Matrix Partners India and BCG launch 'The State of The Fintech Union 2023' Report

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Mumbai, Thursday, 7th September 2023: Matrix Partners India and Boston Consulting Group (BCG) today unveiled their annual Fintech report titled, 'The State of The Fintech Union 2023' at the Global Fintech Festival. The comprehensive report underscores India's remarkable rise in the fintech sector, reaffirming its status as a prominent global leader in innovation. With conviction, India has solidified its position as the world's third-largest and one of the most swiftly progressing fintech markets. This transformation represents a monumental shift from the industry's early stages to a flourishing ecosystem, poised for enduring growth and sustainable profitability. You can view the full Report here.

Vikram Vaidyanathan, Managing Director, Matrix Partners India, said, “The Indian fintech ecosystem is moving from the 0-1 phase of finding PMF to the 1-10 middle journey. Fintechs are being asked tough questions, and rightly so, on building profitable sustainable business models with future-proof compliance and governance. Through our work, we are confident that fintechs are up for this challenge, and they're investing in the right long-term capabilities that help them scale with a strong foundation. We are already seeing scaled companies preparing to go IPO and look forward to their success.” As India's fintech journey enters its "middle phase," here are some notable developments and projections from the Report:

Maturing Ecosystem: The Indian fintech ecosystem has transitioned from the early "0-1 phase" to the "1-10 phase" or the "middle journey." This maturation brings a focus on profitability and the mitigation of systemic risks.

Regulatory Recognition: Regulatory bodies have recognized the significance of fintech, establishing dedicated departments and committees to formulate guidelines that facilitate operations while ensuring effective risk management. Fintechs are also embracing regulations as they scale and are investing in the right levels of compliance and governance.

Profitable Ventures: Several fintech unicorns have achieved profitability, demonstrating the sector's potential for sustained financial success.

Scalable Businesses: The fintech sector is expected to continue witnessing the creation of large companies, more fintech IPOs across various segments (payments, lending, insurance, etc.), and the disruption of newer segments by challengers. Traditional businesses, such as Five Star Business Finance, have also embraced tech to enhance operational efficiency.

Capital Momentum: The first half of CY23 has shown signs of recovery with a 33% higher capital momentum compared to H2 CY22. India's differentiated tech infrastructure and operating models are gaining global recognition.

Revenue Projections: Indian fintech revenues are projected to grow at a rate of over 35% annually, aiming to reach over $190 billion by 2030.

Yashraj Erande, Managing Director and Partner at BCG, said,“Indian Fintech continues to command the 3rd largest share of the global funding and deal volume. Significant increase (2x in 2023 vs 2022) in the profitability outlook across Indian Fintechs observed. Fintechs in India are no longer opting for the acquire first, fix later approach of business build but have now started building businesses which are regulatory compliant by design from day zero. This will be an era of collective growth and collaboration between the Fintechs and incumbents.”

Collaboration over Competition: Fintech partnerships continue to be a focus, with both incumbents and challengers working together to serve customers. The lines between traditional financial institutions and fintech companies are blurring.

Survey Findings: A survey of 70+ founders and CXOs of top fintechs and incumbents revealed insights into the industry's direction:

  • 75% of investors prioritize profitability and sustainable growth.
  • Fintech profitability outlook has improved significantly from 20-30% in 2022 to 40-60% in 2023.
  • Dedicated teams for fintech partnerships and clear risk management guidelines are viewed as effective collaboration levers.
  • The ecosystem recognises that regulatory clarity has improved over last year but also emphasises that more can be done to drive both consistency and transparency.
  • Regulatory-compliant solutions are preferred by incumbents when partnering.

Global Insights: Globally, fintech revenue is set to increase five-fold, surpassing $1.5 trillion by 2030. While the industry faced a funding winter in 2022, early signs of recovery are evident in 2023.

Key Priorities for Growth: As the Indian fintech landscape navigates funding challenges and prepares for future growth, key priorities include:

  • Emphasizing fiscal prudence, sustainable profitability, high-quality governance, and resilience.
  • Leveraging emerging technologies like GenAI to enhance existing solutions.
  • Establishing a clear policy framework to define fintech, bank, and regulator roles and responsibilities.
  • Fostering private innovation within the emerging DPI 2.0 stack to address inclusion, access, and scalability.
  • Exploring growth opportunities in emerging products such as embedded finance, BaaS 2.0, CBDCs, and small-ticket contextual lending.

About Matrix Partners India:

Founded in 2006, Matrix Partners India invests in companies targeting the Indian consumer and enterprise market, and has invested in several category-leading companies such as Dailyhunt(Local language platform), Five Star Business Finance (SME Lending), OfBusiness (B2B commerce, fintech), Ola (Mobility), Ola Electric (Electric Vehicles), OneCard (Mobile-first credit card), Oxyzo (Tech-enabled smart financing), Razorpay (Payments), Captain Fresh (B2B seafood marketplace), Country Delight (D2C dairy & fresh foods brand), GoKwik (E-commerce enablement platform), Jupiter (Neobank), MoEngage (Customer engagement platform), Mswipe(Mobile POS), Stanza Living (Tech-enabled student housing platform) and Zupee (Skill-based gaming) among others. Matrix Partners India has advisory offices in Bangalore, Delhi and Mumbai. Further information is available at To know more about our investment philosophy & ideologies, check out the #MatrixMoments podcast series.

About Boston Consulting Group:

Boston Consulting Group partners with leaders in business and society to tackle their most important challenges and capture their greatest opportunities. BCG was the pioneer in business strategy when it was founded in 1963. Today, we work closely with clients to embrace a transformational approach aimed at benefiting all stakeholders” empowering organizations to grow, build sustainable competitive advantage, and drive positive societal impact. Our diverse, global teams bring deep industry and functional expertise and a range of perspectives that question the status quo and spark change. BCG delivers solutions through leading-edge management consulting, technology and design, and corporate and digital ventures. We work in a uniquely collaborative model across the firm and throughout all levels of the client organization, fuelled by the goal of helping our clients thrive and enabling them to make the world a better place.