'Demonetisation to spark VC interest in Indian fintech firms'

The increase in digital payments by Indians following the demonetisation of old notes is expected to interest venture capital funds to invest in firms operating in the payments and mobile wallet sectors, consultancy firm KPMG said.

"Demonetisation efforts resulted in an increase in transactions for both payments companies and mobile wallet providers. This trend will be one to watch in Q1'17 and Q2'17, as it may spark additional interest from investors," KPMG said in a statement.

Citing its Pulse of Fintech Report Q4'16 edition released on Wednesday, KPMG in its statement said the venture capital investment in India saw a significant decline in 2016, with just $216 million being invested, compared to $1.6 billion the previous year.

"This decrease highlights the impact a lack of mega-deals can have on a country, as actual deal volumes in India remained steady over the same period. Despite the decline, India appears to be a key focus of VC investors in Asia," KPMG said.

According to KPMG, corporate interest in financial technology (fintech) is also expected to increase in India over the next year. Already, many of India's banks and insurance companies have created innovation funds to invest in fintechs or set aside funds for collaboration.

"With the demonetisation 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," Neha Punater, Head of Fintech, KPMG in India, was quoted as saying in the statement.

--IANS

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