Mas­sive pres­sure on fintech to in­no­vate, says Nass­com

Business Standard - - COMPANIES - ROMITA MAJUMDAR

As the gov­ern­ment and in­dus­tries come to­gether to push start-ups into promi­nence across the coun­try there is a vis­i­ble fo­cus on fintech com­pa­nies with many get­ting a larger share of the in­vest­ment pie. Nass­com’s 2017 in­cu­ba­tor and ac­cel­er­a­tor re­port shows that four out of six ma­jor in­dus­try in­cu­ba­tor-ac­cel­er­a­tor part­ner­ships have par­tial fo­cus on fintech ser­vices.

“Quan­tifi­able ob­jec­tives in fintech start-ups are more mea­sur­able. The num­ber of cus­tomers ac­quired, num­ber of re­tail branches or num­ber of ef­fi­cien­cies de­liv­ered, cost per trans­ac­tion low­ered etc. are eas­ier to show (in fintech) com­pared to other sec­tors,” said K S Vish­wanathan, Nass­com vi­cepres­i­dent for in­dus­try ini­tia­tives and head of its 10,000 start-ups pro­gramme. He adds that while there is no dif­fer­en­ti­a­tion be­tween sec­tors as long as the idea is vi­able, fintech is cur­rently boom­ing sim­ply due to its mea­sur­a­bil­ity.

A re­cent McKin­sey re­port noted a sim­i­lar trend with most fi­nances go­ing to fintech star­tups, fol­lowed closely by clean tech­nol­ogy. “Forty-five to 50 per cent of IT ser­vices out­sourc­ing to In­dia comes from the BFSI (bank­ing, fi­nan­cial ser­vices and in­sur­ance) space. That is the seg­ment that is see­ing max­i­mum dis­rup­tion and looking for change. The pres­sure on the coun­try as a whole to in­no­vate in fintech is im­mense,” Vish­wanathan added.

Nass­com’s view on start-ups is sim­ple: If a pro­posal looks prof­itable it will re­ceive in­vest­ments ir­re­spec­tive of what area it is ser­vic­ing. His­tor­i­cally, de­sign-driven man­u­fac­tur­ing has not been a forte of In­dian busi­nesses even though there have been ex­cep­tions. Time and again over the past decade, fi­nan­cial ser­vices have proved their cred­i­bil­ity, be it in form of an RBL Bank or YES Bank or a Band­han. This was pos­si­ble due to suc­cess­ful bankers who switched to fi­nan­cial ser­vices.

Fintech com­pa­nies, in the form of pay­ment fa­cil­i­ta­tors, small lenders and NBFCs, are flood­ing the startup ecosys­tem and chang­ing how In­di­ans have viewed loans and ex­penses since gen­er­a­tions. Vish­wanathan added that the rapidly chang­ing cus­tomer pro­file in fi­nan­cial ser­vices re­quires tech­no­log­i­cal sup­port driv­ing fintech. “To un­der­stand the busi­ness model you re­quire the first gen­er­a­tion of suc­cess­ful en­trepreneurs who can in­vest here. In the next five years, all sec­tors will have such tal­ent (as busi­ness ma­tures),” he added.

Does In­dia need more home­grown ven­ture cap­i­tal­ists (VC) to woo com­pa­nies away from the shadow of an Alibaba, Ten­cent or Se­quoia? “Money has no colour. A VC is a VC ir­re­spec­tive of where the fund­ing comes from. To­day the top 25 VCs from Sil­i­con Val­ley have a pres­ence in In­dia. Ev­ery year at least 10 in­ter­na­tional VCs are es­tab­lish­ing their foot­print here. In­dia is a ma­jor mar­ket for in­vest­ments and will con­tinue to be so,” said Vish­wanathan. He added that with a 30 per cent growth in the num­ber of ac­cel­er­a­tors set­ting shop in In­dia only meant bet­ter op­por­tu­ni­ties for start-ups here.

In­dia houses a lit­tle more than 140 ac­cel­er­a­tors and in­cu­ba­tors for start-ups, com­pared to 2,400 and 1,500 re­spec­tively across China and the US, says the Nass­com re­port. On the bright side, more than half of th­ese are lo­cated in tier-II and tier-III cities and have a mas­sive tech­nol­ogy fo­cus.

Most fi­nances are go­ing to fintech start-ups, fol­lowed closely by clean tech­nol­ogy, a re­cent McKin­sey re­port noted

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