Investment in Indian financial technology (fintech) companies crossed the $1 billion mark in 2015 to reach $1.2 billion at the end of the year, up from a mere $145.1 million in 2014, a joint survey by PricewaterhouseCoopers (PwC) and the Confederation of Indian Industry (CII) revealed.
A report elaborating the findings of the survey also said numerous multinational banks are looking to invest in fintech start-ups in India. According to the findings, 80% of the survey participants said they would include financial technology as a part of their business strategy.
“Today, fintech companies cater to the entire spectrum of financial services…be it personal finance management or analytics-backed wealth advisory services. Driven by digital technologies, analytics and exceptional customer experience, these companies are well on their way to competing with the behemoths of the industry, both globally and in India,” PwC said in the report.
Even globally, fintech start-ups are attracting more funding from investors. According to the survey, funding given to fintech companies across the globe more than doubled in 2015 to $12.2 billion, from $5.6 billion in the previous year.
The survey suggested that consumer banking, payments and funds transfer would be the most disrupted sectors in the world by 2020. Innovative models like peer-to-peer lending are already threatening to disrupt the way customers borrow. Digital investment advisory models are posing a challenge to banks’ third-party product distribution revenues by providing better technology and analytics-backed advisory services.
“A number of innovative start-ups in India are redefining how banking services are delivered and consumed. A slew of players in the online lending space have capitalised on an online/mobile-first strategy not only to create more seamless customer application experiences, but also to take advantage of additional information available through these channels,” PwC said in the report.
Banks across the country have started realising that simply facilitating commerce will not be enough to remain relevant in the larger scheme of things. They need to revamp their businesses to continue catering to their fast evolving and tech-savvy customer base.
“In short, the fintech sector offers innovation and disruptive technology, while banks can drive customer demand. It is therefore up to banks to leverage these concepts and disruptive ideas from fintech and attempt to adopt them into their mode of banking,” the report said, adding that on analysing their core strengths and weaknesses, banks need to partner with fintech companies to bridge the gaps and create a win-win situation for both the parties.