Demonetization drives surge in Indian fintech investment

The report recorded a nearly fivefold year-on-year increase in fintech investment in Indian companies during 2017 to $2.4 billion. The number of fintech deals in the country increased by 65% on the year as the removal of INR500 and INR1,000 banknotes prompted uptake of emerging cashless payment methods.

India was highlighted alongside the US and the UK as a key driver of an upswing in global fintech investment, which rose 18% during 2017 to a record high of $27.4 billion. The momentum has been characterized by smaller deals at higher volumes, with the total number of transactions up 50% year-on-year.

“[W]e saw more and more B2B fintech models proving out at the banks, coupled with larger and later-stage investments as the fintech world scales up,” Julian Skan, senior manager director at Accenture’s financial services practice, said in a statement. “Also fueling growth was the rapid rise of insurtech [insurance technology] ventures where traditional carriers see new opportunities.”

The aftershocks expected in the wake of India’s surprise decision to implement demonetization in late 2016 have been relatively muted as economic activity in the newly low-cash environment remains stable. Economists have attributed the smoothness of the transition to both the speed of the policy rollout and the rapid adoption of non-cash payment systems.

Some of the latest activity reflecting this trend includes a $77 million round led by True North, IDG Venture Partners and Wellington Management for Policybazaar, a start-up based in Gurgaon near New Delhi that operates an online life insurance marketplace. Earlier this year, NeoGrowth Credit, a Mumbai-based loans supplier for small retailers raised a $47 million round led by LeapFrog Investments.

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• Topics
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