Global Fintech Industry Sees Robust 14% Revenue Growth, India Shows the Way

The global fintech industry has demonstrated strong growth, with annual revenues increasing by 14% from 2021 to 2023, despite significant shifts in funding and valuations. The report, jointly prepared by Boston Consulting Group (BCG) and QED Investors, highlights India’s emergence as a leader in digital payments and fintech innovation, spurred by investments in digital public infrastructure (DPI).

Governments in countries like Brazil and India have reaped benefits from their investments in integrated DPI, catalyzing rapid growth in digital payments and fostering innovation across sectors, the report notes. In India, for instance, the Unified Payments Interface (UPI) processed a staggering 13.115 billion transactions in FY24, amounting to nearly Rs 200 lakh crore in value. This marks a significant increase from 8.376 billion transactions worth Rs 139 lakh crore in FY23, underscoring the robust adoption of digital payments in the country.

Fintech leaders have credited Prime Minister Narendra Modi’s vision for positioning India at the forefront of digital payments, transforming the fintech landscape into a hub of innovation. India currently hosts over 10,000 fintech companies operating across various sectors, reflecting the nation’s entrepreneurial spirit and appetite for technological advancement.

The BCG report highlights a notable shift within the fintech industry from a ‘growth at all costs’ approach to one focused on profitable growth. On average, fintech companies have improved their margins by 9 percentage points, emphasizing profitability and compliance as essential for sustained investment, operational scaling, and the creation of enduring, valuable enterprises.

“With an annual global profit pool of $3.2 trillion on a base of $14 trillion in total revenue, the financial services industry presents significant opportunities for innovation”, commented Deepak Goyal, Managing Director and Senior Partner at BCG, and Co-Author of the report. He stressed that profitability and compliance are now foundational to fintech success, crucial for attracting continued investment and building scalable operations.

Nigel Morris, Managing Partner at QED Investors, highlighted the industry’s growth potential, projecting that embedded finance alone will become a $320 billion market by 2030. He noted that advancements in Generative AI and the expansion of embedded finance are shaping the next phase of fintech evolution, where winners and losers are increasingly distinct.

The report identifies four key trends expected to drive the fintech sector in the coming years: the rise of embedded finance as a significant market opportunity, the acceleration of connected commerce, the moderate impact of open banking on traditional banking and significant implications for advertising, and the transformative potential of Generative AI in enhancing productivity across financial services.

Overall, the global fintech market continues to expand robustly, growing at a compounded annual growth rate of 21% when excluding crypto and China-exposed fintechs. This growth underscores fintech’s increasing influence and potential to reshape the global financial landscape in the years ahead.

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Source: siliconindia.com

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