Bala Srinivasa, a partner at the VC firm of Kalaari Capital, recently published an interesting post on India and the development of Fintech in the country. While Fintech has gone hyperbolic in China, and the US, Europe, and the rest of Asia has seen steady growth, India has been left out of the financial revolution. Srinivasa believes there is a “parallel universe” developing in 2nd most populous country on the planet. While India may be trailing the pack, he sees an inflection point in the financial services industry.
“Indian fintech startups have a unique and in some cases larger opportunity than other global markets,” said Srinivasa.
And what makes India so unique? It is the huge gap in traditional financial services being utilized by a population that is on the low end of the pay scale and a country that is still very much a developing nation. The inability for traditional finance to serve the needs of the majority of the population with right sized (and appropriately priced) services may be creating a “perfect storm.”
According to Srinivasa;
“We expect many large Indian fintech companies emerge over the next decade. But technology and product can only go so far in financial services if the business model is not designed for scale.”
This underbanked country has about 400 million consumers who earn $15,000 or less year – out of a population of 1.3 billion. Apparently, there are only about 20 million credit cards in circulation. Smartphone penetration is still on the low end (around 30%) but India is the second largest smartphone market in the world at 220 million users.
Srinivas says the demand is there but until now the efficiency and economics have been missing. It appears that is about to change. You can read his entire post here.