India’s Fintech Sector Secures US$778 Million in Funding in Q3 2024

Posted by Written by Archana Rao Reading Time: 3 minutes

India’s fintech sector witnessed substantial growth in Q3 of 2024, securing US$778 million in funding—a 66 percent increase compared to Q3 2023 (US$471 million) and a 165 percent surge from Q2 2024.

The recent growth of the fintech sector has placed India second only to the United States in terms of fintech funding for the third quarter of 2024. While Q1 2023 still holds the highest funding record at US$1.16 billion, Q3 2024 followed closely with US$778 million. The top-funded fintech segments were alternative lending, investment technology, and payments. Additionally, two startups went public, and one company achieved unicorn status during this period.

India strengthens position as a global fintech leader: Report

According to a report by a market intelligence platform, India’s fintech ecosystem continues to solidify its position as a global leader. This growth is driven by government initiatives such as the Unified Payments Interface (UPI), which processed over 14 billion digital transactions in May 2024, and the JAM Trinity initiative, which integrates Aadhaar, mobile numbers, and bank accounts. The allocation of INR 26 billion (US$309 million) to support fintech startups further accelerates the sector’s expansion.

The report notes that India now ranks fourth in all-time fintech funding, trailing the US, China, and the UK. However, in Q3 2024, India’s ranking jumped to second place. A major contributor in this regard was DMI Finance, a non-banking finance company, which secured US$334 million in September 2024, fueling the US$517 million raised in the alternative lending sector—a 49 percent increase from Q3 2023 and a 199 percent rise from Q2 2024.

India’s investment technology segment has also performed well, securing US$109 million in Q3 2024, a 356 percent increase from Q2 2024, although it marked a 58 percent decline from Q3 2023.

Decline in fintech acquisitions despite funding growth

Despite the rise in funding, fintech acquisitions in India slowed, with only four deals recorded in Q3 2024, marking a 50 percent decrease from the eight acquisitions seen in Q3 2023. A notable acquisition in Q3 of 2024 was Ijeeva, a payment solutions company, by FinFusion Solutions, an IT consulting firm catering to the fintech landscape.

Projected growth of Indian fintech unicorns by 2030

India is projected to have around 150 fintech unicorns, collectively valued at US$500 billion, by 2030, according to a report by JM Financial and Beams Fintech Fund. Key sectors like payments, lending, insurtech, wealthtech, and neobanking are expected to experience multifold growth during this period.

The report, titled “Indian Fintech Journey from Evolution to Mega Public Listings,” predicts that Indian fintech companies’ combined revenue will rise to US$260 billion by 2030, up from the current US$20 billion. This growth will be fueled by higher consumer spending, deeper market penetration, and advancements in artificial intelligence.

With the success of UPI, the payments industry is set to lead India’s fintech boom. Transaction values are expected to reach US$11 trillion by 2030. The number of UPI QR codes is projected to rise from 202 million in 2022 to 317 million by the year end of 2024, while point-of-sale (PoS) terminals are anticipated to grow to 8.6 million.

Lending, insurtech, and wealthtech sectors poised for significant expansion

The report forecasts that the lending sector’s book size will grow 6.6 times to US$300 billion within the next five to six years. Additionally, the insurtech sector is expected to reach US$15 billion in gross written premium, and assets under management by wealthtech platforms are likely to surge fourfold to US$237 billion.

Current fintech unicorns and startup growth in India

As of writing this article, India is home to 26 fintech unicorns, including one decacorn, with a combined valuation of US$90 billion. This places India just behind the US, China, and the UK in terms of the number of fintech unicorns. Notable unicorns include PhonePe, Razorpay, Cred, Slice, Acko, and Zerodha.

A unicorn is a company valued at over US$1 billion, while a decacorn exceeds US$10 billion in valuation.

Additionally, the number of registered fintech startups in India has grown nearly fivefold in the past three years, from 2,100 in 2021 to 10,200 in 2024. Between 2014 and 2023, Indian fintech companies raised over US$28 billion across 1,486 deals, with US$4.3 billion coming from IPOs. Major IPO exits include Paytm, AngelOne, Policybazaar, Newgen, CMS, Tracxn, and KFin Technologies.

The report also highlights the growing trend toward sustainability, predicting that the electric vehicle financing market in India could reach US$50 billion by 2030.

(US$1 = INR 84.03)

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