Founders Are Sceptical About Fintech Profitability, Says Report
As per a new report released by venture capital firm, Matrix Partners India in association with Boston Consulting Group, titled 'State of India fintech union 2022', revealed that industry leaders doubt the profitability of the fintech firms in the next two to three years. The report says that more than 70 per cent of founders and CXOs believe that most fintechs may not be profitable in the next two to three years owing to an increased focus on the scale as opposed to profitability and compliance. The report includes survey results of more than 125 founders and senior management at leading fintech firms.
Canva
"We are at a fork in the road, in the India fintech story with sceptics raising many questions. India fintech has undeniable scale, provided superior value to customers and have emerged resilient through a once-in-a-lifetime crisis in covid-19," said Vikram Vaidyanathan, managing director, Matrix India, in a statement.
The report emphasizes that as the industry matures, fintechs should embrace compliance and privacy by design. It further pointed out the importance of a focus on profitability from day 1, best-in-class governance, risk management and policy enablers to ensure continued growth and innovation.
"The sector is mission-critical for the Indian economy. Almost 36 per cent of fintech customers are new-to-credit, versus 22 per cent for banks. Relentless focus on innovation and customers made fintechs successful. This should continue. Nonetheless, new muscle needs to be added for new priorities. Growing together in partnerships with incumbents and private innovation on public utilities will be key moats," said Yashraj Erande, managing director and partner, BCG, in a statement.
