Indian financial technology (fintech) market is expected to double to USD 2.4 billion by 2020, primarily triggered by rising customer experiences, e-commerce and smartphone penetration, according to a report.
Emergence of fintech companies in India is a prelude to the transformation in payments, lending as well as personal finance that has attracted significant investor interest, the joint report by KPMG India and Nasscom 10,000 Startups said.
"Investor inclination in startup funding is evident in the swelling number of angel deals from 370 in 2014 to 691 in 2015 and investments increasing multi-fold from USD 247 million in 2014 to USD 1.5 billion in 2015," the report said.
Global fintech investments rose to USD 19 billion last year with more than USD 8 billion coming from the US.
The prima facie catalyst for the success of the domestic fintech industry is the government and the multi-pronged approach it has taken towards enabling higher penetration of these digital financial platforms for institutions and the public, it added.
"The roadblocks of low technological and digital infrastructure coupled with the the lack of authentic consumer information can be overcome through continuing government initiatives, regulatory mandates and a robust business environment," said Naresh Makhijani, Partner and Head of Financial Services, KPMG India.
There are about 12,000 fintech startups globally and India has close to 200 of them, the report said.
Indian customers have shown an unexpectedly fast adoption rate towards fintech offerings.
Primary drivers for this change include the significant growth in both mobile and internet coverage and digital payments processing in public services, the report said.
The report also makes some key recommendations to promote
fintech, including forming an independent fintech-focussed industry association to give the sector an identity as well as a platform to voice its opinion, and introducing special visas for startup entrepreneurs and technology experts to attract foreign talent.
It further suggests engaging universities and institutions to strengthen the talent pool, offering coherent tax incentives to startups and venture capitalists, adopting leading practices of regulatory initiatives from global markets and converting public or private unused spaces into incubation centres.