- Indian fintechs, in last 10 years, raised close to $10 billion says Credit Suisse
- India digital payments-led startups have raised $ 4.2 billion, and the digital lenders have raised $ 2.5 billion.
- Fintechs, including e-commerce, have been leaders in the Indian unicorn landscape
Indian financial technology companies have raised almost $ 10 billion in equity capital funding over the last 10 years with the digital payments and lending startups being the largest recipients in this sector as per the report shared by Credit Suisse, a global wealth management firm.
As per the report, titled “100 Unicorns: India’s changing corporate landscape”, India is now home to the third-largest set of unicorns globally, behind only to the US and China, which command a total valuation of $ 90 billion.
The Fintechs which includes e-commerce, have been leaders in the Indian unicorn landscape, with the sector spawning five unicorns having an aggregate valuation of $ 22 billion which is the highest amongst Indian unicorns, the report added.
In the last 10 years, the Indian digital payments-led startups have raised $ 4.2 billion while the by digital lenders have raised $ 2.5 billion.
Ashish Gupta who is the head of Asia Financials Securities Research and also the head of India Securities Research, Credit Suisse, said, “Indian fintech companies have attracted $10 billion of capital and are now at the forefront of India’s startup ecosystem.
“Digital payments are primarily leading the fintech scaleup in India and have grown 10 times over the last five years, now having a 30% share totaling $450 billion”.
Riding on the back of the public payment infrastructure, which includes the Unified Payments Interface (UPI), digital payments have made a huge jump in India as in the last 5 years it grew close to 10.5 times to an annual payment run-rate of $ 450 billion, which constitutes close to 30% of the retail transactions, as per Credit Suisse.
In India, digital payments continue to grow exponentially as it has more than 200 million (20 crore) active users and is accepted by over 30 million (3 crore) merchants, said the report.
Credit Suisse notes that UPI is the major driver of this accelerated payment digitisation as it opened up an interoperable payment network to large technology companies.
The global wealth management firm also said that after its analysis of the credit card spending by customers in India revealed the pace of increase in the share of digital spending was vastly accelerated by the lockdown induced by the pandemic, with online spending increasing by almost 10 percentage points within nine months from 44% to 53%.
It also showed that there is a shift in the market in consumer spending from offline to online.
Gupta said, “Covid-19 has accelerated the pace of digitisation globally across communication, shopping and payments space.
“While part of this shift should gradually recover, as we come out of the pandemic, there is widespread consensus that it has brought a structural change in categories such as shopping and payments”.
In particular, the consumer payment firms have expanded to offer investing, insurance, lending, as well as e-commerce services. Even the Merchant payment players have added value-added services, merchant lending, and also consumer financing at Point-of-Pale (PoS) terminals to garner a higher wallet share.
Even the digital lenders have grown to $ 10 billion with over 40% share in the new personal and consumer durable loans and have been adding new loan products in their portfolio in their underwriting models increase, says Credit Suisse.
The Indian fintechs have also forged partnerships with nationalised banks to embed their credit products along with the investment and protection products while adding new channels of monetisation and increasing the user engagement.
These partnerships also help incumbent banks to expand their reach and also increase their share in the digital business industry.
Riding on the back of proprietary digital platforms and partnerships with the fintechs, digital has helped drive cross-selling, new business acquisition as well as customer servicing channels for the incumbent banks.
The global wealth management firm, Credit Suisse, also stated that the larger private sector banks and the State Bank of India have developed their proprietary digital platforms and are able to source 60% to 70% of new retail customers, 60% to 80% of retail fixed deposits, and contribute to now 75% of new credit card sourcing and 50-60% of new home and micro, small and medium enterprises loans.