Fintech: Sunshine among the Clouds?

Despite myriad buildout challenges, fintech is evolving and generating new opportunities mainly due to its transformative ideas. Many Indian fintech companies have tapped the underserved markets that traditional banks often overlook. No wonder then that India stands second in terms of fintech adoption.

India is a strong player in the Global Fintech Industry with ho me to 7,460 Fintech Start-ups that account for 14% of Global Fintech Funding. This Industry which had its humble beginnings in 2008 scaled up between 2014 and 2021. The Covid Pandemic fanned the Industry’s rise which saw 200% jump in funding in 2020 and 2021. Indian Fintechs raised nearly $8 Billion in 2021. Shockingly, the Industry witnessed a steep decline of 45% in funding in Q1 of 2022[1].

Funding Woes for Indian Fintech

The decline in the funding for Fintechs termed as “Funding Winter” by experts was primarily attributed to global macroeconomic and geopolitical conditions such as:

  • Russia –Ukraine war
  • Impending possibility of a recession and high inflation globally
  • Preference for liquidity post Covid – In the previous 9 months, FPIs pulled out $35.6 Billion
  • Rising demand for data protection restricting innovation – Stringent

However, some experts see this decline as a natural phenomenon. The high funding received in 2020 and 2021 ensured that the growth and late stage Fintechs were already well funded and hence wouldn’t need additional funding. Few others attributed the decline to the below par financial performance and mismatch of performance with high valuations.

The Missing Piece in the Puzzle – “Fin”

While funding is seen mostly as a temporary hassle that is likely to ease out, a larger issue is that most Fintechs seem to miss out on the “Fin” or the Financial Performance aspect of the Fintech. Only 3.5% of the start-ups that raised $100 million or more between January and June 2022 were profitable[2].

Profitability Not on Radar

A BCG survey of more than 125 Founders and CXOs on the “Profitability of Indian Fintech Start-ups” revealed that[3]:

  • 82% Respondents consider product innovation and expansion as their top priority
  • The other top priorities were sighted as hiring right talent (75%) and improving customer service (61%)
  • Cost reduction was considered as being of least priority by 44%
  • Less than 20% consider Fintech governance and internal controls as significant
  • More than 70% believed that Fintech Start-ups may not be profitable in the next couple of years

While overemphasis on technology innovation is needed to thrive, the long term sustainability of Fintech business model hinges on the understanding of revenues, managing of costs and generating a return to the capital invested by the VCs.

So what should the Fintech’s do??

1. Refocus on the Financials

The Indian Fintech start-ups need to focus on making their units profitable. In addition to profits, they also need to prioritize on building compliance mechanisms internally to create sustainable growth models. Another solution is to create strong partnerships to develop joint innovations that will reduce costs and address regulatory complexities. 

2. Embrace Innovations

While focusing on low cost customer acquisition and building sustainable pricing models will ensure profitability growth, Fintechs also need to look into requirements of the newer areas of innovation in the finance related fields such as Investment advisory, Mutual Funds, Cryptos/NFTs (Non Fungible Tokens), Equity broking to improve customer base and revenues.

Learners’ Opportunity     

Fintech firms are not only generating healthy appetite for investment but also creates jobs and entrepreneurial opportunities. For more details check our program @

Discussion Question

1. What is your take in fintech? Job or business? Why?

2. What measures do you think, the Indian Fintech start-ups should implement to improve their financial performance?

Key Words

#foundationsofaccountingandfinance#financialmanagement #financialservices #onlinembacourse #mbabestcourses #onlinembaprograms #elearning #learningsimplified #onlinembaforworkingprofessionals #entrepreneurshiponlinemba



1. BCG & Matrix Partners India (2022). State of the Fintech Union 2022, August 2022.

2.Laxitha Mundhra (2022). As Funding Declines For Fintech Startups, Investors Look For Profitability, Reasonable Valuations. June, 2022

3.  Sounak Mukhopadhyay (2022).(2022). 292 Startups were profitable in Jan-June 2022, July 2022


 Foot Notes





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