What the Future of Global Finance can Look Like

The global finance and fintech sector has braved fire and brimstone in the last years, passing through funding winters and scrutiny. From those trials, it emerged with restored stability and determination. Global funding has stabilized at roughly $7-$10 billion per quarter, a sure sign of steady-state support. 

From the "burn and grow" era, the industry has moved to an "earn and grow" one where profitability and good governance are at the core. Indeed, recent surveys support the fact that though important, profitability and good governance have come to the fore. 

Global Fintech Growth and Capital Allocation 

Revenues from Fintech are set to reach US$1.5 trillion by 2030. Growth is fairly well-balanced across regions, but there is significant shifting in the allocation of capital. For example, India has shifted from payments to lending and B2B businesses, while the U.S. has seen more recent fintech investment momentum in payments. Clearly, India has emerged into an important fintech hub. 

“India is the third most attractive destination in terms of the number of unicorns, the number of soonicorns, in terms of the capital it is attracting. What I’m really heartened by is that the fintechs that are founded in India are not just concentrated in one or two regions but they are spread across different parts of the country. This is an opportunity for us to create more beds of innovation.” 

- Mr. Yashraj Erande, Partner and Director, BCG India at GFF 2024 

Indian fintechs have shown healthy revenue growth, 50% annualized over the last two years. However, scaling up operations and raising sufficient capital still remain a cause for concern. 

Bridges to the Future 

In order to leapfrog into the next phase six strategic bridges will be needed. They are: 

• Full-stack Future-Ready Technology:

Most of the technology stacks are of an older vintage. Core replacement and cybersecurity need huge investments. 

• Institutional Collaboration and Co-creation:

Traditional finance and fintech startups need to come together. Policies should make their collaboration easier. 

• Internationalization:

With revenues racing towards $50-60 billion over the next five years, there is an open field of opportunities for top fintech companies in India to go global. This is where the maturity wall is up, and access to capital will be needed. 

• Access to Capital:

While big pools of capital are reaching maturity, new sources of finance will be needed to fuel innovation and growth of fintech in India. 

• Regulation and Compliance:

There is the need to build trust to scale operations with credibility through compliance. 

• Greener Future:

There is a growing need for fintechs to turn their attention to green innovation in retail and MSME sectors. 

Conclusion 

Continued research and innovation in the field of fintech solutions will help provide a platform to address challenges and seize opportunities that lie ahead.