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Some European fintechs are waking up to the potential. It’s time more do.
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Weekly Leading Article
India is the second most populated country globally, with more than 1.3bn citizens—nearly twice the number of people living in Europe—so it’s no wonder fintechs are beginning to put down roots there.
The country is looking increasingly attractive to UK fintechs, with many already outsourcing their tech talent in India—such as Tide, but more on that below.
Around 50 per cent of India’s citizens are middle class and, according to Tide, there are approximately 63m SMEs there too, making it prime territory for fintechs looking to bolster their customer numbers.
In fact, Tide was one of the first in a new wave of UK-based fintechs gearing up to launch in India—marking its first international expansion outside of the UK.
Tide, which already operates a technology centre in Hyderabad, is planning to gradually roll out its digital-only banking service in India over the coming year.
Similarly, payments giant Wise announced that it was opening an office in Mumbai and tapping into India’s no-doubt lucrative remittances market.
According to data from the Migration Observatory at the University of Oxford, India was the top destination for sending remittances abroad from the UK in 2018, with expats sending £3bn during the year.
Data about remittances flowing in the other direction (from India abroad) is harder to come by. However, with a population of nearly 1.3bn, half of which are middle class and more likely to be sending money abroad, India is likely to become a key market for Wise.
Wise and Tide are not the only UK fintechs waking up to the Indian opportunity. Digital banking service Revolut joined the ranks of British fintechs to launch in the country in a “multi-million-pound” expansion earlier this year.
The fintech hopes India will become one of its core markets as more than half the population of India, equating to 760m people, have a smartphone and can download Revolut’s ‘super app’.
So, why has it taken so long for UK fintechs to wise up (excuse the pun) to the Indian opportunity? The answer isn’t crystal clear.
Both Wise and Revolut had established other Asian hubs, such as Singapore, but hadn’t made the leap to the other end of Southeast Asia.
It’s not like there’s a lack of funding in the country. In fact, data from Innovate Finance puts India in fourth place for fintech investment, with firms in the country receiving a total of $2.6bn in 2020 alone—for reference, UK fintechs received $3.8bn.
A well-funded investment landscape, with a smartphone-centric population and growing numbers of middle-class consumers and thriving small businesses.
It’s time more European fintechs woke up to the Indian opportunity.
The AltFi Leader is a new weekly view for 2021 from our editorial team. We’d love to hear your ideas, thoughts, feedback and constructive criticism. firstname.lastname@example.org