NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

Monday, February 12, 2018

The startup ecosystem in India has witnessed a euphoric growth rate in the past couple of years, spearheading the entire landscape for emerging economies globally. Unfortunately, amongst the various industries that startups are laying a stronghold on, there is one industry where they often fold before being able to lay the winning card – finance.

Despite adequate funding and an unprecedented growth of 135% in just two years, most fintech startups are grappling with inefficiencies in multiple operations. However, with India slowly but surely making the transition towards a cashless economy, access to internet services, and increasing transparency in transactions, the outlook for the future is most certainly robust.

In the recent times we have seen excellent success stories – Paytm, FreeCharge, BankBazaar.com, Lendingkart etc. but the victory has been tainted by the increasing number of fintech startups closing down, despite support from various government initiatives like Digital India, BHIM, UPI etc.

Regulatory sandboxes have been established to be able to better mitigate risks and understand the viable opportunities. Yet, there remain multiple reasons for this anomaly that we need to explore.

Photo courtesy of Simone McCourtie.