BY VICTOR HILL
Opportunities in Focus
India's Fintech Revolution It was bound to happen – and now it has. India's love affair with technology and e-commerce has spawned an explosion in "fintech". We can define fintech as digital technology businesses that compete against (and disrupt) – or sometimes support – the activities of established financial institutions. Businesses in the fintech space serve both customers who already have bank accounts and, in the case of India, the many who do not. Opportunities abound for wily investors in start-ups; but for non-specialist investors there are established players who are poised to profit handsomely from India's fintech revolution.
A New Indian Financial Services Sector Emerges from the Chrysalis of the Old Old India was a conservative country where nothing much happened in a hurry and anything that did happen had to be approved and rubber stamped by several layers of bureaucracy. Banks in Old India were shuffling beasts that behaved more like bureaucracies than facilitators. They were largely state-owned – in fact there were no privately owned banks in India until the 1990s. And they were often under-capitalised and carried large portfolios of non-performing loans (NPLs). Well, things are changing. New India is a country with a can-do finance sector and where fintech start-ups are mushrooming. And Nahendra
Modi's Government is on-side. Many investors are aware that Fintech has been driven in technology hubs in California's Silicon Valley, London's "Silicon Roundabout", Tel Aviv, Sydney, Singapore and Hong Kong, often with important input from leading universities in the host countries. They may not be aware, however, that Bengaluru, Mumbai and Gurgaoni are emerging fintech hubs developing services for a huge market of over 1.2 billion people who share a voracious appetite for technology. Over the last year India's central bank, the Reserve Bank of India (RBI), has granted banking licences to a range of tech-savvy non-bank companies, including telecoms network providers, e-commerce platforms and microfinance companies – even the notoriously lugubrious Indian postal service. In addition,
there have been a myriad of new fintech start-ups. These new players are often serving customers that traditional banks cannot reach. The RBI has two main goals. The first is to boost the lumbering stateowned banks. The second is an audacious programme to promote financial inclusion in a country where hundreds of millions of poor people have never had a bank account, let alone a credit card. According to a recent report published by KPMG Indiaii, there have been an estimated 12,000 new startups in the Fintech space worldwide since the beginning of 2015 attracting a staggering US$19 billion worth of investment. The proportion of this accounted by Indian start-ups is relatively small, though in India, where operating costs are lower than in
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