1. With Indian economy poised to rebound by FY 22, and other favourable drivers including COVID, Indian Fintech is poised for a sustainable growth

With the Indian govt. taking number of measures and consumer sectors reviving from the COVID impact, Indian Fintech is poised for strong sustainable growth. While some Fintech subsectors are on facing temporary downturn amidst COVID, others have actually taken a boost driven by the Indian customer increasingly going digital amidst COVID. Sectors such as Digital Payments, Insurtech and Wealthtech actually came in a sweet spot amidst COVID, while MSME digital lending is going through significant downturn driven by MSME sector significantly impacted currently due to COVID.

2. Mobile payments has been one of the more resilient sectors, as it witnessed significant organic adoption amidst growing COVID concerns with other Digital / non-digital modes of payments

#Transactions/month (UPI+Walletin 2020

Source(s): (1) NPCI, RBI (2) RedSeer Analysis`

With Indian economy expected to rebound post COVID, Digital Payments is expected to grow by more than 2x to reach ~USD 60 Tn in FY 22, driven by continued rise in private expenditure, with retail consumption at the forefront, and significant increase in digital maturity of the Indian customers.

Driven by increased convenience, push from the govt. and widening internet funnel, mobile payments are expected to lead the way, and is expected to outpace the other modes of digital payments to grow at ~60% CAGR to reach ~USD 0.9 Tn by FY25.

Post COVID, sector has been growing on back of increased customer frequency. Transactions reaching Pre-COVID levels with higher ATV. New customers from non-metro being onboarded. P2M, especially offline is picking significant traction.

Bill Pay and Recharges have been driving high growths for the sector. Mobile recharges and utilities payments have been the highest growth drivers for the industry since lockdown.

‘Integrated Digital Payment’ models i.e. models which are offering multiple financial services / products to customers rather than standalone payments, are better placed on their path to profitability vis-à-vis standalone models – “Cross selling is the key”! Standalone payment businesses have limited monetization potential, with govt. relaxing MDR norms.

3. Driven by the COVID push, ~17 Mn new Insurtech policy buyers will get added in the next 2 years, to take the overall number to ~30 Mn

Insuretech Funnel – FY 20

Number of Users, Mn

The Indian Insurtech market is on a strong growth path to grow by ~3x by FY 22, driven by widening internet funnel, increasing awareness amongst customers (Especially millennials), COVID driving growth in health insurance category and other drivers.

COVID led to organic adoption across these platforms, with specific traction in health insurance. Adoption was observed in older age groups as well as non metro cities. Certain models launched COVID specific products to gain significant market share.


4. COVID-19 has been detrimental for Digital lending sector as loan disbursals have taken a significant hit (~90% dip); however there are some green shoots

Loan disbursals by Top 3 Digital MSME Lending Companies ($ Mn)

The credit lending sector is directly correlated to economic growth, and therefore has been significantly impacted by COVID. With MSMEs also facing significant challenges, there has been significant drop in loan disbursals during the period.

The same impact has been observed for the Digital Lending sector as well. Loan disbursals for all the key players have taken a hit by almost 90% on value post COVID.

5. Due to impact of COVID-19, GNPA for digital lenders are expected to increase by ~2x by FY21 but will still be better placed compared to traditional lenders

Note(s): (A) Numbers are indicative based on primary interviews

Source(s): (1) RBI (2) Expert interviews (3) Redseer Analysis

NPAs have gone up by 2x to reach ~5-8% in the post COVID period, and nearly 20-50% customers availed moratorium. Next 2 quarters are expected to bring clarity in terms of expected recovery path.

However, the market for digital lending is supposed to recover, driven by significant headroom for growth available – Only 0.4 Mn of MSMEs are using Credit lending from digital platforms, out of a total addressable base of more than 20 Mn.

With Govt. Stimulus coming in and MSMEs getting momentum in the next few months, the MSME digital lending sector should be on a path to recovery, and should be able to grow by 3x by FY 22, predominantly driven by an increase in number of MSMEs adopting digital lending.

6. Post COVID-19 saw a significant spike with Wealthtech platforms, especially with mobile based platforms at the forefront

Mobile vs web-based vs other types of trading transactions (as a % of total trading transactions)

Note(s): Others includes various modes of trading like Colocation, Non Algo, Algo, Direct Market Access and Smart Order Routing

The Indian equity market has been quite volatile like most of its global peers, amidst global cues driven by COVID. Currently, the BSE and NSE index are almost trading at Jan / Feb 2020 levels post straight 6th month of gains, even after plummeting by almost 30-40% in Mar’20. Driven by COVID, the Indian investors have increased time to trade at their disposal, and in addition are looking at additional sources of income. This has also led to increase in investors especially from Tier 2+ cities (small ticket investors).

Mobile phone and Wealthtech platforms have become the preferred mode of trading post COVID driven by ease of access, seamless onboarding and low charges. In May 2020, Mobile facilitated 45% of the total Wealthtech transactions by volume, and the trajectory appears to be strong going forward. Driven by the momentum gained, number of unique active Wealthtech investors is expected to increase by 2x to reach ~7Mn in the next 2 years, driven by significant headroom for growth.

Transactions per day as well as average investment value per month have increased by almost 7-10% post COVID, which is a healthy sign for the market.


  • Mrigank leads business research and strategy engagements for leading internet sector corporates at Redseer Strategy Consultants. He has developed multiple thought papers and is regularly quoted in media and industry circles.