Technology venture capital firm Chiratae Ventures, in collaboration with fintech consulting firm The Digital Fifth, has released a report on India’s enterprise fintech market. According to the report, the enterprise fintech industry is estimated to have a market size of approximately $20 billion by 2030.
The report focuses on enterprise fintechs that play a key role in streamlining product, sales and service delivery as well as enhancing efficiency in six sectors within the banking, financial services and insurance industry—BankingTech, LendingTech, PayTech, RegTech, InsurTech and WealthTech.
Investment in technology across financial segments is expected to witness high growth over the coming decade on the back of public infrastructure like the India Stack, Account Aggregator, ONDC, KYC and DBU regulations. The Digital Personal Data Protection Act of 2023 will also push financial institutions and their partners to reframe their architecture and business for better data governance, the report indicated.
This digitisation has led to the growth of embedded finance platforms and increased investments in API-enabled infrastructure. Anything-as-a-Service, Banking-as-a-Service, Lending-as-a-Service and Payments-as-a-Service have emerged as key areas of investment for VCs. Digitisation is underway in the retail business for saving accounts, credit cards and personal loans, and has begun for the micro, small and medium enterprises and corporate segments. According to the report, banks and NBFCs will move towards 100% digital for the retail and MSME segments over the next 10 years.
TC Meenakshisundaram, founder and vice-chairman, Chiratae Ventures, said, “Financial sector enterprises are at a cusp of digital transformation, and with regulators’ continued support, fintechs building technology-led solutions will play a pivotal role and capture this burgeoning opportunity.”
According to the report, large banks have started investing in technology and are focusing on scaling their digital business, which is being replicated by small and mid-sized banks. Fintechs and embedded finance players are driving customer engagement in partnership with banks, and this digital push is gradually expanding to complex business banking, including trade finance and treasury.
Regulatory frameworks around digital lending are evolving and positively influencing technology spending by lenders. Lenders are experimenting with products such as pre-approved loans, B2B buy now, pay later, supply chain finance and secured credit, the report indicated.
India is shifting into a less-cash economy and will aim to eliminate it over the next decade, the report noted. There will be a demand for agile Payment-as-a-Service platforms to orchestrate transactions with multiple bank payment infrastructures. Factors like the government’s Digital India initiative, India Stack APIs and the regulator’s focus on consumer protection have driven demand for RegTech solutions.
According to the report, India’s wealth management sector is experiencing growth with increasing asset classes, new entrants and tech investments. India is the ninth-largest life insurance market globally and is expected to reach $200 billion by 2027. Technological advancements such as internet of things, telematics and surveyors are helping boost trust in insurance, reduce fraud, realign workloads and improve decision-making in claims and underwriting.
“The last decade witnessed a continuous influx of funds into enterprise fintechs. This, coupled with the entry of new-age players in various enterprise segments, is shedding light on the previously untapped potential of this market. Every breakthrough in this sector ripples through the BFSI realm, advancing it tenfold,”said Sameer Singh Jaini, co-founder and CEO, The Digital Fifth.