Indian Enterprise FinTech Industry Projected to Reach USD 20 Bn by 2030, says Report by Chiratae Ventures and The Digital Fifth

• Banks and Financial Institutions moving towards 100% digital for the Retail and MSME segments over the next decade.
• Major innovations in the Indian BFSI industry have been propelled by the regulators and public infrastructure such as IndiaStack, Account Aggregator, and ONDC.
• Enterprise FinTech startups are expected to leverage this burgeoning opportunity over the coming decades.

 Chiratae Ventures, in collaboration with The Digital Fifth, has released a comprehensive report titled ‘Unlocking Indian Enterprise Fintech Market.’ As per the 2024 FinTech Sector report, Enterprise FinTechs are poised to expand, with projections estimating a market size of approximately USD 20 billion by 2030. This report focuses on Enterprise FinTechs that play a pivotal role in streamlining product, sales and service delivery as well as enhancing efficiency within the BFSI segment in six essential sectors: BankingTech, LendingTech, PayTech, RegTech, InsurTech and WealthTech.

Sudhir Sethi, Founder and Chairman, Chiratae Ventures on the launch of the report, shared, “Chiratae projects the Enterprise FinTech industry to be over $20 bn opportunity by 2030, and with FinTech being a focus area, we are keen to work with founders transforming India’s Financial Services. Chiratae has a successful history of investing in innovative category builders in FinTech, such as Fibe in Consumer Credit, Vayana Network in Supply Chain Financing, GetVantage in Revenue Based Financing, PolicyBazaar in Insurance distribution, to name a few. With our cumulative learnings and experiences with the traditional Financial Services as well as FinTechs, we are excited to share our insights via this Enterprise FinTech report.”

The Enterprise FinTech Opportunity

The BFSI industry is undergoing a rapid transformation amidst demand for lower costs, scale, innovation, and agility. Instead of banks viewing technology as a cost centre, the thought process has started to realign, and it is now being seen as a driver to manage profit and loss as well as reduce the cost-to-income ratio. Investment in technology across financial segments is expected to witness high growth over the coming decade. The backbone of this digital innovation is revolutionary with public infrastructure like the India Stack, Account Aggregator, ONDC, KYC and DBU regulations. The recent Digital Personal Data Protection Act (DPDP) of 2023 will also push financial institutions and their partners to reorient their architecture and business for better data governance.

This digitisation has led to the growth of Embedded Finance platforms and increased investments in API-enabled infrastructure. This shift towards Embedded Finance providers is creating an opportunity for Anything As A Service i.e. XaaS. Banking (BaaS), Lending (LaaS) and Payments (PaaS), have already emerged as key areas of investment for VCs. Digitisation is underway in the retail business for Saving Accounts, Credit Cards and Personal Loans and has just begun for the MSME and Corporate segments. According to the report, banks and NBFCs will evolve to become fully digital for the Retail and MSME segments in the next 10 years.

TC Meenakshisundaram, Founder and Vice-Chairman added, “Financial Sector Enterprises are at a cusp of digital transformation, and with regulators’ continued support, FinTechs building technology-led solutions will play a pivotal role and capture this burgeoning opportunity. We expect Chiratae to play an active part in the Enterprise FinTech space in the coming four to five years.”

Changing technology landscape across Enterprise FinTech

Large banks have started investing heavily in technology and are focusing on scaling their digital business which is being replicated by small and mid-sized banks. FinTechs and Embedded Finance players are driving customer engagement in partnership with banks, and this digital push is gradually expanding to complex business banking, including Trade Finance and Treasury. Meanwhile, regulatory frameworks around Digital Lending have continued to evolve and are positively influencing technology spend by lenders. Lenders are experimenting with innovations like Pre-Approved Loans, B2B BNPL, Supply Chain Finance, Secured Credit, etc.

India is swiftly transforming into a less cash economy and will aim to eliminate it over the next decade. Payments innovations have been driven by regulatory initiatives and there will be a demand for agile Payment as a Service (PaaS) platform to orchestrate transactions with multiple bank payment infrastructures. Factors like the Government’s Digital India initiative, India Stack APIs and the regulator’s focus on consumer protection have driven demand for RegTech solutions, ensuring compliance, data security and seamless transactions across the FinTech ecosystem. India’s Wealth Management sector is experiencing growth with increasing asset classes, new entrants, and tech investments. The country has shifted to an investment mindset, with a declining focus on traditional physical assets. India is the 9th largest Life Insurance market globally and is expected to reach USD 200 bn by 2027. Technological advancements such IoT, telematics, and surveyors boost trust in insurance, reduce fraud, realign workloads, and improve decision-making in claims and underwriting.

Sameer Singh Jaini, Co-Founder and CEO, The Digital Fifth said, “The tide of change is upon us, and it’s happening right now. The last decade witnessed a continuous influx of funds into Enterprise FinTechs. This, coupled with the entry of new-age players in various Enterprise segments, is shedding light on the previously untapped potential of this market. The distinctiveness of this sector lies in its capacity for multiple contenders to drive the market. Every breakthrough in this sector ripples through the BFSI realm, advancing it tenfold.”

About Chiratae Ventures:

Chiratae Ventures is a 17-year-old Indian technology venture capital fund advisor, having advised funds that collectively (across six funds) have $1.18 Bn AUM, 130+ investments, 50 exits, 9 Unicorns, 3 IPOs and a track record of having returned capital to LPs in each of the last 12 years. The funds advised by Chiratae Ventures have investments across sectors such as Consumer-Tech, SaaS, Fintech, and Healthtech and have been early backers of companies such as Bizongo, Fibe, FirstCry, Flipkart, Lenskart, Myntra, Pixis, PolicyBazaar and Uniphore, amongst many others.

About The Digital Fifth

The Digital Fifth is Asia’s first Fintech and Digital Finance Consulting & Advisory firm, driving change in the fintech landscape as an integral part of the ecosystem. They provide specialized consulting services to the BFSI sector, including digital and open banking advisory, startup guidance, technical due diligence, and security and compliance services. Their core focus lies in driving Digital Transformation, fostering Strategic Partnerships, and implementing cutting-edge solutions across the BFSI segment.