BFSI – Fintech & Financial Services

The Fintech sector in India has witnessed funding accounting to 14% share of Global Funding. India ranks #2 on Deal Volume. The Fintech Market Opportunity is estimated to be USD 2.1 Tn by 2030. Indian fintechs were the 2nd most funded startup sector in India in 2022. Indian Fintech startups raised USD 5.65 Bn in 2022. The total number of unique institutional investors in Indian fintech almost doubled between 2021 and 2022, rising from 535 to 1019 respectively.

Digital Payments

• Volume of UPI transactions increased 200x from January 2017 (4.5 Mn) to January 2023 (10 Bn), and the Value increased 600x during the same period
• UPI recorded the highest ever volume of transactions in April 2023 – 8.8 Bn
• Daily transactions on the UPI platform can touch 1 Bn by 2025
• Digital Payments increased by 76% in transactions and 91% in value (2022)
• A pan-India digital payments survey (covering 90,000 respondents) revealed that 42% of respondents have used digital payments
• Acceptance of digital payments infrastructure has increased from 170 Mn touch points to 260 Mn touch points (increase of 53%)

Regulatory landscape

• India Stack: A set of APIs that allows governments, businesses, startups and developers to utilise a unique digital infrastructure. One of the most important digital initiatives undertaken globally, aimed at putting up a public digital infrastructure based on open APIs to promote public and private digital initiatives. The ‘Indiastack.global’ website serves as a single repository of all major projects on India Stack.
• JAM Trinity:
  • Jan Dhan Yojana: The world’s largest financial inclusion initiative, “Jan Dhan Yojna”, has helped in new bank account enrolment of over 480 Mn beneficiaries
  • Aadhaar: The world’s largest biometric identification system (1.3+ Bn Aadhaars generated so far)
  • Mobile connectivity: India has the 2nd highest number of smartphone users
• Cross border linkage of India’s fast payment systems (UPI & RuPay network – QR code & P2M based payments) with other countries, is aiding in enhancing the global footprint.
• Financial Inclusion: India’s financial inclusion has improved significantly over calendar years 2014 to 2021 as adult population with bank accounts increased from 53% to 78%.
• Financial Literacy: The RBI has set up the National Centre for Financial Education and plans to expand the reach of Centres for Financial Literacy (CFLs) to every block of the. These steps aim to promote financial education across India for all sections of the population.
• Introduction of UPI123Pay and UPI Lite: Allows access to UPI to 400+ Mn feature phone subscribers and facilitates low value transactions in offline mode through on-device wallet.
• RBI Payments Vision 2025: The RBI plans to achieve certain outcomes such as 3x increase in number of digital payment transactions, increase of registered customer base for mobile based transactions by 50% CAGR, increase in PPI transactions by 150%, increase of ard acceptance infrastructure to 25 Mn by 2025.
• Account Aggregator Framework (AA): AA is an advanced framework of sharing consent based financial information between Financial Information Providers (FIPs) and Financial Information Users (FIUs). With 23 Banks onboarded to the AA framework, more than 1.1 Bn bank accounts are eligible to share data on AA. 3.3 Mn users have linked their accounts on the AA framework and shared data. RBI has also notified GSTN as FIP which will enable digital invoice financing and provide much-needed credit to the MSME sector.