You can be on Entrepreneur’s cover!

Planning to Start a Fintech Company? Here is What You Need to Know FinTech in India has seen phenomenal growth over the past three years and is currently the top grossing sector

By Jay Krishnan

Opinions expressed by Entrepreneur contributors are their own.

You're reading Entrepreneur India, an international franchise of Entrepreneur Media.


If you're not a fan of hunting and gathering, you're probably glad we invented trade, all those millennia ago. Our ancestors got buns for apples, sold cattle in exchange for homes, and learnt tradecraft for the cost of a shirt. In those initial transactions, we began the first steps of walking down a pathway that would ultimately create economies, markets, and financial institutions that would be challenged, redefined and developed for thousands of years.

When we finally thought that we knew what was going on, everything is unrecognizable again (thank you, technology!).

Financial Technology (FinTech) has been evolving from its early stages to becoming the catalyst that is forcing us to re-evaluate the traditional financial and banking institutions. They may have been around for hundreds of years, dealing in conventional currencies; now we're reassessing both.

FinTech has been evolving since 1967 when Barclays introduced the world's first ATM. From then on, it was a world for internet banking, PayPal and even Cryptocurrencies.

Rupee it after me:

In India, the majority of the innovation spearheaded by startups making a radical transformation in financial services via technology. The sheer size of the population in India, at 1.3 billion people, is what makes the country a ripe market for FinTech. There is an excellent opportunity for financial inclusion, growing digital penetration, and 76% digital literacy- the highest in the world.

India has a 59% FinTech adoption rate and its ranked second, globally. The primary reason for this surprising figure is that more than 79% of new FinTech startups see traditional incumbents as partners who can collaborate for mutually beneficial ventures, rather than as competition. This favourable collaborative ecosystem that does away with competition is a significant boost to all involved parties and paves the way for unprecedented innovation and evolution of financial technology.

And the big deal is:

40% of India's population is unbanked or underbanked, and as a young nation witnessing high growth in digital penetration, it makes India an exciting global space for Fintech. Thanks to government policies such as "Pradhan Mantri Jan-Dhan Yojana" (PMJDY), between 2014 and 2017, financial inclusion has grown from 54% to 78%. In addition to PMJDY, the Indian government has enacted initiatives to expand the quality and delivery of Digital Financial Services (DFS) through Aadhaar biometric identification. Aadhaar cards are linked with mobile phones, SIM cards and financial service accounts to improve delivery of government schemes and benefits.

According to FII, 75% of adults have digital access to a financial account, and 54% of adults are active users (in the past 90 days) of their formal financial accounts.

The RBI regulates the mobile and online payment sector under the Payments and Settlement Act of 2007 and the Payment and Regulations Act, 2008. Furthermore, the Indian regulatory bodies are conscious and sensitive to changes in the technological space, which ensures that they are responsive to constant innovation from FinTech ventures. The Unified Payments Interface (UPI) introduced by the National Payments Corporation has also opened up a plethora of opportunities in the FinTech and payments sphere.

FinTech in India has seen phenomenal growth over the past three years and is currently the top grossing sector in terms of funding, taking away $631.29 Mn across 70 deals in the first half of 2018.

Based on the nature of the technology and how the Indian market has been responding to it, the government has been able to take initiatives to set up regulations and provide infrastructural support. At the same time, banks and other financial institutions are taking a keen interest in the FinTech ecosystem, regularly seeking collaborations with startups to innovate for themselves.

A panorama of opportunity:

In 2015, more than 12,000 startups emerged across the world and attracted about USD 19 billion in investments. Steadily rising at a Compound Annual Growth Rate (CAGR) of 7.1%, the global FinTch market will hit USD 45 billion by 2020.

In relative terms, FinTech is a new industry in India. Around 64% of companies in the sector have been in business for a period close to 36 months only, with a median employee strength of 14. Besides, 61% of founders of these companies are below the age of 40.

The young nature of the Indian FinTech sector has its pros and cons. On the one hand, there is a lot of optimism in the industry attributed to new companies that generate investor and user interest alike. While on the other, the new and nascent nature of these new FinTech companies translates to only 7% of the total being profitable, as of March 2018.

India is a petri-dish for startups, rapidly evolving to into the ecosystem that provides space for businesses to grow big. There is a wide range of unexplored segments in the diversity that India offers, and there are startups that have also innovated for foreign markets- "Think locally, build globally," as they say. As of FY2016, Indian FinTech startups were valued at USD 1.2 billion and is projected to be double the value by 2020.

The Indian economy was always cash driven, but the demonetization of higher denomination currency notes was catalytic for the FinTech opportunity; e-wallets, lending, and insurance lead from the front and are followed by a broader range of products and services.

With the advent of Machine Learning and able Artificial Intelligence, there have been exponential advances in all spheres of technology, and FinTech is no exception. Paypal's fraud management filters that rely on Artificial intelligence, chatbots to resolve customer queries intelligently in real-time, are some of the many breakthroughs that technology has brought. The development of Blockchain and it's exhibited usage has already boosted the FinTech ecosystem with optimism, with Blockchain based FinTech startups getting reportedly 350% more funding than their traditional counterparts.

The long-term future looks bright as well with Quantum Computing showing promise with companies like D-Wave already beta testing revolutionary new computing architectures. FinTech is at the forefront of innovation and developments in Quantum Computing can prove to be innovative for the sector.

Jay Krishnan

CEO, T-Hub

Jay Krishnan is Chief Executive Officer and Managing Partner at T-Hub, India’s largest start-up incubator and corporate innovation programme. He possesses entrepreneurial and corporate work experience of 20 years. He is a founder of Radifinity, an Industrial IoT start-up. In 2010, Radifinity was acquired through a sale of assets by the Aditya Birla Group and integrated into the Aditya Birla Minacs fold. Over the past 20 years, he has worked in various capacities, including in managing programmes, new product introduction, product management, and global partnerships at Juniper Networks and Cisco Systems—in Boston, San Jose, and Bangalore. He has received numerous international awards, including from CleanTech Open, ICSPAT, TechConnect, Make a Difference, StartMeUp, and Red Herring.
Business News

Microsoft's New AI Can Make Photographs Sing and Talk — and It Already Has the Mona Lisa Lip-Syncing

The VASA-1 AI model was not trained on the Mona Lisa but could animate it anyway.

Business News

James Clear Explains Why the 'Two Minute Rule' Is the Key to Long-Term Habit Building

The hardest step is usually the first one, he says. So make it short.


Get Your Business a One-Year Sam's Club Membership for Just $14

Shop for office essentials, lunch for the team, appliances, electronics, and more.

Science & Technology

AI Will Radically Transform the Workplace — Here's How HR Teams Can Prepare for It

HR intrapreneurs are emerging as key drivers of AI reskilling, thoughtful organizational restructuring and ethical integration, shaping an inclusive future where technology enhances both efficiency and employee development.

Business News

Some Costco Stores Are Now Selling a Frozen Item That Looks Just Like a Trader Joe's Fan Favorite

The Frozen Kimbap is a Trader Joe's cult favorite, and now a version can be found at Costco, too.