October 7, 2017
Investments in FinTech are breaking all records in the past few years. New solutions are coming from everywhere, and consumers are switching to them faster than ever. In the center of this 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. It’s exciting times for FinTech and for India, and an 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 at the top of their priority list?
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.
India’s smartphone user base is expected to grow rapidly from 150 million (in 2016) to 500 million users by 2020. With it, digital banking is also expected to have a rapid growth. The FinTech adoption rate is on top of the world with 52%, only second to China and far ahead of the rest of the world. And some predict it will soon grow to 80% and surpass China and be far ahead of the global average (around 50%). 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 the Indian customer base is so welcoming is already a huge advantage for FinTech startups that are active there.
In 2016, FinTech investments dropped globally 13% and in Asia, FinTech investments grew 12.%. And that was led by India’s and China’s FinTech investment success. FinTech really is blooming in India.
Source: The pulse of FinTech Q2 2017
Especially when it comes to the VC scene, the role of established corporation-affiliated players is clear when looking at the proportion of all VC activity with which they are associated. The aggregate VCs invested may ebb or flow, but their involvement is indicative not only of the region but also the close focus on FinTech of many of the established incumbents in the region, such as Alibaba.
Source: The pulse of FinTech Q2 2017
Overall India ticks all the key boxes for startup success. India’s FinTech scene is an investment magnet. Corporate VCs are interested to collaborate and co-create solutions with FinTech startups and are investing a considerable chunk of their portfolio in FinTech space. And most importantly, the consumers are excited to use them. That’s check, check and check!
We've come a long way since India’s first incubator; STEP (Science and Technology Entrepreneurship Park) was set up in 1986 at Tiruchirappalli Regional Engineering College. India now has the third-highest number of startup incubators and accelerators in the world after China and the US, according to a report by IT industry body National Association of Software and Services Companies (NASSCOM).
While over 50 % of accelerators and incubators are run by the state universities across themes like AgriTech, HealthTech, RegTech and FinTech amongst others, a host of corporates are also encouraging such innovation programs. Banks have led the way around the world in co-creating solutions with FinTech startups in accelerators or incubators; one such program which catches the eye has been launched by YES BANK, India's fifth-largest private sector bank in January 2017 – YES FINTECH.
About YES FINTECH
YES BANK is the fifth-largest private sector bank in India with 2 million+ retail and 10000+ 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.
Their previous program ended up with an off-take 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 presents a huge opportunity – so big that even that I’d like to call it the home of startup unicorns. While we'll still have to see about that one, it has already become clear that for FinTechs, India is the place to be.