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Foreign investors look to tap into the Indian fin-tech opportunity
The FinTech sector saw a decrease in global funding in 2016, especially in Europe and the US. VC-backed global FinTech investment in 2016 was $12.7 billion, which was down 13% from 2015’s record high of $14.6 billion. On the other hand, FinTech investments in Asia increased to $5.4 billion in 2016, up 12.5% from $4.8 billion in 2015, driven mainly by China and India.
Research conducted by Startupbootcamp FinTech Mumbai and PwC on the Indian FinTech ecosystem has found that India’s FinTech landscape has witnessed strong user adoption through 2016, driven largely by the payments sector. Alternate lending also enjoyed a strong year, fueled by the large number of unbanked, new-to-bank, and under-banked consumers.
The insights in the report were based on the responses of over 45 senior financial services and FinTech executives from across India who participated in PwC’s Global FinTech Survey 2017.
Some of the key findings include
95% of incumbents in the financial services industry in India believe that the innovation they seek can be brought about by engaging in FinTech partnerships.
Partnerships with FinTech companies in India are expected to go up from 42% in 2016 to 95% this year on average.
84% of the respondents said that disruption is at the heart of their strategy. They are seeking to innovate in myriad ways to stay ahead of the curve of FinTech disruption.
56% of the respondents see FinTech as an opportunity to expand products and services, improve retention and leverage existing data and analytics platforms
Also, most traditional players expect some real returns from their FinTech expeditions. Although the level of investment each one of them is willing to make varies greatly, on an average, they expect an RoI of around 29% on all of their FinTech investments.
Despite a significant pullback in global investments in the fintech sector last year, the Asian opportunity remains promising. In particular, in India, regulatory support, financial inclusion and demand for the digitalization of services will likely boost investment going forward.