The report serves as a blueprint for $400Bn of value creation set to happen in the fintech sector by 2030 (4X growth from today). The report captures Elevation’s deep thesis on the fintech sector, insights from a comprehensive survey of 70+ industry experts and conversations with 20+ industry leaders from prominent fintechs and financial services, which includes Ajay Rajan (Head of Digital and Transaction Banking, Yes Bank), Anup agarwal (Co-founder & CEO, Mintifi), Anurag Sinha (Co-founder, Onecard), Archit Gupta (Founder & CEO, Clear), Asish Mohapatra (Co-founder & CEO, OfBusiness), Atulya Bhat (Co-founder, Jodo), Hrushikesh Mehta (Senior Vice President - Financial Services, ONDC), Madhusudanan R (Co-founder, M2P Fintech), Nitin Chugh (Deputy Managing Director and Head of Digital Banking, State Bank of India), Nitin Gupta (Founder & CEO, Uni Cards), Sameer Shetty (Head, Digital Business And Transformation, Axis Bank), Sandeep Jathwani (Co-founder, Deserv) Sashank Rishyasringa (Co-founder, axio), Srivatsan Sridhar (Founder & CEO, Skydo), Varun Dua (CEO, Acko), Vamsi Madhav (Deputy Managing Director and Head of Digital Banking, COO & Founding member, Sahamati), Vijay Shekar Sharma (CEO, Paytm) among others.
84% of survey respondents expect fintechs to play a significant or dominant role going forward, with SME Lending, Retail Lending, Fintech SaaS and Wealth (advisory & brokerage) being categories that will see the most fintech growth and innovation, according to the respondents. However, industry participants believe that for continued growth, fintechs will need to overcome a few challenges, such as achieving sustainable profitability, ensuring a regulatory-compliant business model, and adhering to risk and security standards.
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. As a precursor to the next phase of the report, Elevation offers a glimpse into the ‘10 Key Themes’ that will shape the future of fintech value creation in India and the key elements to build an enduring & profitable fintech franchise.
Mridul Arora, Partner, Elevation Capital, said, “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.”
“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.
Key findings from the report
- With more than 9K+ fintechs, India is home to 3rd highest number of fintechs globally
- Fintech funding in India has tripled in 2022 since 2018
- Fintech is now capturing ~14% share of India’s startup funding
- Fintechs are capturing a meaningful market share across key financial service categories
- ~70% of digital payment transactions are captured by fintechs, with the share of fintechs increasing ~2.3X in FY22 from FY19
- ~50% of active broking accounts on NSE are held by fintechs - again, the share of fintechs has grown ~4x from FY19 to FY22
- Share of insurtechs, specifically in sectors such as motor insurance, have grown ~5x since FY19 to FY22 & fintechs are capturing ~5% of the share of gross written premium underwritten. This share is expected to increase significantly over the next decade
- Amidst the perfect storm of disruption in India’s Financial Services landscape, Fintechs have emerged to play a significant role:
- They have captured material share in key categories (e.g. payment gateways, small ticket personal loans, BNPL lending) and rapidly growing share in others (card issuing, wealth & insurance distribution) and, as a result, already drive 3-5% of India’s financial services revenue pools
- From a qualitative standpoint, fintechs have created value across 4Es -
- Expanded access, introducing millions of consumers to digital FS
- Set the bar on Experience - giving customers a world-class experience
- Defined the Efficiency paradigm - improved turnaround times for opening accounts, credit decisions, improved operating costs with the use of tech
- More broadly, Enabled the modernization of India’s financial services - by developing new & improved tech stacks.
- Multiple tailwinds have underpinned fintech growth.
- Fast-growing digital population: 200M+ users digitally transact via smartphones
- Rapid digital banking penetration: From 2018 to 2021, digital banking penetration has grown 3X in India.
- World-class public infrastructure: The emergence of infrastructure such as Aadhar, Digilocker, UPI, GST, Account Aggregator, and large open networks such as ONDC and Agri stack are enabling fintechs
- 99% of the population has digital IDs via Aadhar
- 300M monthly eKYC transactions
- UPI has grown to >8B transactions per month
- 100M+ bills are paid via BBPS monthly
- 2M account aggregator consent requests processed per month
- Enabling regulatory environment: Increased engagement between fintechs & regulators
- Across categories, Fintech's role will be nuanced – varying between that of a shaper, attacker and catalyst
- Shaper: Set the paradigm & lead in market share - in sectors such as consumer payments, B2B SaaS point solutions, digital brokerage
- Attacker: Challenge incumbent market share - in sectors such as credit cards, motor insurance, core B2B SaaS platforms
- Catalyst: Creating and expanding new FS categories - in sectors such as business insurance, cross-border payments
Elevation Capital is a leading venture capital firm that provides seed and early-stage capital for emerging companies in India. Elevation Capital has been investing in India since 2002, deploying almost $2 billion of capital in over 150 companies. The firm announced its eighth pool of capital of $670 million in April 2022. The firm is led by Co-Managing Partners Ravi Adusumalli and Mukul Arora, along with Partners Mridul Arora and Mayank Khanduja. The firm has invested in over 150 companies across Consumer Internet, SaaS, Fintech, Consumer Brands, Edtech, Healthtech and Web3/Crypto and has offices in Bengaluru, Gurgaon and Salt Lake City.
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