Multi-billion opportunity: Enterprise financial technology (FinTech) players are estimated to reach a market size of $20 billion by 2030, as per a report by Chiratae Ventures and The Digital Fifth.

The report focuses on enterprises in the fintech space for streamlining product, sales and service delivery as well as enhancing efficiency within the BFSI segment in sectors such as BankingTech, LendingTech, PayTech, RegTech, InsurTech and WealthTech.

The opportunity is set to expand on the back of public infrastructure such as IndiaStack, Account Aggregator, and the Open Network for Digital Commerce (ONDC).

India being the 9th largest Life Insurance market globally is expected to reach $200 billion by 2027 with technological advancements such IoT, telematics, and surveyors boosting trust in insurance, the report suggests. 

The BFSI industry is undergoing a rapid transformation amidst demand for lower costs, scale, innovation, and agility, with banks now viewing technology as a means to reduce the cost-to-income ration instead of a mere cost centre.

Sameer Singh Jaini, Co-Founder and CEO, The Digital Fifth said the last decade witnessed a continuous influx of funds into Enterprise FinTechs coupled with new-age players entering the market in various Enterprise segments reflecting the untapped potential of this market. 

"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,” Jaini added.

 Investment in technology across financial segments is expected to witness high growth over the coming decade. The recent Digital Personal Data Protection Act (DPDP) of 2023 will also push financial institutions and their partners to reorient their architecture and business for better data governance. 

This digitisation has led to the growth of embedded finance platforms with increased investments in API-enabled infrastructure, thereby creating an opportunity for Anything As A Service (XaaS). Notably, Banking (BaaS), Lending (LaaS) and Payments (PaaS) already emerging as key areas of investment for VCs. 

While digitisation is on track for saving accounts, credit cards and personal loans, banks and NBFCs will only become fully digital for the retail and MSME segments in the next 10 years, the report added.

TC Meenakshisundaram, Founder and Vice-Chairman of Chiratae Ventures said, “Financial Sector Enterprises are at a cusp of digital transformation, and with regulators’ continued support, FinTechs building technology-led solutions will play a pivotal role and capture this burgeoning opportunity.” 

As for regulatory frameworks around Digital Lending, the landscape has continued to evolve with lenders experimenting with innovations like Pre-Approved Loans, B2B BNPL, Supply Chain Finance, Secured Credit, etc. While large banks have started investing heavily in technology and are focusing on scaling their digital businesses, small and mid-sized banks are replicating this change. 

FinTechs and Embedded Finance players are partnering with banks, expanding to complex business banking such as Trade Finance and Treasury. 

The report also predicts that India is swiftly transforming into a less cash economy, with an aim to eliminate it over the next decade.