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A Quick Overview of the Fintech Landscape in India

May 3, 2016

9:00 pm

The market for financial services in India is huge and untapped. India now accounts for nearly a fifth of the world’s population without bank accounts. However it’s also one of the largest growing mobile markets in the worlds with 80% of adults having a mobile phone that can access the Internet. For savvy fintech entrepreneurs, that means there’s a huge market gap and a great field of possibilities ahead.

In fact, the Indian government is highly interested in improving the financial sector. This is evident from their recently rolled out Unified Payments Interface system (UPI) – a round-the-clock funds transfer service, which will encourage the population to go cashless. The app basically replaces a traditional debit card and Internet banking.

But who are the biggest independent players at Indian fintech scene?

Top Fintech Startups in India

CreditSudhaar is an online credit score calculator and advisory service. They now boast customers from 253 cities nationwide. Users can shop around for various credit and debit card offers, apply for different types of loans, and find the best insurance deals. CreditSudhaar is the first startup in the market to offer similar types of services, which are already rather popular in the US and are now entering the European market.

Mswipe is a mobile POS solution designed for SMEs and enterprise clients.  It allows users to accept credit card payments through smartphones or ordinary feature phones. Currently, the company boasts over 30,000 merchants including big names like McDonald’s, Asian Paints and Reliance. Taking the recent funding round of $25 million into account, it’s safe to assume that the startup will continue their expansion and release new features this year.

Milaap is India’s largest peer-to-peer micro-lending/crowdfunding platform open to both personal and social projects. You can lend or donate money to projects you support nationwide or create your personal fundraising campaign. So far, the company has distributed over $6.95 millions for projects ranging from education to sanitation to small enterprise development.

Key Fintech Investors

Obviously, the development of the fintech niche would be impossible without a steady in-flow of investment. Goldman Sachs Principal Strategic Investments Group – an investment group with a fancy portfolio of 75 fintech startups — plans to enter the Indian fintech market later this year . In fact, 2015 has already been a successful year for the ecosystem with over $1.2b in funding distributed among 174 companies. A few VC funds worth mentioning include:

500 Kulfi is a $25 million fund created by 500 Startups for the Indian market. Early stage fintech startups will receive special attention.

IDG Ventures India now boasts six fintech companies in their portfolio and won’t likely to stop any time soon.

Sequoia Capital has previously invested $25 millions to CitrusPay and is now rumored to search for new additions to their fintech portfolio at the local market.

Challenges and Roadblocks

While the Indian market is large and warmed up for financial innovations, startups operating in this niche also face a unique set of challenges. While the government does try to facilitate the emergence of new financial technologies, the market regulations are still tough. In addition to that, access to consumer data is scarce due to the fact that India is still a case-centric country, leading to a high risk for fraud and loops in security. A lack of consumer education exists in India, which prevents everyday people from getting on board. But hopefully, these challenges and roadblocks won’t get in the way of a financial revolution in one of the world’s largest countries. 

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Abdullahi Muhammed is a writer, difference maker and entrepreneur. He is the founder and CEO of Oxygenmat and he writes for Forbes, Entrepreneur, The Huffington Post and a few other sites.