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Fintech : An Evergreen Sector Getting More Greener (1/2)
Fintech : An Evergreen Sector Getting More Greener (1/2)

June 30, 2021

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Fintech : An Evergreen Sector Getting More Greener (1/2)

 

Off lately I have been talking a lot about growing sectors in the start-up ecosystem. Some of these sectors are totally new while some got the COVID push and came to the limelight. But among all these there is one sector which continues to rule the charts. It not only rule but also keep on evolving itself to reach newer heights. Well, I am talking about a sector called as “Fintech”.

Changing Landscape

Now, how this sector is getting greener and greener because it is getting denser and denser. Many new innovations has happened in this Fintech ecosystem which has led to the addition of more start-ups in this pool. Just to give you an example, earlier Fintech was majorly classified into 3 categories: Digital Payment, Lending and Wealth Management but now the categories have expanded and we have new additions in the form of InsureTech and Platforms.   

Now some of you will say that InsureTech and Platforms were already there in Fintech ecosystem, then how come we can call them new. Yes they were there but there were only a handful of companies in these categories but now it’s a full bunch. With the advent of digital insurance, credit card payment modes, Open APIs, Cryptocurrency etc. these new categories have flourished and took an independent place in the ecosystem.

Fintech 1

Now it’s not only the changing landscape. There are many other factors which lead to the rise of this sector. Some are discussed below:

Funding

FUNDING has never been a problem for this sector even if it’s a pandemic or a mayhem. This sector continues to allure investors in every way. In the pandemic year 2020, Fintech attracted $2.7 bn investment. In the year 2019 also this funding was $3.5 bn. In the initial 5 months of 2021, Fintech has already raised over $2 bn. I think nobody can question the funding euphoria in the Fintech.

Total funding in Fintech over past 4-5 years: Total Funding: $15+ bn+ (since 2014), Last Five years funding: $11.7 bn (2- 2021H1 +2.7+3.2+1.7+2.1)

Unicorns

UNICORN races are also won by Fintech firms only from past many years. 11 out of 53 unicorns in India belong to Fintech while 33% of the unicorns added in 2021 belong to Fintech. It clearly shows that scaling up the business is easy, effective and more sustainable in the Fintech ecosystem.

For unicorn companies incepted post the year 2000: Average time to turn unicorn is ~7.2 years while that of Fintech firms is ~6.1 years

Innovation

INNOVATION is also not far behind in the Fintech landscape. We have numerous new innovative solutions which are impacting the normal lives. From neo banking solutions like Fampay to credit card payment solutions like Cred, many such innovative solutions have spurt in recent years.

For all above, I think a big thanks to continuous UPI surge which rose substantially (~4x in volume) from April 2020 – Nov 2020.

Fintech 2

Fintech is not just any other sector, it has the power to drive the economy. Indian Fintech ecosystem is getting stronger and many more wonders are expected in the near future.

But like any other sector this sectors also has its own struggles and challenges but the way forward is strong and impactful which will continue to make this sector the king of start-up ecosystem. A brief will be covered in my next blog.


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