Updated on: Friday, December 24, 2021, 04:24 PM IST

Teji Mandi Explains: Is Fintechs’ soaring valuation really worth it?

Representative image |

Representative image |


Fintechs have recently caught the public’s eye doesn’t mean it's new. Fintech firms’ buzz is rallying like an IPO’s listing. In recent years, fintechs have morphed from scrappy startups to established and legacy financial institutions. But how? Let’s read up in a gist!

What’s Happening?

In the UK, fintechs raised over $2.9 billion in funding, a rise of 331% as compared to last year. Now coming to domestic waters, from the funding perspective, fintech funding in India grew more than two times to $8 billion in 2021 from $2.8 billion seen in 2020. It was a bumper year because there were 11 new fintech unicorns this year. And that’s why all big global investors are running after India’s rising unicorn space. From SoftBank to Tiger Global, most of these investors are heavily invested in Indian fintechs and startups.

With all this buzz, what has also risen for these fintechs is their valuation. For instance, Razorpay’s valuation doubled to $7.5 billion now as compared to $3 billion in April this year. Another fintech Groww’s valuation rallied 3x in October post a $251 million fundraiser this year.

How Did The Valuation Soar This Much?

The rising consumer base and investors interest have made 2021 a golden era for the fintech ecosystem. Somewhere COVID-19 lockdown gets a little credit behind fintechs’ success because the lockdown brought everyone digitally close. E-commerce sales also rose big time during the pandemic. Suddenly, the importance of technology was realised on a massive scale. Traditional financial services lacked agility in comparison to fintechs, which was way ahead in user-friendly interfaces, hassle-free processes and prompt feedback systems.

Currently, UPI systems have monopolised the market with two main players - Google Pay and PhonePe. Fintechs are disrupting the traditional players not just in payment services but also in credit cards, merchant banking and retail lending.

What Fintechs Hold For The Future?

Fintech innovation is ever-evolving. Currently, businesses and banking customers heavily relied on technology to navigate their financial livelihoods. Deloitte in its report said that, with the economic recovery, the opportunities for fintechs will continue to widen. The long-term future of fintechs looks intact. Fintechs can change the very fabric of modern society and business dynamics. It is here to stay and will take shape according to modern technology.

(To receive our E-paper on whatsapp daily, please click here. We permit sharing of the paper's PDF on WhatsApp and other social media platforms.)

Published on: Friday, December 24, 2021, 04:24 PM IST