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A new report has found that India’s investments in FinTech dropped significantly in 2016 from 2015, indicating what impact a lack of mega-deals can have on a country even though actual deals in India remained steady over the same period.
The report from KPMG, The Pulse of FinTech Q4 2016 [PDF] reported that investment in the sector dropped from $1.6 billion in 2015 to just $216 million in 2016; however, despite the decline India appears to be a key focus of venture capital investors in Asia.
India’s demonetization of the Rs 500 and Rs 1,000 banknotes last November appears to have resulted in a boost in transactions, which is certainly a trend that will be one to watch in Q1 and Q2 2017. It’s expected that this may attract more interest from investors.
Neha Punater, head of FinTech at KPMG in India said:
With the demonetization effort that started in Q4’16 in India, there has been a big increase in the number of transactions managed by both payments companies and wallet providers. As this effort continues, we should see momentum grow for digital platforms and fintech solutions.
With India’s securities regulator announcing plans to set up a FinTech advisory committee to focus on investments within the sector and Arun Jaitley, India’s finance minister telling banks to promote digital banking, corporate interest in India’s FinTech is likely to increase over the next year.
This can already be seen through many of India’s banks and companies, which have launched innovative blockchain consortiums while India’s largest IT services firm, Tata Consultancy Services (TCS) is overseeing several blockchain pilots and proof of concepts for clients around the world.
It appears that plenty is being done to harness the benefits that FinTech is providing to a nation that has a high smartphone use. The country reportedly crossed a billion mobile subscribers and exceeded the United States with 200 million smartphone users, becoming the world’s second largest smartphone market after China, in January 2016.
Yet, while this is the case, according to the deputy governor of the Reserve Bank of India, banks need to be aware that they run the risk of becoming history if they don’t maintain the pace in the age of FinTech.
With the results of Q4 2016 venture capital investment announced in India, this year is certain to be a year when the nation can bounce back, helping to show that the country has what it takes to become a hub for FinTech.
Featured image from Shutterstock.