AUM of Fintech Industry to Reach USD 1 Trillion by 2030: EY Report

Fintech Industry in India will reach USD 1 trillion, by 2030, says a report by Venture capitalist firm Chiratae Ventures and consulting firm Ernest and Young. In terms of revenue generation, the industry in terms of Asset under Management and USD 200 billion in terms of revenue, a joint report by The report also said that growth in the Fintech Industry will be led by digital lending. Digital lending space is expected to reach USD 515 billion by 2030.

Neo-banking, Insurtech, Wealthtech, Payments and Digital Lending will take part in the growth of the Fintech Industry in India. The Indian fintech industry, just after the United States and China, is the third largest fintech market. In the last five years, almost 1,000 fintech firms have been funded with a collective amount of USD 18 billion. Out of 105 Unicorns, businesses having a valuation of USD one Billion, 21 are from Fintech Industry. 

Co-founder and Vice Chairman of Chiratae Ventures, T C Meenakshi Sundaram, said that there was no data available that says that retail business and SMBs were funded by the banking channels. He also said Fintech is filling the void by funding the small businesses. 

"It's a high data play where fintech players are able to put multiple data points together and possibly come up with better underwriting capabilities. SMEs cannot afford high cost of capital and fintech players have a better way of underwriting and low-cost delivery. We expect USD 500-billion fintech-facilitated lending to be a large play, while wealth, insurtech and neo-banking will make up for USD 500 billion," he said. Among all types of lending, Peer-to-peer lending, SME financing, and short-term credit models are gaining traction at a much higher speed.

The financial sector in India, which encompasses commercial banks, insurance companies, non-banking financial companies, and other smaller financial entities, is seeing an unprecedented growth. New firms are entering the market while existing ones are growing. Reserve Bank of India, which acts as a banking regulator, has modified the norm to allow new entities such as payment banks to be created, which added new types of entities operating in the sector. Still, the sector witnesses over 64 per cent participation of banks and related sectors which manages the total assets held by the financial system.