India is set for a fintech boom over the next 10 years, propped by factors such as its demography, improving digitisation trends, tech savviness and enablers such as Aadhaar or the Unified Payments Interface (UPI).
Fintech. which refers to the use of technology in financial services, has witnessed robust growth over the past few years following the extensive use of internet and smartphones. The segment initially offered services such as mobile or DTH recharges or digital wallets. The service bouquet has now extended to lending, insurance and even wealth management.
According to a BofA Securities report, the solid growth rate seen so far will sustain over the next decade because of factors such as low per capita (which will grow as the economy recovers), the demographic dividend in the form of more than 400 million millenials, more and more people taking to digitisation, a maturing ecosystem and enablers such as Aadhaar.
The brokerage estimates the transaction volume in the digital payment market to grow 3.8 times to around $300 billion in 2024-25 from $80 billion in 2020-21 .
Within fintech, in the B2C (business to consumer) segment, there are three categories. The first category comprises close to 25 million of the workforce who fall in the top bracket. Most of them are early adopters and are less price sensitive. The next 25 million workforce are gradually adopting technology and transacting online. Of the rest, there are 200-300 million people who may transition into middle-class and then there are those who rely on direct benefit transfer which are unlikely to be the target market for fintechs.
