Indian fintechs are expected to grow at a rate of over 35 per cent annually, to reach over $190 billion by 2030, according to a recent report from venture capital firm Matrix Partners and consulting firm Boston Consulting Group.

The industry’s revenues stood at $17 billion in 2022.

The report ‘State of the Fintech Union 2023’, also highlighted that in terms of capital momentum, the first half of CY23 has shown signs of recovery with a 33 per cent higher momentum as compared to H2 CY22. India’s differentiated tech infrastructure and operating models are gaining global recognition.

Focus areas

The report stated that as the industry matures, it will look at ‘meaningful scale’ and closely track profits as a metric. It added that product expansion, apart from profitability, was the top focus area for fintech executives.

The report surveyed over 70 founders and investors across fintech categories such as insurtech, wealthtech, payments and lending, among others.

The report added that over 40 per cent of fintechs surveyed were looking at a reduction of customer acquisition and marketing costs in a bid to conserve cash and achieve profitability, without compromising on their growth plans.

“The Indian fintech ecosystem is moving from the 0-1 phase of finding PMF to the 1-10 middle journey. Fintechs are being asked tough questions, and rightly so, on building profitable, sustainable business models with future-proof compliance and governance. Through our work, we are confident that fintechs are up for this challenge, and they’re investing in the right long-term capabilities that help them scale with a strong foundation. We are already seeing scaled companies preparing to go IPO and look forward to their success,” said Vikram Vaidyanathan, Managing Director, Matrix Partners India.

The focus on profitability and sustainability also comes as technology companies globally continue to face a funding drought, with the worsening of macroeconomic conditions and inflationary headwinds.

The report also revealed that 85 per cent of investors in the fintech sector now cite profitability as their top criterion, followed by growth.

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