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Different Types of FinTechs – Research & Ranking

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This is the concluding chapter of the series “Future of Banking and Finance in India.”

In this article, we take a brief look at leading Fin-Techs in the country. As we mentioned in yesterday’s story that Fin-Techs can be briefly divided into categories like

  • Lending
  • Wealth Tech
  • Insurance Tech
  • Payments

Today let’s learn which startups come under these categories. These startups are built with an intent to address a particular need of clients efficiently.

After feeding with you all the data and numbers in previous stories, we will try to keep this story with as little data as possible.

Let’s dive in.

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WealthTech

WealthTech is categorized as products and services ranging from financial services software, investment platforms, online investing tools, and robo-advisors to digital brokerages. These startups have been leveraging advanced technologies such as AI and analytics to transform the face of traditional investment and wealth management services. India has over the years witnessed a rise in working and a wealthy population. This has led to massive advancements in the WealthTech space.       

FinTechs under the wealth category are governed by the Securities Exchange Board of India. SEBI has undertaken several initiatives to facilitate growth in this sector under its watch. Some of the initiatives include:

  • Regulatory Sandbox for WealthTech firms to experiment on a pilot basis
  • Allowing e-commerce entities to sell Mutual funds from their platforms
  • Permitting investments into Mutual Funds through payment FinTechs, albeit with a cap on the investment amount

Below is the list of Startups in the WealthTech category.

Company

Details

 

Zerodha

 

· Founded in – August 2010

 

· Founder – Nithin Kamath

 

 

· Valuation – $1bn as per company data and $3bn as per Hurun’s list

 

· Investors – Founders and employees

 

 

· What it does – India’s #1 discount broker.

             

 

Upstox

 

· Founded in – 2012

 

· Founder – Ravi Kumar, Kavitha Subramanian, and Shrini Vishwanath under RKSV Securities

 

 

· Marquee investors: Ratan Tata, Tiger Global, Kalaari Capital, and GVK Davix.

 

· What it does: Second most preferred discount broker in the country. It is going to launch international trading

Samco

 

· Founded in: 2015

 

· Founders: Jimeet Modi

 

· Valuation: $10.4 Million

 

· Marquee Investors: Jimeet Modi, Vipul Modi, Siddharth Mehta, Sivaramakrishnan Iyer

 

· What it does: Samco is an award-winning online discount stock broker known for its clutter-breaking investment platforms.

 

Scripbox

 

· Founded in – 2012

 

· Founders – Atul and Sanjiv Singhal

 

· Valuation: $157 Million

 

· Marquee Investors: Deep Kalra, Rajesh Magaow (MakeMyTrip), S Sriniwasan (CEO, Kotak Realty Fund), and others. Accel partners and a California based investment firm Omidyar Network are the other two big investors in Scripbox

 

· What it does:  It’s an automated Mutual Fund investment platform that helps people achieve their goals using Robo Advisors.

 

Lending

Lending is one of the prime functions of a bank. With FinTechs entering this function of banking, it will have a huge impact on credit growth in the country. The main reason for this segment to prosper is, banks’ reluctance in providing easy loans to customers. For instance, if you need a small loan, banks ask you to submit a list of documents and it would take days for the bank to disburse the loan.

However, FinTechs don’t require you to submit unnecessary documents for a loan and also offer competitive interest rates, quick and streamlined process from applying for a loan to its approval.

FinTechs in the lending segment can be further divided into two key sub-segments – Digital Lenders and Intermediaries. As the name suggests, Digital lenders are those which lend money to customers whereas intermediaries are those which facilitate matchmaking of lenders and borrowers.

Let’s take a look at some of FinTechs in this category-

Company

Details

 

Credit Vidya

 

· Founded in: 2013

 

· Founders: by Abhishek Agarwal and Rajiv Raj

 

· Valuation: $30.2 Million

 

· Marquee investors: Bharat Fund, Ryan Khoury, Navroz D.Udwadia , Rick Gerson, Matrix Partners India, Kalaari Capital, Siddharth Parekh, Swapna Subramani

 

· What it does: Started with the aim of making financial services accessible at affordable costs to all creditworthy individuals, Credit Vidya is a technology-driven platform for easy and quick personal and other loans.

 

 

 

LenDen Club

 

· Founded in: 2014

 

· Founders: CEO Bhavin Patel and CTO Dipesh Karki

 

· Valuation: $2.3 Million

 

· Marquee Investors: Artha Venture Fund, Venture Catalysts, Anirudh Damani, Daud Ali, Narendra Karnavat, Vikas Kapoor, Vikram Lakhotia, Krishna Jhunjhunwaala, and Jayesh Shah.

 

· What it does: LenDen Club is a peer-to-peer (P2P) platform in India. It connects investors or lenders looking for high returns from creditworthy borrowers looking for short-term personal loans.

 

BankBazaar.com

 

· Founded in: 2008

 

· Founders: Adhil Shetty, Arjun Shetty, and Rati Shetty.

 

· Valuation: $116 million

 

· Marquee investors: Amazon, Sequoia India, Experian, WSV – a joint venture fund of Walden International and Korean Company SKTA – and Eight Roads

 

· What it does: Country’s first neutral online marketplace website that gives customers instant customized quotes on Loans, Credit cards, MF, and Insurance products.

 

Easy Salary

 

· Founded in: 2015

 

· Founders: Ashish Goyal, Akshay Mehrotra

 

· Valuation: $45 Million

 

· Marquee Investors: Deewan Housing Finance Corporation, Eight Roads Ventures, ABC India, Vikas Agarwal, Transcorp, Chiratae Ventures,  Northern Arc, IFMR Trust 

 

· What it does: It provides quick short-term personal loans to creditworthy individuals. 

 

 

Insurance Tech

Compared to other categories, InsurTech is still in a nascent stage in India. This could be attributed to the lack of awareness and education about insurance. However, the havoc caused by the current pandemic and the government’s efforts to improve insurance penetration in the country has created an enabling environment for companies in this space to grow.

The current InsurTech space in the country is being dominated by few names like Toffee, Digit, and Acko. India is a young country with a significant proportion of working population. Hence, these FinTechs are trying to target an audience from the age group of 20+. The marketing initiatives of these companies have successfully garnered the attention of the millennial population.

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InsurTechs can be further divided into three sub-segments namely, Digital insurance advisor, digital insurers, and claims. According to a report published by RBSA on a comparative analysis of gross domestic premium earned by InsurTechs and traditional insurance platforms, the premium earned by new-age insurers has increased by over 100% CAGR for two years.

Let’s take a look at some of the InsurTechs in the country:

Company

Details

PolicyBazaar.com

 

· Founded in: June 2008

 

· Founders: Yashish Dahiya, Alok Bansal, and Avaneesh Nirjar (ETechAces Marketing and Consulting

 

· Current Valuation: $2.4 Billion

 

· Marquee Investors: Chiratae, Info Edge, Inventus, Premji Invest, SoftBank, Temasek, Tiger Global, True North, Wellington Management, Rabbit Capital

 

· What it does: Policybazaar.com is now India’s foremost insurance aggregator. It provides a digital platform – website and app – where users compare financial services from major insurance companies

Turtlemint

 

· Founded in: 2015

 

· Founders: Dhirendra Mahyavanshi, Anand Prabhudesai, Kunal Shah

 

· Valuation: $176 Million

 

· Marquee Investors: Jungle Ventures, GGV Capital, American Family Ventures, MassMutual Ventures, SIG, Blume Ventures, Sequoia Capital India, Nexus Venture Partners, Dream Incubator, and Trifecta Capital.

 

· What it does: It is an Android mobile and web application used by insurance agents, whom the company refers to as micro-entrepreneurs, for distributing insurance and other allied products.

Acko

 

· Founded in: 2016

 

· Founders: Varun Dua and Ruchi Deepak 

 

· Valuation: $500 Million

 

· Marquee Investors: Amazon, RPS Ventures, Intact Ventures, Munich Re Ventures Binny Bansal, Swiss Re, Transamerica Ventures, Ascent Capital, Barings Private Equity, VenturEast, Narayan Murthy’s Catamaran Ventures, Kris Gopalakrishnan, Atul Nishar, Hemendra Kothari, Rajeev Gupta, Aditya Agarwal, TI Platform, Subba Rao and Venk Krishnan.

 

· What it does: Started as India’s first digital insurer. Along with mainstream insurance, it offers several innovative, bite-sized products like trip insurance, electronics cover, and hotel-stay insurance.

Digit

 

· Founded in: 2017

 

· Founders: Kamesh Goyal

 

· Valuation: $1.9 Billion

 

· Marquee Investors: A91 Partners, TVS Capital, and Faering Capita, Prem Watsa’s Fairfax India Holdings, Virat Kohli and Anushka Sharma

 

· What it does: Online insurance startup with a portfolio of 30+ insurance products.

Payments

It’s the most funded category of all FinTechs. Over the past five years, the payments industry has seen tremendous growth with RBI facilitating new modes of payments such as UPI, Biometric payments, e-wallets, etc. In the recent paths, the payment category garnered so much attention that big organizations like Airtel, Amazon, and WhatsApp also entered the spree.

The Digital payment FinTechs have been the flag bearer in the Indian FinTech space despite India being largely a cash preferring society. Along with payments, the majority of payment platforms have now introduced lots of other services. PayTm launched PayTm Mall, direct purchases of mutual funds within the platform, etc. PhonePe allows you to apply for FastTag, book LPG cylinders, and invest in Mutual Fund, virtual gold, etc. It also enables you to purchases groceries, book flight/bus tickets as well as order food from select restaurants.

A major push in digital payments is caused due to proactive government measures. While demonetization is a thing of the past, the government is focusing on the systematic reduction of cash payments.

Let’s have a look at some famous digital payments FinTechs in the country:

Company

Details

PhonePe

 

· Founded in: 2015

 

· Founder: Sameer Nigam, Rahul Chari, Burzin Engineer

 

· Valuation: $5.5 Billion

 

· Marquee Investors: Flipkart (Binny Bansal, Rohit Bhagat)

 

· What it does: Digital payments and financial services company

CC Avenue

 

· Founded in: 2007

 

· Founders: Vishal Mehta

 

· Valuation: $82.64 Billion

 

· Marquee Investors: Public company

 

· What it does: Offers digital payment solutions, data center infrastructure, and software platforms to merchants, enterprises, corporations, and governments in both domestic as well as international markets

Bharat Pe

 

· Founded in: 2018

 

· Founder: Ashneer Grover & Shasvat Nakrani

 

· Valuation: $900 Million

 

· Marquee Investors: Coatue, Sequoia Capital, Ribbit Capital, Steadview Capital Management, Beenext, Amplo, and Insight Partners

 

· What it does: Empowers shop owners to accept payments from any payment app for free

MobiKwik

 

· Founded in: 2009

 

· Founders: Bipin Preet Singh (IIT Delhi) and Upasana Taku

 

· Valuation: $493 to 498 Million

 

· Marquee Investors:

Bipin Singh and Upasana Taku, Bajaj Finserv, American Express, NET1, Sequoia, Cisco, ESOP Pool, Tree Line, MediaTek, NDTV, HT Media Group, GMO Payment Gateway

 

· What it does: It allows you to shop at your favorite stores, pay bills, recharge, send money and accept payments with a single tap

 

The Future:

The future of the FinTech sector in India looks promising. The term Financial Technology (FinTech) is gaining traction among 20-something budding entrepreneurs in the country. At Research and Ranking, we are also leveraging technology to make investing a truly re The future of the FinTech sector in India looks promising. The term Financial Technology (FinTech) is gaining traction among 20-something budding entrepreneu warding experience for our clients.

According to data from BCG-FICCI (March 2021), the Indian FinTech market is expected to grow from its current valuation of $50-60bn to $150-160bn by 2025, implying 20-25% CAGR.

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What does this mean for investors and why you should pay attention to this?

  • Though these businesses are currently not listed on the exchange, we can’t deny the possibilities in the future.
  • For instance, a food delivery startup Zomato, which is currently worth over $5 Billion, has recently filed draft papers with SEBI. One of the listed companies “Info-edge” has around 19% stakes in Zomato and it’s planning to sell a stake worth Rs. 750 crore in the IPO of the food delivery aggregator via offer for sale.
  • Similarly, PhonePe after its recent Spin-off from the parent firm, Flipkart, has announced that it’s looking to get listed by 2023.
  • Although Zomato and Swiggy are not yet listed on the exchange, they are generating employment in the country. In the current situation, when hotels are not allowed to have dine-in, these start-ups are also helping them to remain functional. This also had an invisible impact on the stock prices of Domino’s parent firm Jubilant Foodworks.
  • Over the longer term, a right collaboration between banks and FinTechs may boost their efficiency and profitability, leading to higher stock price and valuation
  • FinTechs are set to add another $100bn in market valuation over the next five years. This means several new companies coming into existence and existing ones growing much beyond their present size.
  • More importantly, this also means more employment generation and a domino effect on the economy.
  • For the country and economy, it will take India’s journey forward towards financial maturity. As stock market participants, this opens up exciting opportunities for wealth creation over the longer term.

To be a successful investor, while grabbing the current opportunities, you need to be aware of developments taking place in the economy. New investment ideas may originate from these developments.

However, to benefit from these future opportunities you need to start investing from today with the help of an investment advisor who can guide you in your investing journey and help you build wealth over time.

To start investing now, subscribe to our Powerful Wealth Creation Strategy by clicking here.


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