportunity by 2030," said Mridul Arora, partner, Elevation Capital.
The platform claims that it captures insights from a survey of more than 70 industry experts and conversations with over 20 industry leaders. About 84% of survey respondents expect fintechs to dominate the future, with SME lending, retail lending, fintech SaaS, and wealth categories experiencing the most growth. However, for continued growth, fintechs must overcome challenges like sustainable profitability, regulatory compliance, and risk and security standards.
Moreover, the report stated that fintechs capture 70% of digital payment transactions, an increase of 2.3 times in FY22, adding that the sector also holds 50% of active broking accounts on NSE, growing 4 times from FY19 to FY22.
Insurtechs, particularly in motor insurance, have grown 5 times from FY19 to FY22, and fintechs are capturing 5% of gross written premium underwritten. This share is expected to increase significantly over the next decade.
As per the report, the sector has gained significant market share in categories, including payment gateways, small ticket personal loans, and BNPL lending, driving 3-5% of India's financial services revenue.
"Fintechs have emerged as significant players, making meaningful headways into key categories and capturing a sizable market share of 3-5% of India's very large and growing financial services revenue pools. They are creating and will continue to create value across the 4Es of Expansion, Efficiency, Experience, and Enablement. Over the next decade, we expect this value creation to accelerate, catalyzed by India's Digital Public Infra, allowing fintechs to capture 12-15% of the financial services revenue pool by 2030," said Vaas Bhaskar, principal, Elevation Capital.
The report comes at a time when India's fintech ecosystem is at an inflection point, showcasing immense headroom for growth relative to its global counterparts.
