‘TN needs a fintech-specific policy, enabling environment for driving the sector’

With over $1 billion in revenue in FY20, Chennai has positioned itself as the Software-as-a-Service (SaaS) capital of India. Also, the city is also standing at a unique position to lead the way for SaaS + Fintech integration due to its native advantage such as low-cost infrastructure, low employee churn and a large under-penetrated financial ecosystem, according to the Fintech Yatra founder Abhishant Pant.

Started in 2018, The Fintech Yatra is a ground up research programme aimed at understanding the domestic fintech ecosystem from the grass-root level, and is the only government-funded fintech accelerator in the country. The platform connects start-ups and financial institutions, helps them in fund raising and connect with incubators or accelerators.

Pant, who was in Chennai recently as part of Fintech Yatra 2020, said, “SaaS+Fintech will be a big play and Chennai - as a SaaS capital - should essentially roll up its sleeves and start playing that role at the earliest before someone else takes it up.”

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Chennai advantage

Highlighting some of the advantages of the city, he said, Chennai, for long, has been the back-office hub for leading global banks besides having a number of knowledge centres like Wells Fargo, Paypal and the highest number of financial institutions headquartered outside of Mumbai.

“For instance, a SaaS provider offering invoice digitisation solutions for an SME, can partner with a fintech to offer invoice discounting by integrating the bank APIs,” Pant said, adding, “Through the system-level integration using SaaS solutions, banks can have a real-time view of the business.”

As part of Fintech Yatra, Pant and his team travel 11,000 kilometers across the country every year covering 19 cities and 21 villages to meet fintech start-ups and merchants to capture the evolution of digital economy in India.

Fintech Yatra’s report, ‘Fintech Journey: The 2020 Origin’, released recently noted that of the 2,200-plus fintech start-ups in India, 28 per cent are located in Bengaluru followed by Mumbai (24 per cent) and NCR (21 per cent). While Chennai accounts only for 6 per cent. The report covered 967 start-ups across the country.

Policy, enabling environment needed

Pant said the lower number of fintechs in Chennai can be attributed to lack of venture capital funding ecosystem, absence of fintech-specific policy support from the government (unlike in Maharashtra or Karnataka) and missing ecosystem enablement among other reasons.

“There are a handful of VCs in Chennai who provide seed-funding. If we have a lesser number of investors in the market it will directly impact the possibility of funding and thereby growth,” Pant said.

Bengaluru, known as the fintech capital of India, also has the largest number of VCs available across the value chain, according to the report.

“But the amazing thing about Chennai ecosystem is that south-based financial institutions are largely under penetrated from a digital or fintech point of view,” Pant said, adding, “anyone who starts from Chennai has the advantage of low-cost infrastructure, low employee churning and the availability of second largest financial ecosystem outside of Mumbai.”

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