India is considered to be 2nd biggest home for Fin-tech companies. Not less than 2500 startups are operational now. Few of them have become unicorns such as PayTm, a startup is called a unicorn if its revenue growth is more than $ 1 billion.
Fin-tech is defined as any business which integrates finance with technology.
Most promising FinTechs in India are - PayTm, Mobikwik, PayU, FreeCharge, Zerodha, PolicyBazaar, Ola money, CRED, Phone pay and ETMoney to name a few.
Fin-tech market size and expectations
Fin-techs have a long history from ATM to POS to credit cards to stock broking services going online. Bloomberg and Thompson Reuters were the pioneer companies utilizing this need of financial sector to closely work with technology. In the early 90s the internet boom and rise of e-commerce can be considered as evolution of Fin-tech. Later in early 21st century use of smartphone increased and people wanted to do whole lot of activities from their phones. This was a landmark success for Fin-tech rise. Now even some reports suspect that "slowly these FinTechs will completely replace banks". Some of them are of the view point that in coming days there will be tremendous change in the ways BFSI sector provide services now.
There is still a huge gap between developed countries where banking enjoys 80% of the people account where as in developing countries like in Asia and African region this share is just 40%, people prefer to keep their cash with them.
Image Source: YourStory.com
Specifically if we talk about India, then demonetization announced in November 2016 was a remarkable step taken by Modi government. It brought multi-fold increase in digital transaction. Introduction of UPI, money wallets and Jan-dhan khata, further fueled digital payments. The government inclination towards digital, gave birth to several FinTechs startups. PayTm and Mobikwik were some of the companies which flourish due to government supporting policies. Its common phenomenon when government makes supporting policies then related businesses rise. Utilities bill payment and Bharat bill payment system (BHIM app) were introduced by Indian government to boost hassle free digital payments from the ease of mobile. Changes in NEFT and IMPS for online payments from bank account increased upto 80% since demonetization. Indian Government is pushing hard for increase in digital payments, as recently we noticed Sovereign Gold Bond scheme came with discount of Rs 50 per gram if purchased online. Current market size of indian FinTechs is $73 billion with a 5 year CAGR of 22% .
Let's see some of the prominent Fin-tech start-up
PayTm - Money wallet, E-commerce
Boss - Vijay Shekhar Sharma
Founded - 2010, Noida
USP - Cashback and Discounts
Revenue model - Commission from transaction, Commission from vendors.
Revenue - Rs 3319 Crore, 2019
Zerodha - Stock Broking
Boss - Nithin Kamath & Nikhil Kamath
Founded - 2015, Bangalore
USP- Made countries' largest share broking firm, without any single external investment.
Problem solved - Made trading "brokrage free" .
Revenue model- discount broking.
Revenue - Rs 850 crore, 2019
PolicyBazaar - Online Insurance policy aggregator
Boss - Yashish Dahiya
Founded - 2008, Gurugram
USP - Policy comparison, sell and discount
Problem solved - Customer can compare different policies before buying.
Revenue model - Lead generation, policy sales
Revenue - Rs 310 crore, 2019
CRED - Credit card payment palteform
Boss - Kunal Shah
Founded - late 2018
USP - Cred coins with lots of benefit
Revenue Model - it's in nacent stage and expanding userbase.
Although Kunal is quite optimistic for his newest venture CRED.
Kunal Shah is founder of successful FIN-TECH FreeCharge, which was sold to SnapDeal and later Axis Bank aquired it.
Reason of Fin-tech failures
Show-stoppers for indian fin-techs are - regulatory approvals, finding investors, cybersecurity and trust among users. As we know where ever money is involved there are chance of fraud. So it's always good that these fin-techs go through these security tests, which ultimately leads them to meet their goals. India needs robust technology background for start-up as still 19% of the population remain un-touched by banks. Perhaps main reason for this untouchability is lack of trust among the customers or their past experiences.
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