India’s business-to-business (B2B) fintech sector is on track to cross $20 billion market size by 2030, a report said.
Jointly released by Chiratae Ventures and The Digital Fifth, the report primarily attributed the growth trajectory to key sectors such as banking, lending, payments, and insurance, despite seeing a 53% decrease in funding to $2.4 billion in 2023 on an overall slowdown in funding.
The report—Unlocking Indian Enterprise Fintech—sheds light on essential sectors within B2B software-as-a-service (SaaS), including bankingtech, lendingtech, paytech, regtech, insurtech, and wealthtech.
“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,” Sudhir Sethi, founder and chairman, Chiratae Ventures said.
Chiratae Ventures, a 17-year-old Indian technology venture capital fund, boasts approximately six funds with $1.18 billion assets under management across 130 investments, collaborating with Digital Fifth, a fintech and digital finance consulting and advisory firm.
The driving force behind digital innovation within these sectors lies in groundbreaking public infrastructure initiatives such as the India Stack, Account Aggregator, ONDC, KYC, and DBU regulations.
The recently enacted Digital Personal Data Protection Act (DPDP) of 2023 is expected to compel financial institutions and their partners to revamp their architectures and business models for enhanced data governance
According to the report, the total funding for the fintech segment witnessed a significant decline of 52% to $2.4 billion in 2023, down from $5.1 billion in 2022, with the highest funding recorded in 2021 at $6.9 billion. B2B funding contributed around $0.5 billion in 2023 and $1.7 billion in 2022, marking a notable shift.
“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,” Sameer Singh Jaini, Co-Founder and CEO, Digital Fifth said.
Key players in fintech investment in 2023 included YCombinator, Tiger Global, and 9Uniconrs, with Chiratae Ventures also making investments in firms like Kristal, Fibe, ShopSe, and CreditMantri.
The venture firm reiterated its commitment to continue investing in early-stage startups throughout 2024.
The report underscores collaborative efforts between fintechs and embedded finance players in enhancing customer engagement through partnerships with banks.
It emphasizes significant investments by large banks in technology to scale their digital businesses, which is gradually extending to complex business banking areas such as trade finance and treasury.
Moreover, the report highlights the growth prospects in India’s life insurance and wealth management sectors, citing an expected reach of USD 200 billion by 2027 in the former and a shift towards an investment mindset in the latter, with increasing asset classes and tech investments.
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