A few ground rules for UK Fintech’s India entry
A financial technology sector expert delves into some key factors when companies eye the Indian market.
The Fintech Revolution is transforming the financial sector at its core. Today, there are over 21,650 Fintech start-ups in the world, each at varying stages of growth. Approximately 25 per cent are at an ‘emerging’ stage (beta product and seeking seed investment), 40 per cent are ‘scaling’ (market ready product and revenue positive) and 35 per cent have reached a ‘mature’ stage of growth, (established product, growing revenues, well funded, expanding). Source: GrowthEnabler Intelligence, Aug, 2018.
The UK is recognised as a leader in fintech innovations – a world leading financial centre. The UK financial services sector is one of the largest globally, representing approximately 9.4 per cent of GDP. London has the highest concentration of global financial institutions across banking, capital markets, insurance and asset management in the world. London is also the home to some of the most innovative Fintech start-ups, who are the 3rd most funded cluster, after the US and China. Nevertheless, the UK fintech economy still requires much needed capital and constant growth – which can come from fast-growing markets like India.
India is recognised as a technology powerhouse. A fast-growing digital economy, that has a huge consumer market, and an attractive tech talent pool; India will be a key market for the UK Fintech’s to target, now and in the future. India is seeing a surge in fintech innovation too. According to GrowthEnabler Intelligence and start-up categorisation, India has over 1,130 fintech start-ups, at varying stages of growth. 38 per cent are at emerging stage, 34 per cent scaling and 28 per cent at mature stage. This is a positive indication. However, there are critical success factors that must be addressed along this journey.
Prime Minister Modi’s visit to the UK earlier this year, in April 2018, was a much trigger event, as it led to the creation of a UK-India Technology Partnership. Since this partnership, a number of initiatives and capital funds are being developed to promote technology transfer and trade between the two nations. And Fintech innovation has a significant role to play.
UK fintech start-ups must explore the growth, investment and partnership opportunities the Indian market has to offer. There are few ground rules:
Regulations can be good, bad and ugly
The financial sector in the UK is going through significant change as new regulations, new technologies and economic pressures make way for new fintech entrants. India is no different – although has its own economic and cultural nuances. UK FinTech’s at a mature stage of growth, who have market ready solutions and high investment capacity should be first to explore India. Fintech’s must ensure they invest in building privacy and data protection and cyber-security capabilities as these are critical areas that will help to build consumer confidence and drive adoption.
For fintech start-ups to succeed, they have to be supported by an ecosystem.
Patience and tenacity will be key
Fintech’s have to have a ton of patience when engaging with traditional financial services organisations, policy agencies and regulators. Entering new markets, like India, will require even greater tenacity for UK fintechs. Fintechs in the UK take anywhere between six to 18 months to sign a contract with a large financial services company. The deal process is painfully slow. Expect to engage with multiple stakeholders, who need require varying levels of approvals from multiple parties, at every step of the journey.
There is a constant need to educate decision makers on how best to embrace and engage with fintech’s. The right frameworks, models and leadership attitude is key to enabling fast-innovation. It starts from the top.
Don’t ignore culture. It will define your success.
Fintech’s entering India must understand the social and cultural dynamics that drive buying decisions – both at a business and consumer level. The need for local presence is key. To build trust digital fintechs need to engage both in an online and offline manner. Fintechs must ensure products are designed to meet the needs of consumers (eg multiple languages) and are building trust at each stage of the customer journey. Case in Point: Online payment solution provider, PayTM, are currently leading the digital wave, particularly with its adoption in India’s Tier 2 and Tier 3 cities, providing evidence of the potential success awaiting fintech players, if they get it right.
It all comes down to visibility
Regardless of a fintech’s growth stage, from India to the UK and beyond, and despite major initiatives (i.e. UK-India Technology Partnership) it all comes down to visibility. If your prospective clients don’t know about you, your prospective employees haven’t heard of you, or if your prospective investors don’t know you exist, then growth – let alone rapid growth – will make an already-difficult-task even harder. Whatever your success, be sure to shout about it, tell the world and maximize your visibility through objective intelligence coverage provided by platforms such as GrowthEnabler.
Af Malhotra is Co-Founder of GrowthEnabler, which provides intelligence on tech innovation and disruptive business models.