Indian FinTechs attracted $2.7 billion investments in 2020: KPMG report

By Leandra Monteiro

According to a KPMG report, in 2020 venture capital funds invested $2.7 billion into Indian FinTech companies. This is the second-highest fund infusion into the sector since 2019 when it had peaked at $3.5 billion.

The biggest Indian investment in 2020 was into Bengaluru-based payments firm Navi Technologies at $397.9 million from angel funds. Followed by Noida-based Pine Labs which attracted a total of $300 million from private equity players, and Razorpay which received $100 million from GIC of Singapore, Sequoia among a few others, making the company a unicorn.

When compared on a global platform, FinTech investments stood at a whopping $105 billion across 2,861 deals in the year, the third-highest annual total ever, as per the data collated by KPMG India.

As per the report, payment platforms remained the most targeted area of investment, followed by tech-driven insurance firms and wealth management platforms. As the current insurers enhanced their digital reach due to the pandemic, competition started to heat up in this segment. Niche payment players also expanded into the insurance segment.

Looking ahead at the year 2021, KPMG expects the FinTech investment to remain robust as the sector has witness an increase in demand for digital payments, contactless payments as well as an increase in activity on e-commerce platforms.

“Many of the banks in India are now going down the path of digital. They are really looking at tech and fintech companies that can help them move their digital activities forward, either investing in them directly or using them as service providers. That is going to be a big growth area for investment here in India — banking-as-a-service platforms,” said Sanjay Doshi, Partner and Head of Financial Services Advisory, KPMG in India.

In addition to payments and platform models, KPMG also predicts that B2B solutions, including embedded finance and ‘buy now, pay later’ solutions, will likely be a much in demand investment area in 2021.