Fintech is preparing to produce the Largest Number Of Unicorns In India


With 33 unicorns in the sector Fintech is set to create the highest number of unicorns in the coming years.

Startups in Fintech have raised $24 billion in capital between 2014 and the first quarter of 2022, making them second only to ecommerce.

Lendingtech represents the biggest market opportunity in 2025 ($614 Billion) and is following by the insurtech industry ($339 Billion) along with payment technology ($208 Bn) within fintech.

Fintech is among the largest sectors of the startup ecosystem of India in terms of the amount of unicorns that are created. It has 22 of the 105 unicorns in the fintech sector this sector is second to ecommerce when it comes to the number of unicorns created.

According to Inc42’s ‘ The State of Indian Startup Ecosystem Report 2022 With 33 unicorns, India’s fintech industry is set to produce the most unicorns in India in the coming years.

The startup ecosystem in India has more than 4.2K fintech-related startups including 647 ventures that have been funded. The startups have raised close to $24 billion in funds from 2014 until the beginning quarter of 2022. Fintech, too, comes second to only ecommerce terms of the amount of money that has been raised.

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Paytm was the first Indian fintech unicorn, which was able to achieve the valuation of $1 Billion in the year 2015. Since that time, the fintech market has seen 21 unicorns added which will be 11 in 2021. In the first quarter of 2018 there are four fintech unicorns including the most recent is the credit card company OneCard in July 2022..

The feat becomes more impressive when one realizes the fact that India created 44 unicorns over the course of 2021. This means that one out of every four unicorns created in 2021 was a fintech unicorn.

If the current trends in the Indian fintech startup ecosystem are any indication this sector is set to surpass the rest regarding the amount of unicorns that are created.

Opportunities For Future Fintech Unicorns

Overall, fintech has the potential for a potential market of $1.3 Tn by 2025 according to Inc42. Inc42 research report.

Within the diverse subsectors of fintech that include lendingtech, it is the one with the largest market opportunity for 2025 ($614 Bn) and is then insurtech ($339 Billion) along with the payments sector ($208 billion). The market potential of these three areas is directly linked to the gap between supply and demand.

At the Economic Pitch Fintech Summit 2022, Nithin Kamath, the founder and CEO of the investment tech company Zerodha explained that lending is among the largest opportunities in Fintech. “That is a huge opportunity, as the majority of people in India don’t have enough cash. What is the best way for someone to underwrite the risk is an additional problem, but it is huge risk,” stated the Zerodha CEO.

The argument is supported by the reality that the penetration of credit cards in India is at 5.55 percent as per RBI statistics. This is the reason lendingtech is projected to expand at a rate of 32 percent between 2021-2025. For lenders like Fi, Uni, Lendingkart, Axio, Fino and other lenders that could be an exciting time for you.

Insurtech, which includes lendingtech, is also a sector in which the penetration rate within India is extremely low. Hence it is the fastest growing sector in the fintech industry in the country.

Based on IRDAI information the percentage of insurance coverage in India was 4.2 percent in FY21. After the COVID-19 epidemic, insurance expenditure has increased for the population of India and premiums for insurance in the life insurance category set to be at an INR of 24, Lakh Cr ($317.98 Bn) by the end of FY31..

The market for payments has seen an exponential increase since the launch of UPI in the year 2016. According to the most recent data from the NPCI, UPI transactions have surpassed the 6 billion mark by July 20, 2022. In the near future, the move will join credit cards with UPI the lending tech and startups in the field of payments are likely to experience a second wave of growth.

challenges the future of Fintech Unicorns Facing

Recently, RBI has been proactive in reducing risk to the consumer , and has also slowed down startups by introducing new rules around digital lending and credit cards that will require the fintech sector to modify its business practices all over the entire board.

On June 20th on, the RBI announced that Non-bank Prepaid Pay Instruments (PPIs) aren’t able to have credit line credit effectively placing an end to credit cards that are not issued by banks, putting Indian credit card companies into the midst of a panic.

Slice and the likes of Slice had to alter the entire model of their business and move away from the use of credit lines to an arrangement similar to buy-now-pay-later (BNPL) gamers. Fintech earlyicorns like Jupiter were also forced to end their prepaid card business.

Cryptocurrency is a subsector of fintech which has been in an area of regulatory uncertainty for the last several years. But that hasn’t prevented governments from adopting an extremely strict tax regime. There is the government imposing a 30 percent tax on gains made from cryptocurrency and the 1percent TDS and discussions of a 28% GST in progress.

The most recent norms regarding digital lending However, they are in place to safeguard consumers from fraud in lending, excessive measures to recover, the high price of credit and high-interest rates. The rules also prevent lenders from automatically raising credit limits without the customer’s express consent.

The government is seeking to establish a financial technology environment with the security of the consumer in mind. It’s time for fintechs to review their business models to ensure that their customers’ interests at the forefront of their the forefront of their minds.

In the study which is part of Inc42’s The State Of Indian Startup Ecosystem Report 2022 40 percent of founders expressed doubts regarding the efficacy of government policies that promote entrepreneurialism and startups. In addition, 51% founders believed that sudden policy changes have hurt the startup ecosystem.

What’s the Future For Fintech

However, when it comes to the profitability of fintech startups, they have fallen behind. Many of the most prominent names in the fintech industry are in the red with just a quarter of India’s Fintech unicorns in the black.

Zerodha is among India’s most profitable fintech unicorns with profits in the amount of 1,122.30 Crore in the FY21. The other unicorns that are profitable comprise Billdesk, MobiKwik, Oxyzo, Chargebee, Razorpay and groww.

Many fintech companies have projected to make a profit within the next few quarters. Paytm is one example. It has set a date of September 2023 to reach a point of breaking even. If profitability doesn’t improve over the coming quarters, consolidation in fintech could grow in the face of a continuing slowdown in funding.

Technologies like data analysis, Big Data AI and machine-learning are all set to create new opportunities and enhance personalisation. will be a major area of focus for fintech startups of all kinds.

Fintech is among the most significant segments of the startup ecosystem of India that is driving innovation in fields which are constrained by the limitations of outdated technology, and by the inability of individuals to embrace new technologies.

Banking and insurance, as well as investment, were once the mainstays for Public Sector Undertakings (PSUs) as well as large Indian corporates. However, Fintech startups in India are swiftly altering the status quo and giving customers more choices to choose from.

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