Investments in fintech are breaking their own records over and over again. New solutions are coming left and right, and the consumers are switching to them faster and faster. Fintech is booming and there seems to be no end to it.
In the center of the boom is Asia, especially China and India. While China still leads in consumer adoption rate of fintech solutions and investments, India isn’t far off. And according to predictions India will soon go past China and become the leading country in fintech. It’s exciting times for fintech and for India, and even more exciting opportunity for startups. But why is India such a hot place in fintech? And why should startups all over the world put India to the top of their priority list?
Market size & fintech adoption rate
First of all, India is a huge market. Just the sheer size of the country itself is humongous with 1,3 billion people and counting. But what makes it interesting for fintech is that its population is the most underbanked or unbanked in the world. At least for now.
India’s smartphone user base is expected to grow rapidly from 150 million (in 2016) to 500 million users by 2020. With it the digital banking is also expected to have a rapid growth. (source).The un- and underbanked consumers will jump right past the old banking systems and go straight for the newest fintech innovations. And they are doing it fast.
The reluctance of trying new banking related solutions that many fintech markets struggle with is quite non-existing in India. In fact, their fintech adoption rate is on top of the world with 52%, only second to China and far ahead the rest of the world (source). And some predict it will soon grow to 80% and surpass China, and be far ahead of the global average (around 50%) (source).
Banking is one of the most trust-based industries. Getting people to change from their trusted bank to a new provider or to try a completely new service altogether is a huge struggle for fintechs. That is one of the key reasons fintech adoption rate is so low in many markets. The fact that Indian customer base is so welcoming is already a huge advantage for fintech startups that are active there.
In many, if not most markets, fintech startups struggle with innovation-stifling regulations and legacy systems. But the Indian government has decided to take a different approach.
The Indian government is actively pushing to support new fintech innovations and startups in many ways. For example, they have been discussing with the key players in fintech to understand the market better. Thus they are able to design a supportive and enabling regulatory environment.
As a result, India has many policy initiatives which provide a strong foundation for fintech in India. They are working hard to simplify the regulatory processes, do tax redemptions, patent reforms, and provide increased government funding. They have also created India Stack, a world-class technological framework and an amazing set of APIs, to help entrepreneurs and innovators to accelerate their solutions to a completely new level.
India’s government has also been a big part in making people so receptive of new fintech innovations. They have actively encouraged and educated the Indian consumers to use fintech solutions. Thah has been a huge help in getting new solutions the top of the mind of the Indian consumers. (Source)
India is clearly sending the message that fintech innovations are necessary and more than welcome.
In investors eyes, fintech is extremely hot now. And within fintech Asia, lead by India and China who attract the most investments, are the hottest of them all. Even when in 2016 fintech investments dropped globally 13%, in Asia fintech investments grew 12,5%. And that was led by India’s and China’s fintech investment success. (source) Fintech really is blooming in India.
Considering the market’s opportunity and the supportive environment for fintech innovations and the whole ecosystem, it is no wonder that investors find India attractive. More so as India offers the highest expected return on fintech investments. If investors are interested, startups should be too.
Overall India ticks all the key boxes for startup success. India’s fintech scene is an investment magnet. India’s government is being very proactive in supporting the growth and adoption of new fintech innovations. And most importantly, the consumers are excited to use them. That’s check, check and check!
Getting access to the Indian fintech opportunity
While India has a huge potential for fintech startups, for startups far away, it might seem too distant. From understanding how the market works to the very basics of being a company in a foreign country can feel too big of a challenge.
An EY study found that one of the best business models to drive mass adoption of fintech solution is collaborating with businesses who already have an existing customer base in the market. Working together with a major player is a great way to get access to the market and get an understanding of the hows. For young startups, it can be especially fruitful to go to an accelerator organized by a major local player. Then they will get straight access to a big number of customers and the company’s great experience of the industry. And at the same time also get help accelerating their startup’s growth.
YES BANK and YES FINTECH Accelerator
YES BANK is the fifth largest private sector bank in India with 2 million+ retail and 15 000+ corporate customers. They definitely know the Indian market by heart. And thus they can give startups just the knowledge they need to access to the huge Indian fintech opportunity. Through the YES Fintech accelerator startups will also get access to their huge customer base and their 200+ APIs. That means a straight route to the market, and getting an amazing set of tools to test and validate the startups’ solutions with real customer data.
The accelerator will also provide focused mentorship to accelerate the startups’ growth. And also give access to 1 million+ funding. Through the program and its ecosystem, partners, and cohort startups can also take their solutions to the top 20 global fintech markets.
Their previous program ended up with an offtake of 90% wherein 9 out of 10 solutions were taken up by YES BANK. That’s an incredible number! It speaks volumes of the startups and YES BANK’s startup-readiness. Overall, the YES Fintech accelerator is definitely a solid option for startups planning to conquer the Indian fintech market.
For fintech startups India gives huge opportunity. So big even that I’d like to call it the home of startup unicorns. While we still will have to see about that one, it has already become clear that for fintechs India is the place to be.
Read more and apply now to the YES FINTECH Accelerator. Applications will close on the 7th of October 2017.
Read more about what the Global Fintech Accelerator is about.