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Fintech World Tour: Mumbai

Publish date: 06 February 2019
Author: Government of Maharashtra

Suniti Nanda is a fintech officer at the Government of Maharashtra. She spoke to Efma’s Boris Plantier about the Mumbai FinTech Hub and Mumbai’s fintech industry. 

The Mumbai FinTech Hub is a fintech initiative established by the Government of Maharashtra and is governed by the Fintech Policy created in February 2018. It aims to support and foster next-generation innovation that will enable financial empowerment and technological advancement across the entire financial services ecosystem to nurture globally competent fintech firms. In an exclusive interview with Efma, Suniti Nanda, a fintech officer at the Government of Maharashtra, tells us more.

How many fintech startups are there in Mumbai?  

In our registry we have close to 200 startups, with around 400 fintech startups in Maharashtra. According to a report by Yes Bank, it is estimated that there are around 1,200 fintechs in India, providing jobs for over 16,000 people.

What are the specialties of these startups?

Payments dominate the sector in terms of funds raised by analytics and digital wealth management, with process automation also gaining importance. Alternative lending is the second most funded and one of the fastest growing segments in the Indian fintech space.

Many fintechs are operating in the B2B and B2B2C space, where they are partnering with other financial institutions to improve various services and customer touchpoints. In broad terms they are concerned with payments, lending, wealth and investments verticals.

The fintech industry typically uses the latest open source technologies available in the market, including big data, artificial intelligence, machine learning, deep learning, natural language processing, cloud computing, and blockchain.

How much money is invested in Mumbai fintech startups?

According to a Traxcn report, as of 2017 US$695.6 million was raised by fintech startups in Maharashtra. According to another report by KPMG, the transaction value for the Indian fintech sector was estimated to be approximately US$33 billion in 2016 and is expected to reach US$73 billion by 2020.

Why should fintech startups settle in Mumbai?

Mumbai is India’s financial capital. It houses vital stock exchanges, key regulatory bodies and is the location of the headquarters of many national and international financial institutions, including SBI, ICICI Bank, Yes Bank and HDFC Bank. Mumbai also accounts for 25% India’s industrial output, 5% of its GDP and 70% of the capital transactions in the Indian economy.

Mumbai has the highest venture capital (VC) investment with over US$2516.42 million in last 5 years. It is a talent hub for the best technical, digital and business professional institutions. It also has some of the best training and education institutions in the country, including IIT Mumbai, SP Jain, JBIMS, COEP.

There has been a surge in industry-academia partnerships and increased private sector participation in creating innovation hubs such as the Lower Parel Innovation District (LPID). To rapidly grow the ecosystem, the state has launched a first of its kind fintech policy focused on providing subsidized space across major cities in Maharashtra and opportunities to run government and commercial pilots with BFSI leaders as mentors and investors.

An environment has been set up by the state to increase collaboration between ecosystem partners through an application programming interface (API) sandbox and use case repository. Additionally, to ease the financial burden on start-ups, fiscal incentives including reimbursements and grants are being provided.

We are currently running the first cohort in the accelerator program and reimbursements/grants schemes have been activated to cover infrastructure, GST, rental etc.

How do you see the future of fintech startups in Mumbai in the next five years?

With digital payments in India expected to exceed US$500 billion by 2020, we expect payments to remain an investment opportunity for VCs. Digital payments play an important role in India as they act as a gateway for other areas such as lending and wealth advisory. With a growing focus on financial inclusion, these digital payment footprints will help create credit history for the large unbanked population.

With the rise of digital data due to smartphone penetration government initiatives, Jan Dhan Yojana, API based national payments structure and iris based, Aadhar (unique identification for each citizen) India is equipped with the underlying infrastructure on which fintech firms can grow.

We believe there will be a growth in adoption of alternate data points for credit assessment by banking institutions and more attention on risk management algorithms for predicting non-performing assets (NPAs). We believe Mumbai has the potential to create almost 20,000 jobs over the coming years in the fintech sector. To balance this need, there will be focused courses introduced by leading education institutes.

What's coming next for the Mumbai FinTech Hub?

We plan to incubate at least 300 start-ups in next three years, as well as reducing the startup failure rate by 50%. We also hope to feature among the top five global fintech hubs.

In addition, we hope to operationalize Smart Fintech centers in Mumbai as well as create focused financial inclusion labs/incubation centers, multi-partner accelerator programs with focused themes, a fintech education platform and platforms for market access and idea evaluation.

Further aims include forming global corridors with other countries to support fintech’s global expansion, a rolling launchpad program for start-ups from other countries and an active API Sandbox with Maharashtra Government data APIs.

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