Key segments in fintech include digital payments, marketplace lending and emerging areas, such as crowd funding, insurance tech, robo advisors, wealth management and blockchain-enabled applications.
On lending, the key thought presented was that a lack of credit records did not imply that a customer was not creditworthy. Transaction records on eCommerce platforms or in phone records, could also provide strong insights. Combination of underserved customers eager for credit and investors looking for strong yield opportunities has the potential to make for a strong business case for online lending, in our view.
The fintech space in India is at a nascent stage. Digital wallets processed US$4bn of payments (0.3% of consumer expenditure) in 2015, as per RBI data, in comparison to the US$850bn for Alipay in China alone (21% of consumer exp). Digital payments in India could take away a significant share from cash, with the potential for ~US$350bn in payments in our view, if over 20% of consumer expenditure in 2020 is processed digitally.
