Invest Guide November 2024

The Global Fintech Fest (GFF) 2024, - Event Spotlight, Where, What, Who -

Fintech, an integration of finance and technology encompasses a wide range of services, including mobile banking, insurance, cryptocurrency and investment applications.

Global Fintech Fest (GFF) 2024, the annual fintech conference organised by the Payments Council of India (PCI), the National Payments Corporation of India (NPCI) and the Fintech Convergence Council (FCC) was held from August 28-30 at the Jio World Convention Centre in Mumbai.

Started in 2020, the GFF, in its fifth edition in 2024, emerged as the world's largest fintech conference and the largest thought leadership platform in the fintech landscape. The three-day event marked an unparalleled gathering of innovators, leaders, and visionaries in the financial technology sector. With over 800 speakers including policymakers and regulators like RBI participated in the event providing a comprehensive view of the direction in which fintech is headed.

The global event saw the participation of honourable PM Narendra Modi and eminent industry leaders Dammu Ravi, Secretary (Economic Relations), Ministry of External Affairs, Government of India; Kris Gopalakrishnan, Chair - GFF 2024, Co-founder Infosys and Chairman, Axilor Ventures; and Ritesh Shukla, Chief Executive Officer, NPCI International Payments Limited (NIPL) among others.

Fintech Growth: Past, Present and Future -

Over the last decade, the global financial technology (fintech) landscape has evolved rapidly. Digital banking and financial services are proving revolutionary, both in wealthy economies and in areas where billions of people previously struggled to obtain banking services.

According to a report by KPMG, Global fintech investment has reached the level of USD 58.2 billion in H2'23. This industry, which presently accounts for only 2% of global financial services income, is expected to generate USD 1.5 trillion in yearly revenue by 2030, accounting for about 25% of total banking valuations globally. Payments and AI-focused fintech solutions remained the top topics of interest among investors. The adoption rate of Fintech in India is 87 percent, which is well above the global average of 67 percent.

Boasting over 9,000 fintech companies, India ranks third globally in terms of the highest number of fintech entities and commands a 14% share of start-up funding in the country. Despite a dip in funding, the sector continues to thrive, with revenues surging to $25 billion in 2023—up by 56% year-on-year.

Key factors driving Fintech Growth -

• A young techsavvy population
• Growing AI and data analytics
• Increased Mobile and Digital banking
• Use of Paytechs like Gpay, Phonepe, Mobikwik
• Growing E-commerce trend

In a special Keynote address by Shri Ajay Kumar Chaudhary, Non - Executive Chairman of the Board and Independent director, NPCI -

The coming years will witness significant trends in areas such as embedded finance, decentralized finance (DeFi), integration of Artificial Intelligence (AI) & Machine Learning (ML), Distributed Ledger Technology (DLT), adoption of Application Programming Interface (API), Cloud Computing, Big Data, interconnection of multiple financial ecosystems with the help of technologies like tokenisation, unified ledger etc. (FINTERNET) in financial services- all are set to redefine the sector.

Embedded finance, where financial services are seamlessly integrated into non-financial platforms, is expected to drive significant growth.

Further, the concept of Tokenisation, Unified Ledger, Blockchain, FINTERNET and Quantum Computing is gaining traction and has the potential to disrupt as also propel our economy to new heights. While the payments led the last era, we expect B2B (serving small businesses) and B2B2X (B2B to any user) will lead the next. FinTech serving B2B have ample room to disrupt, as small to mid-sized enterprises (SMEs) worldwide have annual credit need of an estimated USD 5 trillion.

Global Fintech Market Outlook 2024-2032 -

Key launches during GFF 2024 -

Domicile of funded FinTech companies* -

It has been two years since Russia's unprovoked full-scale invasion of Ukraine on February 24, 2022. The war has contributed to volatile and increased commodity and energy prices, which aggravated food shortages and fuelling inflation in many regions across the world. The ongoing war has had significant consequences for India, affecting energy prices and food security. Although energy and grain prices subsided from their mid-2022 peaks, the possibilities for their resurgence remains and Europe may continue to see threats to its energy security.

Way Ahead - Opportunities and Challenges

The current fintech landscape is characterised with aggressive credit lending, congestion, market saturation with intensified competition and openness for collaboration and a drive for innovation. While revolutionizing traditional financial services have led to improvement in the efficiency of delivery of financial products and services by way of making it swifter, cost effective with enhanced customer experiences, it must be remembered that these innovations come with their own set of risks and vulnerabilities.

Fostering innovation and financial inclusion -

The Fintech way forward is aimed to maximize fintech benefits while avoiding dangers to the financial system. To achieve this, the FinTech sector must prioritize customer centricity and governance. In 2024, the RBI considers India's fintech sector as poised for significant regulatory advancements and oversight enhancements. As the country adopts to emerging technologies such as artificial intelligence, machine learning and decentralized finance the oversight of Fintech 2024 aims to protect consumer interests with regulatory developments that are crucial in shaping the financial ecosystem.

Current Investor mindset on Fintech disruption -

As India's fintech sector has reached new heights and boasts of 10,200 registered fintech start-ups, India's fintech sector experienced a significant decline in investments in September 2024, with total funding reaching USD 230 million from 10 rounds, according to a data by iLattice. The decline in the funding environment is attributed to regulatory scrutiny intensifying and regulatory interventions made by RBI. With valuations plummeting and corrected, fintech player are looking to reassess their business models, cut costs and focus on achieving profitability.

Summary -

The Global Fintech Fest 2024 highlighted the fintech landscape's dynamic nature as well as the importance of collaboration and innovation in creating its future. As the industry evolves, embracing technology and regulatory frameworks will be critical for increasing financial inclusion and guaranteeing a sustainable economic ecosystem. Together, stakeholders can face the challenges ahead and leverage fintech's potential to create a more accessible and reasonable financial world.