The Indian fintech ecosystem has generated over $100 billion in value in the past 10 years and is currently midway to potentially create 2-3x value in the next decade, a report by global consulting firm BCG and investment firm Z47 (formerly Matrix Partners India) said on Thursday. As of July 2024, India, among the top three fintech destinations in the world, had 12,370 fintech enterprises with a 12 per cent growth since 2019 and secured $26 billion in the past five years.
The ecosystem, with $25 billion in revenue in 2023, currently has 24 unicorns in comparison to 28 fintech unicorns in the UK, 131 in the US and 22 in China. Moreover, there has been a 3.5x growth in the number of fintech minicorns (private market valuation of over $1 million) and 3x growth in unicorns ($1 billion valuation) and soonicorns (closer to unicorn status) in the past four years.
Speaking on the report State of the Fintech Union 2024, Yashraj Erande Global Leader – Fintech India Leader, Financial Institutions, BCG said the (fintech) ecosystem has also matured significantly with over 35 fintechs at more than $500 million valuation, compared to only 13 in 2020.
“We are now in the “middle journey” of growth, with a long roadmap ahead to stabilize and scale. As we continue to witness this transformation, it’s essential to probe into the rising strategic needs of this sector and identify initiatives companies must execute to catapult their growth journey and manage potential risk,” said Erande.
Some of the top Indian fintechs are Paytm, PhonePe, Zerodha, Razorpay, Cred, Groww, Acko, Pine Labs, MobiKwik, BharatPe, Open, Oxyzo, Clear, Policybazaar, etc.
The next phase of growth for Indian fintechs is expected to come from rural and semi-urban areas which remain highly underserved, according to the report. Serving rural and semi-urban areas would require phygital model with fintech leveraging ‘feet-on-street’ distribution and offline distributors enhancing operations with technology, BCG report added.
With the growing and deepening fintech ecosystem, enterprises are looking to go public over the next few years. According to the report, several fintechs out of over 35 fintech firms in the country, valued at over $500 million, would be contemplating or approaching IPO in the coming years.
However, the report noted that around 70 per cent of fintechs listed in India have had their share prices decline in six months of listing, highlighting the need for sustained performance.