India Is Becoming The Fintech Hub of The World

INDIA IS
BECOMING THE
FINTECH HUB
OF THE WORLD
THE DIGITAL FIFTH
FINTECH REPORT 2021
THE DIGITAL FIFTH REPORT
Phone : +91 98671 67676

Email : sreekant@thedigitalfifth.com
PAGE | 2
ABOUT US
Set up in 2017, we are India’s first Fintech consulting
and advisory firm for Fintechs, Banks, NBFCs, Wealth
Management, Mutual Fund and Insurance segments.
We have been the go-to solution finders for established
BFSI organizations and emerging game-changers alike.
While the Fintech landscape continues to evolve at a

rapid pace, The Digital Fifth empowers businesses by
providing them with tested as well as bespoke solutions
for their digital evolution journey. A niche consulting
firm, we focus on Digital Transformation, Fintech
Training & Strategic Partnerships between start-ups and
banks.
Our founders bring 50+ years of expertise in building &

setting up Banks and driving transformation projects
across US, Europe, Africa & Asia.
OBJECTIVES
– Changing the way money moves
– Business and ecosystem impact
– Creating measurable value
– Celebrate clients’ success
AREAS OF EXPERTISE
– Digital Strategy for Banks, FIs and
Fintechs
– Business and technology advisory
– Digital Program management
– Open Banking & Innovation
– Market Insights & reports
– Deep industry connect
– Cybersecurity
OUR SERVICES
– Consulting - Business, Digital &
Technology Strategy
– Fintech Learning and development
– Partnership - Go to market & ecosystem
access
– Investor matchmaking and fund raising
EXPERIENCE
– Setting up of Digital Banks
– Building and Executing digital strategy
– Execution of business and technology
strategy for banks, NBFCs and Fintechs
– Digital & technology program
management
– Client matchmaking for Fintechs
– Security and Governance
www.thedigitalfifth.com
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TABLE OF
CONTENTS
India Is Becoming the Fintech Hub of the world 1
What is the best strategy for open banking and how to

12
implement it?
Comprehensive Funding Analysis 18
Top Open Banking Initiatives in the country 23
Big Techs and Open banking 31
Fintech Acquisitions - 2021 36
Key Regulatory Changes 38
Top 30 India Fintech Influencers 2021 39
Indian Fintech Landscape 2021 41
Indian Open banking Ecosystem 2021 43
Indian Digital Lending Ecosystem 2021 45
The Digital Fifth Fintech School 47
sreekant@thedigitalfifth.com
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INDIA IS BECOMING
THE FINTECH HUB
FOR THE WORLD
BANKING-AS-A
SERVICE BECOMING SIGNIFICANT
With Banking-As-A-Service (or – Larger fintechs acquiring smaller

Finance-As-A-Service) gaining banks
significance, most prominent
– Relationships expanding
institutions will setup full scale units
from Pure Sales to End to End
for BaaS as well as Digital Banking
Engagement
with clear revenue and customer
engagement targets. We believe – Newer and innovative
that nearly 20 to 30 percent of overall monetization models
revenues would migrate to these
channels for Retail & MSME business – Building of newer products and
in next 12 to 24 months from current services
sub 5 percent numbers.
– Deeper integrations
This change will also be visible as
INNOVATION MOVING FROM
digitally savvy institutions will start
FRONTEND TO BACKEND
demonstrating better Cost Income
Ratios along with P/E Ratios. A lot of early-stage innovation
in India was focused on better
COLLABORATION BETWEEN
customer experience during Sales
BANKS AND FINTECHS
& Onboarding. This created space
Collaboration frameworks between for investment in frontend apps
banks and fintechs have matured with not-so-great delivery through
over the last 3 years. Banks have archaic Backoffice processes. We
started optimally using the fintech believe that during this year, the
services in bi-directional way with focus will shift to strong and flexible
the focus on key matrix like revenue backend platforms with integration
increase, cost reduction, deeper capabilities & cloud readiness.
customer engagement etc. During
This would mean heavy investment
the next year, we will see:
in:
– Banks investing or acquiring
– Core Banking Platforms
fintechs
PAGE | 5
– Open Banking Systems monetization opportunities. the same services as for Retail
They would find it challenging or Corporate Customers.
– Digital Banking Systems
to build business as they While all of them have current
– Digital Lending Platforms would compete with larger accounts with banks, most
All- In-One Apps (PayTM, are not serviced well through
– Open Insurance Platforms PhonePe) as well as Digital branch as well as digital
Banks (like Kotak and DBS). channels.
– Payments Infrastructure
Larger Retail Neobanks with The most critical needs of SME
We believe that investments
massive funding will do well customer includes invoicing,
would soar in startups
due to leadership quality, credit, liquidity management,
focusing on these platforms.
access to larger funds, and reconciliation, payment &
OPEN BANKING ability to sustain growth. receivable management,
STRATEGY which are not offered in a
We believe that newer
coherent way by banks. We
Firms will create board Neobanks will come up with a
have seen players like Open,
approved Open Banking sharper focus on
Vyapar, Ezo in India solving
Strategy for partnering the real problems of the
– Older customer base (say
with the ecosystem. These customers in partnership
50 plus)
strategies would be driven with banks. Players focusing
by the Board and would be – Retirees on even smaller MSMEs like
aligned with business as Khatabook, OKCredit have
well as digital strategy of the – Women
also made significant impact
organization. to the life of these customers.
– Specific Regions
Open Banking Strategy would We believe that SME
– Inclusion
cover: Neobanks would continue
These startups may have a
– Business Model with to grow with more niches
higher possibility of success
monetization approach & coming up like
as they will have a deeper
operating model – Exporters
understanding of the
– Open Banking Use cases customer segment, wider
– Importers
product offerings, and lower
– Open Banking competition. – Industry focused – say
architecture steel, e-commerce
We also believe that Retail
– Enterprise Architecture merchants
Neo-banking as a term will
with middleware approach not be used for platforms that These startups would also
& integration layer just have a “Decent App on face intense competition from
Prepaid”. SME Neobank initiatives of
RETAIL NEOBANKS
major banks like HDFC Bank,
SME NEOBANKS
We see a different journey for ICICI Bank, SBI etc.
Retail and SME Neobanks in SME banking has remained in
India. Retail NeoBanks will Multiple startups would be
doldrums due to lack of focus
move from primarily “Youth entering the market in next
of bankers on this “difficult”
and Mass focused” to more couple of years to tap different
customer base. They have
differentiated segments. segments of the market as
been offered services by a
Many of these new initiatives indicated above.
hybrid model, assuming that
would close down due to a these are customer can use
lack of differentiation and
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STARTUP ECOSYSTEM GETTING ENRICHED
NEXT YEAR WILL SEE for these players. Hopefully, competition.

A HUGE INCREASE IN clear focus on maximizing
INDIAN STARTUPS
SETTING OF STARTUPS the offering for a customer
base will help them in moving
INITIATE THEIR
Covid has adversely impacted toward scale and profitability.
INTERNATIONAL
the livelihood across all EXPANSION
segments and levels. We MARKET GETTING
With a lot of startups raising
see many of these impacted READY FOR
Series B or beyond funding,
people to focus on building INTERNATIONAL
they will look at international
their own start-ups in 2021 as STARTUPS
markets for expansion. We
they see newer opportunities.
In the last couple of years, believe that Middle East
We believe that this year
India has seen entry of many and South Asia would be
may be biggest in terms of
international startups, which the best market for Indian
number of startups coming
are in different stages of startups due to proximity as
up. This trend is already
expansion. However, many of well as similarity in market
visible with a large number
these players have closed their expectations. More than
of industry seniors stepping
business due to Covid related 10 startups in Payments
out of their organizations
challenges as well as due to / KYC / Regtech business
for setting up their own
lack of understanding of the will setup base in Middle
businesses.
market. East and will pave way for
GOING WIDE ON bigger engagement in the
We believe that Indian B2B
PRODUCTS AND ecosystem.
market is ripe for expansion
SEGMENTS
as banking sector is now South East Asia will be an area
Most Fintechs started their exposed to value of fintechs of focus for startups in B2B
journey by deeply focusing within India and has seen Lending / KYC / Regtech due
on one product and segment. international startups in to potential of scale in the
This established them as events across the world. We market. We have seen B2B
a leader in their own areas will see entry of another 40 to startups like Perfios, Kuliza
like Point of Sale, Payment 50 startups in the following making their presence felt in
Gateway, Buy Now Pay Later, areas: these markets.
Personal Loan products.
– Core banking platforms US and Europe would become
However, lack of scale and
more relevant for Indian
monetization opportunities – API Platforms
startups in year 2023 and
within these segments has
– Underwriting Platforms beyond. This delay is linked to
pushed all these players
heavy investment required to
in newer products and – Digital Engagement enter these markets and lack
segments. Platforms of business experience of our
We will see a bit of startups in this geography.
– Wealth Platforms
overlapping and confusing
ecosystem now, with every – CRM Platforms
player trying to add adjacent
There may not be much value
products or reach out to
for international startups to
newer segments. This would
enter B2C business due to
make it difficult to map the
challenges with localizations
competitors and would also
as well as excessive
affect the brand positioning
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COLLECTIONS AND PAYMENT
COLLECTION AS A embedded in the customer ecosystem through higher

SEGMENT journeys (subscriptions) cost of implementation and
instead of coming as a infrastructure.
Collection business has separate friction step.
always been intertwined Remittance business remains
with Payment business and INDEPENDENT B2C largely inefficient and is still
we have not seen innovative PAYMENT BUSINESS waiting for the emergence of
collection offerings like UPI MODEL WILL REMAIN few large remittance players
collect in the market. Entire EXCLUSIVE TO LARGE with a focus on high traffic
lending industry is waiting STARTUPS (YES, SAME corridors.
for newer solutions to come, AS WHAT WE HAD
PREDICTED LAST YEAR) B2B PAYMENT
which may be the coming
SEGMENT WILL GO
from either a large startup or
As a payment product, UPI THROUGH EVOLUTION
from New Umbrella Entity for
will continue to scale with
Retail Payments. B2B segment has done well
more innovative use cases
over last few years across
This would help in coming in and will remain
POS and Payment Gateway
reimagining collections default payment gateway
segments with leaders
beyond Cheques and NACH for the country. While UPI
building scalable business
model, which are reflective of has enabled innovation
models. This segment has
previous physical era. These in payment space, it has
primarily depended on
solutions would solve for: resulted in larger players
Merchant Discount Rate
taking complete control of the
– End to end Collections for (MDR) for their revenues. As
market. With wallet business
Merchants / NBFCs etc. country continues to move
depleting and UPI getting
towards lower MDR, payment
– Logical Network level aggregated with few players,
startups focusing on issuance
Reconciliations there may not be many new
side (where they share
players entering this space.
– Irregular amount / issuance fees with banks) as
duration linked collections We believe that with the well as acquirer side would be
(going beyond fixed potential entry of New adversely impacted.
amount and fixed Umbrella Entity in Retail
Almost all payment startups
duration) Payments, network level
have started offering other
innovation may scale to
We also believe that financial products like
the next level. This may
collections would get fully lending, wealth to make their
adversely impact the banking
business model viable. This
PAGE | 8
movement will get intensified during next 12 to 24 months. Many of these platforms may also
gravitate towards neo banking/ accounting segment.
B2B remittance business may have some players entering the segment, which has remained on
“dated payment rails” due to lack of innovation and intent. Even now, the remittance cost is nearly
2 to 4% of amount based the payment corridor, thereby impacting SME exporters adversely.
LENDING, TRADE FINANCE AND BEYOND
INDIA WILL HAVE 5 TRADE FINANCE improve its trade processing

DIGITAL LENDING STARTUPS WILL operations.
UNICORNS IN THE NEXT EMERGE
Indian banks will have
3 YEARS
Trade finance has remained to partner with global
Lending fintechs across an under penetrated area consortiums like Marco Polo,
retail and sme segment have for fintechs due to inherent Voltron, Trade Information
attracted a good chunk of complexity of the sector Network or with Indian
funding over the last couple of requiring deep knowledge of consortium of Finacle
years. Some of these startups business and compliance. We Trade Connect. There is
are currently undergoing have not seen experts from limited possibility of any
tough times due to changes these domain leaving their fintech player building the
in ekyc processes, Covid high paying and secure jobs consortium ground-up as
impact, liquidity crunch and to disrupt this segment. it would require immense
NPAs. This segment has now capital as well as international
There are multiple areas, rollout.
reached a maturity stage with
where fintechs can help in
established ones expected to
simplifying trade finance There may also be some
grow well and capital deprived
including: action in Treasury segment,
ones either closing down or
which is in complete slumber
merging with banks / stronger – Replacing manual data as of now.
fintechs. entry with data extraction
and processing of trade WEALTHTECH GROWTH
Successful startups in this
documents WOULD CONTINUE TO
segment have started
BE A CHALLENGE
1. Entering offline business – Reducing the operational
risks Indian Wealthtech / Robo
2. O
ffering newer lending Advisory has grown rather
products and beyond – Applying trade regulations tepidly due to lack of real
3. Adding new segments – KYC business models as Indian
customers do not tend to
4. Offering their platform as
– AML pay for value added services
SaaS
around wealth. In addition,
– Trade Embargoes
5. Applying for banking direct mutual funds have
license Internationally, startups gained ground amongst
6. Becoming Neobanks focused on trade finance digitally savvy customers,
like Traydstream, Coriolis, resulting in low or zero
We believe that India would Intix, Tradeteq are helping revenues for mutual fund
soon see multiple Digital in reducing risks and distributors.
Lending Unicorns as stronger accelerating trade processes.
players continue to gain Over next few years, most
Yes Bank has recently
traction. wealthtechs will merge
partnered with Traydstream to
with larger entities offering
PAGE | 9
wide range of products and Fund, Stock and other related are doing well as they:
services. These acquirers may services in partnership with
– Have low cost of customer
be from fintech ecosystem wealthtech platforms.
acquisition (as customers
or from financial services
ecosystem. Unique revenue
NEOENTRANTS / are already acquired)
making startups like
EMBEDDED FINANCE
– Have deep insights on
SmallCase would continue to Financial services are normally customers
scale, which are not focused not the primary need of the
purely on mutual fund – Can simplify customer
customer and are always
distribution. journeys
linked to real transaction like
buying a house, shopping, Many of these ecosystem
There may also be movement
education etc. As fintech players may buyout fintech
towards Wealth As A Service,
services are available via Open startups to fast-track the
wherein any Financial as
APIs through partners, large movement. This trend will
well as Non Financial Service
startups have started crossing continue to scale over next
Provider may offer Mutual
over to fintech. These players couple of years.
GOVERNMENT TECHNOLOGY AND ECOSYSTEM
Government has – Government e financial services like from

revolutionized fintech Marketplace ecommerce providers)
ecosystem through
– Psbloansin59minutes – Lending enablement
introduction of government
framework (OCEN in
supported frameworks like – MF Utility
progress)
– Aadhaar Authentication – Sahamati
We believe that government
– Aadhaar e-KYC, E-Sign – Public Credit Registry (in would continue to support
progress) the ecosystem through these
– IMPS, UPI, AEPS, UPI
initiatives as well as other
– RBI / IRDAI / SEBI incentives (like for digital
– GST
regulatory sandbox payments). This will provide
– TReDS powerful rails for Fintechs to
– Data aggregation (beyond
PAGE | 10
scale the business. shift in their organization Banks to PSU banks to large
structure. Digital ambitions private sector banks, who
As most financial institutions
of the banks are already are mapping their customer
would be embarking on their
visible across the spectrum journeys with Fintechs and
digital transformation in 2021,
from NBFCs to Small Finance Neobanks.
there would be a dramatic
CHANGE IN HR PRACTICES TO SUPPORT DIGITAL
HIRING & DOWNSIZING the Assets and Liabilities CREATION OF NEWER

WILL GO IN TANDEM: business. There would UNITS
be a definite reduction
Hiring would increase across between 10 to 30 percent Current organization
areas like product, technology, linked to the movement of structure may not support the
digital marketing, compliance, customers towards digital, transformation expectations
user experience, data science, improvement in processes, and hence, we would see the
partnerships etc. There would and closure of branches. creation of newer units like:
be rightsizing (10 to 50%) in
the areas of operations, credit, 3. Impact on Operations :
sales, finance etc, whose With change in customer 1. Banking As a Service:
work may be partially or fully expectations and overall This unit would handle
automated. Many of these automation across all Neobanks, Fintechs
impacted employees will customer journeys, we and embedded finance
move towards newer roles believe that over the next partners and would have
through accelerated training 24 months nearly 30 to its own P&L. This unit may
programs. 50% of front office, as well be named API Banking
as back office roles, will get Unit, Open Banking
1. Impact on Technology: reduced. Anyone in these Unit based on individual
We see a positive impact roles should take a long nomenclature.
on jobs and opportunities term view and plan their
for the tech staff working own career path. 2. Digital Banking: This
on transformation. There team would handle the
would be an increase up 4. Impact on Credit: full-scale Digital Business
to 30 percent with the Automation in (including sales) of the
management expectation underwriting has been bank instead of just
moving from just “third one of the primary themes focusing on services as is
party management or for digital lending over the current approach.
program management” to the last few years. In this
“insourcing and building year, we can see 15 to 20% 3. Data Science: We
cutting edge technology reduction in these jobs are seeing an intense
stack”. This would pave as larger institutions will movement towards
way for an transitioning adopt newer methods of building an in-house Data
phase for the internal underwriting. Science Unit to support
teams, which will need overall business across all
Multiple roles across channels.
support from HR teams.
Corporate, Treasury, Trade
2. Impact on Sales: We see will remain unaffected by
an adverse impact on jobs market changes as Digital
and opportunities for sales Transformation for them is still
staff focused on Retail in inception stage.
and SME segments across
PAGE | 11
LEADERSHIP AND improvement on the current CHANGE IN

BOARD LEVEL status where just 20% of these COMPENSATION
CHANGES: entities have this experience STRUCTURE
on their boards. We also
In the next 12 to 24 months, believe that they may Digital skills are in short
almost 30% of the top even come as a regulatory supply and will need to be
management would be mandate. compensated outside the
with deep digital/customer current baselined salary
engagement/technology CHANGE IN KPIS and incentive structure.
experience. This would create Without this basic change,
As most roles go through
internal challenges as many the organization with all right
transition, the KPIs of current
of these would be lateral hires intentions may not even
as well as new roles would also
and maybe from different age be able to start their digital
need to go through changes.
brackets and limited finance journey. This needs clear
We have seen that multiple
experience. mapping of skills with market
organizations have made
expectations.
Forward-looking institutions the mistake of not aligning
would not just hire for these performance measures with TRAINING AND
roles, but actively support in newer expectations, thereby CULTURE CHANGE
the amalgamation of these pushing the employees
towards sabotaging the digital Skills required for running
members in decision making
agenda. Digital Initiatives are different
and transformation journey.
from skills available within
We also believe that the In one example, we have large organizations. To ensure
role of the leadership would seen new digital customer that teams are getting
change to “Intrapreneur” due onboarding and servicing for the future, training of
to environment of extreme platform was not supported resources around Fintech
innovation, regulatory by the branch staff as they / Digital Lending / Digital
interventions, volatility, were taking this initiative as Transformation / Open
uncertainty, complexity and a threat to their roles with no Banking / Innovation / Change
ambiguity. positive impact on their KPIs. Management would be the
HR theme over the next few
Almost all Financial
years. These interventions
institutions would have at
may be done through internal
least 1 Digital Leader on their
champions as well as through
board, which would be a vast
external experts.
PAGE | 12
WHAT IS THE BEST STRATEGY

FOR OPEN BANKING AND
HOW TO IMPLEMENT IT?
Open banking has opened up a new collaboration line for Banks

to forge a partnership with Fintechs and build new business
models using a set of banking APIs. Fintechs have also lapped up
on these opportunities to create new business models like Neo
Banks, Accounting Platform Embedded with Banking, and the
recent phenomenon of Embedded Finance. With consumption
of APIs, entire financial services have opened up to new business
opportunities and growth dimensions.
PAGE | 13
As the world is seeing more build stack of APIs in a long road ahead, many
on Open Banking and partnerships with Banks banks have taken initiatives
embedded finance, APIs will & FIs and making same around open banking and
be at backbone transforming available for third parties; made good impact. But
financial services & come From Plaid, Fincity, it remains a significant
to center of this transition Truelayer to Setu or Zeta challenge for most banks
and powering a new wave of at home building up API to get ready with a whole
transformation such as stack platform suite of APIs (application
programming interface) and
– Emergence of new – Mobile Applications:
onboard Fintechs fast enough
business models: APIs have enabled the
to create new business
Transition from B2B or entire mobile application
opportunitiesdespite having
B2C business models to development process
alignment of relationship.
new business models like easier and faster; Kotak 811
B2B2C or B2B2B and other is one of leading example The entire process to
combination; for example of developing whole of develop and onboard fintech
Bank Open embedding Digital Bank on top of APIs partnership & Go-to-market
banking services in may take months and maybe
– Driving Innovation: APIs
SAAS based Accounting a year.
have made the internal
platform and making both
development process and Other financial segments
banking & accounting
management much easier such as Insurance or Wealth
services available for their
and efficient, leading to are yet to see a transition
SME customers
drive Innovation at a faster towards API enabled business
– Platform or Aggregator pace models.
Model: New forms of
Though Open Banking is
business setting up to
still evolving and there is
PAGE | 14
GETTING READY FOR or Open Business ( for easy of working with various banks
OPEN BANKING reference for Insurance, & Fintechs and understanding
Securities, Wealth etc) is modalities of business
It is rightly said that Open primarily about strategy and demands, technology
Banking is more about organizations need to take requirements, monetization;
business and less of strategic view to set up API The Digital Fifth has devised
technology, and definitely it is led transformation within full framework to define and
not technology project driven organization as part of Open implement Open Banking
through standard project Banking. Based on experience Strategy within organization.
management. Open Banking
FIVE PHASED APPROACH TO DEVELOP & IMPLEMENT STRATEGY
1. Assess Open Banking business models or target view for movements within
Readiness segmentation will form industry as someone at times
critical component to define take industry leadership with
This would be critical for
Open Banking Journey. In just one innovation. This one
early starter or even for
addition, one need to assess segment is seeing massive
organizations in mid of their
competitive positioning, traction across the globe from
journey. Business strategy
partner ecosystem, current UK Open Banking & Europe
along with short term and
API maturity, technology PSD2 to Singapore or India.
long-term plans will set
readiness state, stakeholder’s So, it is crucial to explore
context for Open Banking
expectations and technology. innovation and activities
Strategy for Bank. Business
taking place across the globe.
strategy of defining new Competition provides deeper
2. Redraw Future Landscape
Banks need to redraw the landscape of its business. Market is evolving at fast pace; customers’
expectations are changing while regulators also assessing innovation led approach. These
transitions demand for organizations to draw future landscape for API led business for Bank and
its opportunities. Open Banking is driving major transformation in industry through opening up
of new business models, opportunities for monetization. During this process, One will lay down
future landscape for Bank on API Journey. Below diagram provides overview on parameters to
draw future landscape for Bank based on expectations.
PAGE | 15
3. Create Open Banking New set of KPIs will be domains to drive Open
Positioning another factor to be Banking
considered while defining – R
ight customer segments
Based on self-assessment
its new open banking such as retail or SME
and checking out on new
positioning in the industry.
landscape, Banks or FIs must – Approach to manage
create new positioning for self This phase need to focus customer relationship like
in Industry and document on Identification of Open partner led or Bank driven
Target Business Model along Banking Use Cases – Define cost structure
with all aspects addressing – Build monetization
Open Banking strategy will
such as: opportunities
be used to design business
– New Business model to – This process will help
model for the Bank. Business
adopt Banks/FIs to pick & define
models will be defined based
– API Banking Leadership on below aspects: open banking use cases as
– Rolling out of API products part of this phase.
– Focus on Bank on
– Market Recognition Business activities/
PAGE | 16
4. Align Open Banking Journey: – Operational Journey

Initiatives & Define Open
– Partner Engagement – Process Framework
Banking Strategy
Model
– Governance
Based on current state – Customer Engagement Framework
assessment, analysing of Approach
– Technology Enablement
future state goal and Bank’s
– Unified API Service
positioning in Open Banking; – ESB / API Enablement
Platform
Banks/FIs should put down
– Platform
its Open Banking Strategy for – Productization of
the organization. This process Services Below diagram is broad
should cover Bank’s goal on representation for building
– New Customer
three broad objective: Open Banking Strategy
Segment
– Open Banking Customer
PAGE | 17
5. Execute the Strategy has not been built in a proper you want to go about it. But,
way to make it work. This has Strategy is designed to fail if it
Planning and developing
to have top down approach has not been built in a proper
Strategy is one part of the
and horizontally mapped way to make it work. This has
game, Execution is the Key.
across business units. Open to have top down approach
Many of the banks & FIs have
Banking Strategy needs to be and horizontally mapped
struggled to put right tools
managed from CEO or CXO across business units. Open
and processes in place as
desk and needs to operate as Banking Strategy needs to be
part of execution and this
a business unit. So, this would managed from CEO or CXO
becomes major bottlenecks
require participation from desk and needs to operate as
in rolling out partnership with
Operations, Compliance, Risk a business unit. So, this would
Fintechs.
Management, Finance and require participation from
Strategy is to define what you other supporting units to be Operations, Compliance, Risk
want to achieve and how do completely onboard on same. Management, Finance and
you want to go about it. But, other supporting units to be
Strategy is to define what you
Strategy is designed to fail if it completely onboard on same.
want to achieve and how do
PAGE | 18
COMPREHENSIVE FUNDING
ANALYSIS
The amount of vision and the right business funded With over $1.4Billion
model has not wavered. being infused into the market.
funding received by The Funding trend shows a
According to the data over the
dip post the month of June
the fintech segment, past 4 months, the following
and then slowly picks up
trends can be Seen
despite the economic again towards the end of the
– Lending and Payments year.
slowdown, is a clear
continue to be the top
March had the highest
indicator of the picks for Investors
number of startups being
confidence that that – Large deals, have been funded, with 23 deals being
far and few over the closed that month and A
the market has in the total amount of $182 million
course of the year, with
segment. only 2 deals occurring of in investments. The lowest
over a 100 million (Not amount of fund infusions
Over the past 12 months, The in the fintech segment was
including the 700mil
Digital Fifth has collated all seen in the month of July,
received by PhonePe from
the funding data available on which saw only 2 deals being
Wallmart). A major chunk
Fintech startups, and created closed and a net funding of
of Investments has been of
an in-depth analysis to $5.5million.
a small to medium ticket-
understand how the market
size
has performed. The Impact of Covid is clearly
– Due to COVID-19, here has visible on the graph especially
This article provides an post July, both in terms of the
been a clear dip in the
overview of the funding number of deals being closed
market in terms of the
across segments, key patterns and the amount of funds
number of startups being
observed and insights on being infused. While the
funded.
how the external factors have months of March and April
impacted the funding in – A major chunk of the witnessed an upward swing in
segments. investments received terms of the number of deal
has been Seed funding, closures, this can be attributed
Due to Pandemic and
showing that the investors to the relief package offered
the economic slowdown
see the market reviving by the government which
it resulted in, the fintech
itself at a rapid PACE boosted the optimism of the
segment has seen a
segment.
significant dip in terms of – Insurtech has also seen a
the number of statups being large jump in funding post The second half of the year
funded during the initial Pandemic, as most of the the year has witnessed a
months of the pandemic. But purchase of insurance has significant drop in deals.
the year-end has witnessed shifted online.
these numbers start to rise In terms of the amount of
and a positive traction is being
FLOW OF FUNDS funds raised, PhonePe beats
witnessed across all Fintech
ACROSS THE YEAR all others hands-down with
segments. This shows that $700Million being infused in
This year has seen a total of
investors’ faith in the founder’s the month of December. But
112 Unique startups being
PAGE | 19
since this funding was provided by Walmart which currently owns over 80% stake in PhonePe, we
have not included this in our calculations. Other significant funding during the year includes API
testing platform Postman, which received a funding of $150million and Razorpay which received
a funding of $100 million for its new Neo Banking platform.
PAGE | 20
TOP STARTUPS FUNDED
Funding Amount Company Founded Location Segment Focus Investors

Type (USD Year Area
Million)
Series C 150 PostMan 2014 Banga- Enablers API Insight Partners
lore devel-
opment
and
Testing
Series D 100 Razorpay 2013 Banga- NeoBank Pay- GIC, Sequoia Capital
lore / Ac- ments
counting
Series C $160 - Pine Labs 1998 Noida Payments POS Investors in this Round: Master-
$185* (India) software card
solutions
for offline
retail-
ers and
brands
Series C 84 Digit Insur- 2016 Ban- Insurtech Internet Investors in this Round: Faering
ance galore first Capital, TVS Capital Funds, A91
(India) insurer Partners
Series B 80 Cred 2018 Banga- Payments Credit DST Global, Ribbit Capital, Se-
lore Card quoia Capital and Tiger Global
Pay-
ments
Series C 75 BharatPe 2017 Ban- Lending QR code Investors in this Round: Coat-
galore based ue, Ribbit Capital, Amplo and 2
(India) payment more
app
Series B 70.1 MoneyTap 2015 Ban- Lending App- Investors in this round: RTP
galore based Global, Sequoia Capital, Aquiline
(India) credit Capital Partners and 1 More
line
SERIES B 60 KHATA- 2018 BANGA- NEO- DIGITAL Investors in this Round: Sequoia
BOOK LORE BANK LEDGER Capital, Tencent, DST Global and
(INDIA) / AC- AC- 12 More
COUNT- COUNT
ING BOOK
* Pinelabs raised a funding of approximately $75 to $100mil in the month of December
PAGE | 21
SEGMENT WISE FUNDING

The lending segment continues to have the maximum traction despite the challenging
macroeconomic conditions. The segment saw the the highest number both in terms of the
Number of startups funded and the of funding received. With total of 34 startups receiving a net
amount of $462million over the course of the year. This sector has seen a consistent infusion of
funds throughout the year with the maximum funding taking place in the month of March.
Apart from Lending, the Payment sector has also seen as many as 23 deal closures this year
amounting to a total of $974million. Of this amount, $700 million was received by PhonePe in
a funding round led by Walmart. This fund is a part of the spinning-off process of PhonePe by
Walmart.
Since Walmart still owns over 80% of PhonePe, we have excluded this amount from our
calculations
The Wealthtech and the Insurtech segment has also seen good traction over the year with 15 and
16 startup fundings being closed in each segment respectively.
PAGE | 22
STARTUP FUNDING ACROSS FUNDING ROUND

A major chunk of investment seen this year has been in the early stage startups. 49 startups have
received seed funds this year and 7 have received funding from angel investors. This is a major
indicator of the investor’s confidence in the revival of the economy and the Fintech startup space.
In terms of the amount of funding the maximum amount of funding has been in the series B.
Apart from participation from the likes of Accion, Amazon, Matrix Partners India, Rainmatter
Capital and Sequoia Capital, equally active engagement from Seed and Angel investors, like
Beenext, Aspada Investments, IvyCap Ventures, Lightspeed Venture Partners and more was also
seen.
CONCLUSION
Despite being a tough year for the economy, we have seen continuous investment in Indian
Fintech Ecosystem with 100 plus startups getting funded nearly 1.5 billion dollars. We believe that
with the massive adoption of digital expected in 2021, we’ll see more than 200 Fintech startups
getting funded with expected amount ranging between 3 to 4 billion dollars. This investment
will be focused on SME Neobanks, Lending Fintechs, Fintech Enablers (or Fintech Infrastructure
platforms), Insurtechs, and Embedded finance. Marketplace platforms, Retail Neobanks,
Wealthtechs and Regtechs would continue to lag in the funding rounds.
As for valuations, we see significant jump linked to higher digital adoption, availability of bigger
funds with VCs and increased interest of Banks & Financial Institutions in the ecosystem.
PAGE | 23
TOP OPEN BANKING

INITIATIVES IN INDIA -2020
The decade started INDUSTRY/ customers faster and better.
with a lot of
GOVT LED
Account Aggregators are
the key to the transforming
expectations and Open Banking initiatives in
major changes in INITIATIVES India and the network of
the participants is going to
the Banking sector. ACCOUNT be a massive one. With the
AGGREGATOR higher focus on the customer
COVID or Mutant centricity through the consent
COVID has posed The Account Aggregator driven approach, and a
concept has been in the collection of digital services
a lot challenges market for a couple of years available at the request of
and changes to the now. With more than three one click through Account
entities with the operational Aggregators, is the model that
business community license to build the Account Open Banking services from
Aggregator system, namely banks in India will scale up to.
and Banking sector
One Money, CAMS Finserv,
was no different. and Finvu, COVID has OCEN
delayed the launch of their The new age financial
All of this is an platforms in 2020. With no inclusion in India which will
old story now and open information available democratise credit starved
in the market pertaining to population of India, is Open
Banking sector has the launch of these Account Credit Enablement Network
realised the need Aggregator platforms, (OCEN). The traditional model
early 2021 is just a mere has failed to provide the credit
for digitisation expectation. solution for the population
and seamless Account Aggregators will in India that needed it the
enable seamless Open most. This public innovation
open banking framework is going to work in
Banking facilities by enabling
infrastructure is the customers consent to close association with Account
share their data digitally. It Aggregators with an aim to
key to achieve it. In is expected that the BFSI bring large scale innovation
and integration capabilities
this report, let us domain will entirely rely on
Account Aggregator services into lending platforms.
understand some which are complaint to In hope to provide loans to
of the major Open regulations building around borrowers in a timely manner
Consumer Data Protection, with the help of Technology
Banking initiatives to share or receive the data driven Open API’s that will
securely and digitally. The
in India, that lay put the borrower in the
digital transfer of information proximity of not just one, but
grounds for more to will enable faster turnaround a network of lenders. OCEN
time from the BFSI service
come in 2021. providers and serve the
systems emphasise the use
PAGE | 24
of technology to reduce the impact of OCEN, the Open scale global players into
gaps in gathering documents lending model, is to provide the Indian Lending Market.
and digital disbursement of a universal language for OCEN will ensure lending
the loans, to serve the new lenders in the market to partners to be regulatory
customers better. scale and build innovative compliant structure that
financial credit products. With will bring in innovation,
OCEN will empower open
ease of systemised lending, customer centricity, and
banking capabilities to
there is a greater chance of new investments into the
individuals and MSME’s with
improved competition in the market. This would reduce
the help of standardised set
lending segment, offering the credit gap in the market,
of APIs that can effectively
loans at lucrative interest leading to the improvements
plugin the lending
rates to the customers in on the lifestyle and business
capabilities, into their current
need of it. The future of OCEN capabilities of the customers.
products and services. The
will pan out bringing large
PAGE | 25
DEPA principle (Open, Revocable, the customer confidence

Granular, Auditable, provide on the financial services
The Data Empowerment Notice, and maintain Security offered in the market and
and Protection Architecture by design), to empower aims to improve customer
(DEPA) puts every citizen of adoption of standards for participation in a secure way.
India in the driving seat w.r.t data storage and processing Like the CDR in Australia,
their data. DEPA aims to techniques. aiming to include all public
bring democracy in consumer services into the Data
data space and the service DEPA’s data governance
Protection, similarly DEPA
providers, involving the use concept in the new age
has the capability to spread
of standardised technology Open banking system will
across into various public
architecture. DEPA supports ensure that the customers
services industries. Tighter
secure, interoperable and have complete control over
data privacy laws could mean
privacy respecting framework their data. This will help
peace to customers and the
for data sharing through them explore the financial
firms requesting the data
Consent artefact, data product offerings and will
must implement advanced
sharing through Open API’s bring in Fintech players
infrastructure, to safeguard
and a standard for Financial into the market ensuring
the data from the customers.
information. Consent Artefact innovation and competition.
will be based on ORGANS DEPA is focused to improve
Source: Niti Ayog
PCR loans, repayment history of borrowers to the lenders in

the borrowers, ancillary data the market, giving the lenders
Public Credit Registry (PCR) like overdue utility payments, a 360-degree view of the
is a repository initiative by RBI or tax payments data from credit history of the customer.
that will put together the data tax authorities, and other PCR will also ensure that the
of individual and corporate primary data in a single large credit history of the customer
borrowers (new and existing). database. is available to all the lenders,
The idea is to maintain the to evaluate the risk and credit
credit history, outstanding PCR aims to reduce
worthiness of the customer.
information asymmetry of the
PAGE | 26
The result of the risk and the market which in turn improving the transparency
credit worthiness evaluated is focused to improve the in the market. Though there
will not only improve the business conditions. The open are heaps of initiatives ahead
businesses to mitigate risk, repository will ensure that to be implemented, for the
but also provide the choice for the lenders have an account PCR to get Operational, there
the customer i.e., to choose of the individuals, corporates, is a lot it can bring to the
and compare the lenders SME’s and MSME’s on loan table to both customers and
and their services. TCS and outstanding, repayments, lenders to ensure a win-win
Dun & Bradstreet have been loan exposure, collateral proposition. With the Open
identified as the bidders at including the incoming API technology, OCEN and
the forefront, with a pending cashflows, helping the lenders PCR the lending industry is
technical evaluation from RBI. reduce bad debts. PCR will due for massive reforms that
also ensure the monitoring can transform the outlook of
PCR will reduce the
of the microfinance industry, the industry.
information asymmetry in
Image source: RBI
PAGE | 27
INITIATIVES BY PRIVATE PLAYERS IN THE

COUNTRY
ICICI Stack
‘ICICI Stack’ is a set of API’s Bank offers the digital services digital facilities available to
and comprehensive digital to Individual customers like the customers 24*7, without
banking services to individual opening of instant savings visiting the branch. Retail
or commercial customers. account, Fixed Deposit, customers can have enriched
ICICI Stack offers more than Public Provident Fund, Buy experience while business
500 services that provide all Insurance, wealth creation, customers can improve
the banking requirements among others. The Business productivity even while
to the customers in one customers can use the away from office. It was the
location. Most of the services facilities like Insta Biz, Point of initiative that was Just in time
provided are the first time the Sale, or Payment gateway (as when the situation demanded
industry has experienced and the need suits the customer), business behind closed doors
are available on the Bank’s Insta Overdraft, access to Biz and this could be the future,
portable platform. circle, among more. ICICI but in a different and better
Stack is leading the Open situation.
This fine initiative from ICICI Banking path with seamless
PAGE | 28
Angel Broking the business centric Open API enabling API’s will ensure high
approach. participation of Technology
and Edelweiss driven Insurance that will
Analysing the case of make life easy for customers.
The Banking industry is Edelweiss General Insurance,
raking up the technological the Open API’s can enable Angel Broking’s Open API
innovation through Open enhanced claim process, will enable new investments
API’s is also spreading to collaboration with other and trading platforms that
the speciality firms in the insurance providers, and can run without the burden
BFSI segment. Firms like distributors with low cost of licensing. Their Open API
Angel Broking (Financial of integration with ease of will enable access to end-
Services – Trading) and access to information in real to-end broking services and
Edelweiss (Insurance) have time. The API sharing will enable new products to be
also introduced Open APIs. give customer the choice trading ready in minutes. This
Witnessing these innovations, and a better experience on will enable traders have the
one can now agree that whole all claims or post insurance flexibility to implement their
of BFSI segment is bullish over needs. Other big players also own algorithms for trading,
Image source: Angel Borking
PAGE | 29
new start-ups building the long-awaited personal start-ups building robotic

innovative solutions and to touch to not-so-tech-savvy advisory services on stocks,
offer personalised trading customers, making trading or Language assistants or
platforms and websites the next wonder segment platforms that can speak to
catering to investing and that can transform the the customers, eliminating
trading audience. The Financial services industry. the lag in real time trades.
impact of Open API from The future of the industry
Angel Broking will bring could be very interesting, new
ICICI Bank online recharge and Banking innovative solution from

services like savings account, ICICI bank could set other
interoperable loans, investments, credit banks with sophisticated
Banking cards, among others by applications to attract new
linking their account to the wave of customers, bringing
Application ‘iMobile Pay’ application. in large scale interoperability
ICICI bank has emerged as and personalisation to
Taking the technology banking sector. The smaller
the tech innovation leader
capability of the other Banks banks will have to gear up to
among the other banks
out of equation, this initiative this tech prowess, else the
in the industry. They have
from ICICI bank will enable customers could gradually
recently launched a ‘first-of-
the customers movement play makeshift from one bank
its-kind’ mobile application
towards Open Banking, as to another. Will this initiate
‘iMobile Pay’ which can now
it was largely market driven banking industry to port
allow payments and banking
till date. ‘iMobile Pay’ could accounts from one bank to
services to customers of any
facilitate the customers of other like mobile numbers,
bank. Through ‘iMobile Pay’
regional, cooperative, and along with the credit history of
customers can generate UPI
small banks with UPI, bill the customer? That would be
id, pay bills, shopping, fund
payments or other seamless something that we can think
transfer, use digital wallet,
banking services. This of in future.
PAGE | 30
HDFC Bank Smart and web based. It will support country in future, which might
a range of features like POS, not be too far away.
Hub Merchant Digital khata, collection
Solutions 3.0 for reminders, management of 2020 has been a revolutionary
billing, inventory, payments, year in terms of Technology
SMEs and lending based on their improvements, or investments
bank history / business in technological services
‘Smart-Hub Merchant
capability. This technology from every firm, to go digital
Solutions 3.0’ is a HDFC
driven Business initiative in every step. Major changes
bank initiative to allow self-
will provide ideal forum for and reforms coming from the
employed professionals
the merchants to enter the BFSI segment, especially in
and merchants to accept
digital ecosystem through the Banking industry. With
payments in store, online
simple and convenient almost every major bank
and on the go by the instant
solution. Smart Hub will heavily investing on the tech
current account offering. The
take digital payments and infrastructure could mean the
bank looking at 20 million
technology to manage the banks will soon be completely
customers to use the smart
businesses, to rural India and capable of executing Open
hub from semi urban and
this will improve the bankable Banking services. 2021
rural India to deepen the
capabilities as well as bring could witness most exciting
market penetration of digital
in digital reforms to small Open Banking concepts
payments across India.
time vendors. Digitisation of turn into reality from the
Smart-Hub will be both every business will transform conceptual stage, marking it
Mobile applications based, India into a completely digital to be the year of reforms and
innovation.
PAGE | 31
BIG TECHS AND OPEN

BANKING
Banking and to be true with term collaborative approach to
work together and develop
Financial services making around new products, business
models, and value drivers
have been going “Embedded Finance”,
for customers. Emerging
through major which enables demands from Fintechs led to
banks opening up its services
transition with any non-financial and data through APIs and
emergence of new company to provide drive API enabled Banking,
and now widely been termed
business models banking services as Open Banking. With use
around Neo Banks, from its platform of wide range of APIs from
various business models
Challenger Banks, by integrating with evolved across financial
services, be it payments,
Banking-As-A-Service banking partners.
lending, investments, etc.
and its positively Application Programming
Though Fintechs have been
Interface (APIs) have made
turning around this new banking models
mainly benefitted in the entire
business of Open banking,
the way banking is possible through extending
Big Tech ( widely been used
banking services from Bank’s
delivered. Once Bill platform and delivering it
for Google, Apple, Facebook,
Amazon, Microsoft, and
Gates said “ we need through third party platform.
others) spotted significant
This whole phenomenon
banking, not banks”. can also be termed as Open
opportunities to enter into
financial services space. Big
Banking. In this era of Open
This is turning around techs have scaled to mass
Banking, Banks adopted a
PAGE | 32
Source: CB insights
scale and delivering wide techs having othersa to fast Payment Interface) payment
range of technology services track their financial services, ecosystem post embedding
through their platforms it is essential to look at the payment mode powered
and banking is always been transition made by some of by UPI platform to provide
interesting segment for them these big techs into banking. both P2P and P2M services
to explore and embed into in the Indian Market. In last 1
their product portfolio. Be it year, Google pay has become
Sundar Pichai or Jeff Bezos, Google one of top three players
all have clearly shown their in India in UPI payments
deep interest in the financial Google Pay has been one of alongside Phone Pe and
segment and esp in Banking. the success stories for Google Paytm where they command
in payment space across close to 94% market share. In
Open Banking made things
the globe, which is more November 2020, Google Pay
easier for them as they could
of digital wallet and online clocked almost 100 Million
use banking services from
payment platform powering transactions.
Banks through APIs and build
person-to-person as well as
better customer engagement Google Plex, digital checking
in-app payment services.
& value proposition for their account, in partnership with
Google Pay became one of
set of customers. Before Citi Bank is stated to be
major force in UPI (Unified
getting into advantages big launched in 2021 on Google
PAGE | 33
Source: https://www.apple.com/apple-card/
Pay platform. The Google- like Gmail, Google Maps, do lots of banking services in
Citi Plex account is a new Google docs and global partnership with Banks, it is
digital checking and savings presence; Google remains investing heavily in Fintechs to
account designed to make a big advantage position widen its portfolio.
money management intuitive to make better insights
Amazon Pay has already been
and engaging powered by about individual and
successful in most of the
analytics. embed financial services in
region with its digital wallet
personalised manner.
Google has already kind of functionality. In India,
announced the launch of Amazon has implemented
Google Card, a kind of debit UPI functionality to its
card, co-branded with a Amazon Amazon Pay and built a
Banking partner. Recently, complete payment app to
Google has further widened In the race of widening facilitate funds transfer, bill
its ambition to drive banking banking services, Amazon is payments, recharge, and
services when it announced taken big jump by leaps and other features. Amazon
to launch mobile banking bounds with venturing into took a big step towards
accounts in partnership with banking services space with strengthening its payment
BBVA USA, Bank Mobile, BMO payments to lending to selling game by integrating with
Harris, Coastal Community insurance. By looking closely, Worldpay, in 2019, to act as
Bank, First Independence it would look like Amazon is a back-end intermediary
Bank, and SEFCU. building the future of banking between banks and credit
within its ecosystem. Though card companies.
Being fully embedded in
Amazon is mostly trying to
individual life with services Apart from payments,
PAGE | 34
Amazon has ventured into expected to be launch in 2021.

Apple
lending through multiple
In India, Facebook is
partnerships with banks such
making another big Always hailed as one of the
as Bank of America Merrill
inroads in banking through most innovative companies,
Lynch, Goldman Sachs, ING.
integration of UPI services Apple has already worked
As per the CBinsight report,
on its Whatsapp Platform with Goldman Sachs and
Amazon has already issued
in partnership with multiple Mastercard to launch Apple
$5B of loans till 2019.
banks in India. In addition to Credit Card for its customer,
Facebook UPI payments, Facebook has which is directly integrated
announced its intentions to with iPhone. Apple already
roll out Insurance and pension has Apple Pay, a digital
Facebook is another big
products by end of this year. wallet kind of functionality
tech which has shown its
on the iPhone, which allows
ambitions to roll out banking
services through its platform.
Microsoft customers to add money
to it and use for contactless
It was in 2013, Facebook
Though, Microsoft has yet payments as well as for online
embedded funds transfer
to provide direct banking transactions.
capability from its facebook-
services, and it has made
social media platform through Driving Factors for Big Techs
its intention clear with a
messenger in partnership to push their Banking Goals
partnership with plaid to
with ICICI Bank. Since then
make Excel as Fintech App. Though there have been more
Facebook has made massive
Microsoft has partnered use cases across financial
transition in financial services.
with Plaid to let people services, these big techs are
In compared to other Big Tech
automatically import their operating into or getting into
players, Facebook has trying
bank and credit card account it. Open Banking undoubtedly
to make inroads into crypto
data into a new personal gave them the edge to keep
currency when it launched
finance tool called Money in exploring and adding banking
Libra, Facebook Digital
Excel. services to their wings.
Currency. They also launched
Calibra, Facebook Digital But there has more, which
Wallet to store Libra. The does provide them with the
crypto currency platform is advantage to launch and pose
PAGE | 35
formidable threats to Fintechs Trust- Undoubtedly, Big techs underwriting processes, and
and the banking ecosystem. enjoy their fan following, be new products. Big Techs
We looked at some of the it Apple or Google because have developed superior
reasons as follows: of their ability to the superior capabilities around AI/ML
service model and sustainable and have used successfully
Ecosystem: Big techs have
quality. Banks have yet been in their existing product and
developed their ecosystem
able to hold their fort in the service stack to power their
well where they own their
age of Fintechs primarily growth. The same skills on AI/
customers, their value chain.
because of the trust factor. ML provide them an edge to
For example, Amazon has its
When these big techs bring couple their financial services.
e-commerce platform with
a similar level of trust to
its customers, resellers, and Capital One of the reasons
customers to use banking
then coupling with other for the big growth in Fintech
services from them, it
value propositions from & startup evolution is the
makes it easier for them to
Prime, Alexa, etc., and all well availability of capital. Today,
roll out banking. Big Techs
integrated. This makes it easy the majority of available
power their trust factor with
for them to plug in financial capital, mainly through
Banks and play well on the
services and operate it within Venture funding, has gone
positioning.
their ecosystem. into technology. To drive
Stronghold on Customer innovation and customer
Platform Enabled Banking:
Engagement- Big Techs have outreach programs, ease
Technology is the backbone
known for building the best of of capital helps startup to
for Big Techs on which
class customer engagement drive their business model.
they have built on their
for their customers through Big Techs have been widely
business. Platform-based
building a robust interactive placed on cash, which makes
architecture has been core
model with continuous it easier for them to drive
to its technology, which
engagement. innovation and spend well
allows them to develop, build,
on customer acquisition
launch, and scale various new Big expertise in AI/ML
programs.
features and solutions at a Artificial Intelligence and
rapid pace. Micro-services Machine learning have There is little doubt that big
based architecture enables played a significant role techs will play a significant
big techs to plug in easily in transforming financial role in banking because of
with Banks using APIs and roll services and digitization. AI/ their inherent advantages
out financial services to their ML developed model has led through continuous
customers. to the emergence of new innovation and partnership
lending models, better credit structure with Banks.
PAGE | 36
FINTECH ACQUISITIONS - 2021

Impact
Segment Acquirer Acquiree Amount
Lending
Lending Eduvanz Klarity Undisclosed Increased Ecosystem Reach and Impact
Qbera from Estimated
InCred Ant Creditex $10-$15 To augment
Technologies million
To merge LazyPay and create a full stack
PayU Paysense $185 million
digital landing
To improve client base and provide a full
Wealthtech Scripbox Mitraz Financials Undisclosed
stack wealth management solution
Undisclosed-
Niyo To provide a more comprehensive product
Goalwise cash-and-
Solutions line
stock deal
Infibeam Cardpay
To provide a complete suite of payments
Payments Avenues Technologies $61k
acquiring and payments issuing products
Limited Limited
Navi DHFL General As a part of building a complete banking
Banking Undisclosed
Technologies Insurance Product Suite
GST software and
Services business To bolster ClearTax’s enterprise customer
Other ClearTax of Karvy Data Undisclosed base and help then scale up their GST
Management business
Services
To enable Instamojo to become a full-
Instamojo GetMeAShop $5million fledged business operating system for
businesses
1. Fintech firm Eduvanz management platform Technologies for an

which focuses on Scripbox has acquired a undisclosed amount that
education financing, controlling stake in Mitraz is estimated to be around
has acquired Klarity , a Financial, an investment $10-$15 million. Qbera has
startup that provides advisory firm providing a strong lending platform
career coaching through personalized financial for personal loans and the
one-on-one video- services to high net acquisition will help Incred
based interaction. The worth individuals (HNIs) to augment its digital
acquisition has been for and ultra high net worth distribution strengths and
an undisclosed amount. individuals (UHNIs). With contribute to the launch of
The acquisition helped this acquisition Scripbox its platform business.
Eduvanz to increase its and Mitraz Financial will
4. Fintech company PayU
network of education reach out to a larger set of
has acquired a controlling
institutes and also improve clients by providing a full
stake in PaySense, a
its reach on the ecosystem. stack wealth management
digital credit lending
Klarity Team will help solution powered by the
platform and all its assets
Eduvanz users to not only tech, data, and science.
at a valuation of $185
finance their courses but
3. Incred Management million. PayU will merge
also help in choosing the
and Technology Services its consumer lending
right course for them.
acquired fintech firm business Lazypay with
2. Digital personal wealth Qbera from Ant Creditex PaySense to build a full
PAGE | 37
stack digital lending Since its inception Navi with a comprehensive

platform in India. PayU Technologies made it credit issuance portfolio
will inject a sum of clear that it intends to go including secured and
$200 million in the new for a full banking license unsecured lending
merged entity in the and using tech at the
form of equity capital, center of the operations.
PREDICTIONS
where $65 million will be This acquisition fits in
FOR 2021
immediately invested, and the direction to fulfill its With successful Fintechs as
the remaining corpus will banking ambitions. Navi well as Financial Institutions
be infused over the next Technologies is following looking at adding new
two years to help the loan The Flipkart strategy and products / segments, this
book grow. acquiring the streak of year would see the highest
companies to build a number of acquisitions in the
5. Digital Banking fintech
comprehensive portfolio. market.
startup Niyo Solutions
has acquired Goalwise, 8. Fintech company – Banks and NBFCs
a new age mutual funds Instamojo has acquired will acquire primarily
investment platform in a GetMeAShop for $5 million lending fintechs for their
cash-and-stock deal for from Times Internet. technology and customer
an undisclosed amount. GetMeAShop is a startup access
The founding members that allows businesses
of Goalwise will join Niyo’s to setup their wesbsite, – Wealth firms, who have
leadership team and will build an online store shunned technology
run Niyo Wealth as an and help businesses to till now, will acquire
independent vertical in the engage with customers wealthtechs for their tech
startup. This acquisition through the social apps prowess
is in line of Niyo’s goal of such as WhatsApp &
– Payment fintechs will
building a comprehensive Facebook. This acquisition
acquire smaller payment
product suite and will help Instamojo to
players, wealthtech,
inclusion of many more become a full-fledged
insurtech players
financial products. business operating system
for businesses. – Lending fintechs will
6. ClearTax, an online tax
acquire wealthtech,
filing platform, has 9. Fintech solutions provider
insurtech to bring width to
acquired GST software Infibeam Avenues
their business
and Services business of Limited acquired Cardpay
Karvy Data Management Technologies Limited. The – Wealthtech players would
Services for an undisclosed deal has taken place at an acquire smaller wealthtech
amount. The acquisition initial cash consideration players for access to
will bolster ClearTax’s GST of rupees 45 lakh. customer base
enterprise customer base. Infibeam will incorporate
With this acquisition, Cardpay’s services into
more than 200 enterprise its own, allowing it to
customers of Karvy will offer a complete suite
move to ClearTax. This of payments acquiring
acquisition will help Clear and payments issuing
Tax to quickly scale up products, present on
their GST customer base. both sides of digital
payment transactions.
7. Financial Service company
The acquisition of
Navi Technologies has
Cardpay strengthens
acquired DHFL General
Infibeam’s Payments
Insurance for $14 million.
credit services business
PAGE | 38
KEY REGULATORY CHANGES

RBI ISSUES GUIDELINES SC ALLOWS TRADING IRDAI PERMITS VIDEO-
FOR PAYMENTS IN CRYPTOCURRENCY KYC FOR ONBOARDING
REGULATING BODY INSURANCE
Supreme court (SC) has
CUSTOMERS
Reserve Bank of India permitted trading in
has issued rules for non- virtual currency including Insurance Regulatory and
government self-regulatory cryptocurrency which was Development Authority has
organization (SRO) which will earlier banned by Reserve permitted general and life
be tasked with collaborating Bank of India (RBI) on the insurance providers to use
with all the stakeholders for grounds of higher risk video-based identification
formulating and enforcing potential. process (VBIP) for onboarding
rules for payment system customers, RBI has already
Read more...
operators. permitted financial institutes
STARTUPS TO BE for video-KYC, it will help
Read more...
INCLUDED IN PRIORITY in reducing the manual
RBI ALLOWS AADHAR SECTOR LENDING process and in preventing the
BASED VIDEO-KYC pandemic.
Reserve Bank of India (RBI)
Reserve Bank of India (RBI) has included startups in Read more...
has permitted financial priority sector lending with a
NSE ALLOWED
institutes to perform view that startups enable hi-
TO UNDERTAKE
Aadhar based video-KYC tech and all-inclusive growth.
E-KYC AADHAR
for onboarding customers, Banks are required to provide
AUTHENTICATION
which will reduce the manual 40 percent of their exposure
intervention and increase to priority sector. Securities and Exchange
digitalization of onboarding Board of India (SEBI) has
Read more...
process. allowed National Stock
Exchange (NSE) to undertake
Read more...
e-KYC by eight entities which
were notified in May.
Read more...
PAGE | 39
INDIAN FINTECH
INFLUENCERS 2020
Anurag Sinha Arif Khan, Arindam Das, B.G. Mahesh Bhavik Vasa
Co Founder of Chief Digital CEO at DMI Consumer Co-Founder at Founder of
Credit (DMI Finance
OneCard Officer at NPCI: Pvt Ltd):
Sahamati GetVantage
Dhirendra Dr. Kshama Hero Choudhary Ishan Bansal Krish

Mahyavanshi, Fernandes, Gopalakrishnan
Co Founder of Managing Partner at Co Founder of Chairperson of
Turtlemint: Director and Chief BEENEXT Groww RBI Innovation
Executive Officer Hub
Northern Arc:
Kunal Shah Neeraj Sinha Nikhil Kamath Nitin Gupta Priya Sharma
Founder of Cred Head - Retail Co-Founder and Founder and CEO Co-Founder of
& Consumer CIO of Zerodha & of Uni ZestMoney
Banking at SBM True Beacon
Bank
PAGE | 40
Raj N Phani Rajat Agarwal Rajesh Kumar Ramgopal Ravishankar G V,

Subramani
Founder and Managing Managing Chief Operating Managing
Chairman of Director of Matrix Director & Chief Officer of Perfios Director at
Zaggle Partners India Executive Officer Sequoia Capital:
of TransUnion
CIBIL Limited
Reeju Datta Sameer Brij Sasidhar Shanti Shashank Kumar

Verma Thumuluri Ekambaram
Co-Founder of Managing CEO & MD of Group President – Co Founder of
Cashfree Director at Nexus SUB-K Impact Consumer Banking Razorpay
& Member of Group
Venture Partners Solutions: Management Council
Kotak Mahindra Bank
Smrithi Sudipta Roy T.R Varun Dua Vinay Agrawal

Ravichandran Ramachandran
Business Head Group Head - Group Country CEO of Acko Chief Executive
- Payments, Unsecured Assets, Manager India & General Officer of Angel
Consumer & Cards, Payment South Asia of Visa: Insurance Broking Group
Commercial Solutions &
Lending & Millennial
Insuretech at Banking:
Flipkart
FINTECH LEADER
OF THE YEAR
Sachin Bansal, CEO of Navi
PAGE | 41
INDIA FINTECH LANDSCAPE

JANUARY 2021
PAGE | 42
Before 2010: Funds.

Initial stage of 2019 till date:
development of digital
marketplaces focused on Indiastack continues to
generating leads for loans positively impact Fintechs
and insurance business with newer services.
2010 - 2014: NeoBanks have emerged

as a segment of choice
Like every other for investors. Embedded
ecosystem, Indian Finance players are
Payment ecosystem grew introducing “Fintech as
immensely across wallets, a service line” in their
pre-paid cards, point of current business models
sale platforms, payment by either developing it
gateway platforms organically or buying out
Fintechs.
2015 - 2018:
Lending startups are
Introduction of Indiastack going through evolution
(Aadhaar / eKYC / UPI / phase. Complex areas
eSign etc) simplified as like Trade Finance and
well as disrupted Payment, B2B startups are getting
Lending, Insurance, support in the new wave.
Wealth business.
While wallets collapsed
due to UPI, Lending
Fintechs/Insuretech
prospered.
Wealth business went
through challenges due
to Direct plans of Mutual
PAGE | 43
INDIAN OPEN BANKING

ECOSYSTEM
PAGE | 44
The banking ecosystem of India has undergone rapid

changes in the past 5 years, moving from a traditional
product centric, inside-out approach to a consumption
based, outside-in approach. With the evolution of open
banking, pioneered by BFSI players like Yes Bank, Kotak,
RBL etc, the ecosystem has now grown to include NBFC
and other tech players who have created partnership within
the system. Open banking has now become a part of their
organizational culture.
The ecosystem has also seen the emergence of players in
the segment of API Validation and data driven solutions,
enabling it to grow into perhaps what can be called the
most comprehensive and holistic open banking ecosystem
in the world
The open banking network can be broadly classified into
5 categories. With the Bank APIs forming the bottom
layer, followed by a technology stack partners on top. This
ecosystem is enabled by key players who perform tasks like
data validation, analytics and also provide infrastructure. The
effectiveness of this network has led to the rise of several
use cases like Neo banks, digital banks and big tech players
who use bank APIs for their underlying operations. The
ecosystem is also supported by investors.
Read More Here
PAGE | 45
INDIAN DIGITAL LENDING

ECOSYSTEM
PAGE | 46
The Indian Lending landscape has undergone a dramatic

shift over the past few years. The legacy systems and
practices that were prominent in this space are disappearing
and getting replaced with digital processes that are
powered by data and AI. This transformation has been
further accelerated by the arrival of COVID-19 and the social
distancing norms put to counter it.
Keeping these changes in mind, we at The Digital Fifth have
also revamped our Digital Lending landscape to include the
new players and segments that have grown and flourished
despite these tough times.
Read More Here
PAGE | 47
THE DIGITAL FIFTH FINTECH

SCHOOL
The ongoing pandemic and the upgrade themselves to make a bigger
accelerated digital adoption impact and contribute towards the
among people, industry leaders overall growth of the ecosystem..
and institutions had to re-think
their Digital strategy and product Why Our Trainings?
offerings. The Digital Fifth views these
Our courses are less about theory and more
changing scenarios as an opportunity about implementation. We attract the best
for businesses to unlearn old rigid of the crowd because we firmly believe in
practices and re-learn what the delivering the best trainings from our end,
customers need and for individuals to be it in terms of content or the best industry
recalibrate themselves according to the speakers. The following are our highlights-
industrys needs.
– Information packed practical training
Keeping this shift in mind, the Digital – Industry experts sharing their first-hand
Fifth has rebranded its training experiences
programs under the umbrella of The – Participants across the 10+ countries
Digital Fifth Fintech school. Through
– Learning experience with live capstone
comprehensive Fintech courses for projects and examples
financial services professionals and
– Community Support through premium
FinTech startups, The Digital Fifth WhatsApp Group
enables individuals to reskill and
PAGE | 48
THE DIGITAL FIFTH
India’s first Fintech consulting and
advisory firm for Banks, NBFCs, Wealth
Management, Mutual Fund, and
Insurance segments.
GET IN TOUCH
+91 9867167676 | sreekant@thedigitalfifth.com | www.thedigitalfifth.com

India Is Becoming The Fintech Hub of The World

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INDIA IS

THE DIGITAL FIFTH REPORT

Phone : +91 98671 67676

While the Fintech landscape continues to evolve at a

Our founders bring 50+ years of expertise in building &

What is the best strategy for open banking and how to

Comprehensive Funding Analysis 18

Top Open Banking Initiatives in the country 23

Big Techs and Open banking 31

Fintech Acquisitions - 2021 36

Key Regulatory Changes 38

Top 30 India Fintech Influencers 2021 39

Indian Fintech Landscape 2021 41

Indian Open banking Ecosystem 2021 43

Indian Digital Lending Ecosystem 2021 45

The Digital Fifth Fintech School 47

With Banking-As-A-Service (or – Larger fintechs acquiring smaller

STARTUP ECOSYSTEM GETTING ENRICHED

NEXT YEAR WILL SEE for these players. Hopefully, competition.

COLLECTIONS AND PAYMENT

COLLECTION AS A embedded in the customer ecosystem through higher

LENDING, TRADE FINANCE AND BEYOND

INDIA WILL HAVE 5 TRADE FINANCE improve its trade processing

GOVERNMENT TECHNOLOGY AND ECOSYSTEM

Government has – Government e financial services like from

CHANGE IN HR PRACTICES TO SUPPORT DIGITAL

HIRING & DOWNSIZING the Assets and Liabilities CREATION OF NEWER

LEADERSHIP AND improvement on the current CHANGE IN

WHAT IS THE BEST STRATEGY

Open banking has opened up a new collaboration line for Banks

FIVE PHASED APPROACH TO DEVELOP & IMPLEMENT STRATEGY

2. Redraw Future Landscape

4. Align Open Banking Journey: – Operational Journey

TOP STARTUPS FUNDED

Funding Amount Company Founded Location Segment Focus Investors

* Pinelabs raised a funding of approximately $75 to $100mil in the month of December

SEGMENT WISE FUNDING

STARTUP FUNDING ACROSS FUNDING ROUND

TOP OPEN BANKING

DEPA principle (Open, Revocable, the customer confidence

Source: Niti Ayog

PCR loans, repayment history of borrowers to the lenders in

Image source: RBI

INITIATIVES BY PRIVATE PLAYERS IN THE

Image source: Angel Borking

new start-ups building the long-awaited personal start-ups building robotic

ICICI Bank online recharge and Banking innovative solution from

BIG TECHS AND OPEN

Amazon has ventured into expected to be launch in 2021.

FINTECH ACQUISITIONS - 2021

1. Fintech firm Eduvanz management platform Technologies for an

stack digital lending Since its inception Navi with a comprehensive

KEY REGULATORY CHANGES

Dhirendra Dr. Kshama Hero Choudhary Ishan Bansal Krish

Raj N Phani Rajat Agarwal Rajesh Kumar Ramgopal Ravishankar G V,

Reeju Datta Sameer Brij Sasidhar Shanti Shashank Kumar

Smrithi Sudipta Roy T.R Varun Dua Vinay Agrawal

INDIA FINTECH LANDSCAPE

Before 2010: Funds.

2010 - 2014: NeoBanks have emerged

INDIAN OPEN BANKING

The banking ecosystem of India has undergone rapid