© 2016 KPMG, an <strong>India</strong>n Registered Partnership and a member firm of the KPMG network of <strong>in</strong>dependent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.
F<strong>in</strong>tech <strong>in</strong> <strong>India</strong> - A global growth story 16 Growth levers for f<strong>in</strong>tech: A mature market driven approach F<strong>in</strong>tech is ga<strong>in</strong><strong>in</strong>g significant attention across the globe – with hubs evolv<strong>in</strong>g across Americas, Asia Pacific (APAC) and Europe. Different countries are mak<strong>in</strong>g substantial efforts to build a robust environment for f<strong>in</strong>tech for different reasons. Emerg<strong>in</strong>g economies <strong>in</strong> Asia are aim<strong>in</strong>g at a high level of f<strong>in</strong>ancial <strong>in</strong>clusion of the unbanked and under-banked, while developed economies like the U.S. and the U.K. are more focused on efficiency, cost-sav<strong>in</strong>gs and personalized customer services. A right mix of numerous factors are driv<strong>in</strong>g growth <strong>in</strong> these f<strong>in</strong>tech hubs. The availability of right technical skills, significant growth <strong>in</strong> capital <strong>in</strong>vestments, emergence of government policies, and an entrepreneurial and <strong>in</strong>novative m<strong>in</strong>d-set are the driv<strong>in</strong>g forces to establish f<strong>in</strong>tech as an enabler. KPMG <strong>in</strong> <strong>India</strong> proposed to formulate an approach towards plann<strong>in</strong>g the growth strategy for the <strong>India</strong>n f<strong>in</strong>tech landscape, derived from the learn<strong>in</strong>gs of a dynamic run-time analysis of mature f<strong>in</strong>tech markets. This approach consists of three stages: 1. Mature-market track<strong>in</strong>g: Our framework identifies mature f<strong>in</strong>tech markets to track the attributes that germ<strong>in</strong>ate, enable and guide the markets to success. 2. Market driver prioritisation: Our framework analyses the data po<strong>in</strong>ts from mature markets, to identify a current set of some of the most impactful driv<strong>in</strong>g forces (i.e. drivers to which a market is be<strong>in</strong>g the most responsive) for a set assessment timeframe. 3. Focus-market adjustment: On the basis of Stage 1 and 2, a global-overall roadmap for <strong>India</strong>n f<strong>in</strong>tech market’s roadmap is designed. For the present market conditions, KPMG <strong>in</strong> <strong>India</strong> presents a prelim<strong>in</strong>ary walk-through of this approach to del<strong>in</strong>eate a list of prioritized strategic focus areas for market participants. Stage 1: Mature market track stage Selection of track<strong>in</strong>g criteria This stage <strong>in</strong>volves selection of key mature markets after collection and analysis of their key data po<strong>in</strong>ts such as regulatory v<strong>in</strong>tage, bus<strong>in</strong>ess ecosystem maturity (presence of digitally transformed leaders <strong>in</strong> BFSI, <strong>in</strong>novation centres presence), deal activity (size, deal-stage distribution and exits) and coverage across key technologies. KPMG used the criteria above to select the follow<strong>in</strong>g mature markets: the U.S., the U.K., Hong Kong, S<strong>in</strong>gapore, Israel and Australia. Rationale for selection only mature markets for track<strong>in</strong>g: We acknowledge an unprecedented growth <strong>in</strong> many emerg<strong>in</strong>g markets globally. However, KPMG’s benchmark<strong>in</strong>g framework has selected only tenured, mature markets for the track<strong>in</strong>g stage. This is important because for any emerg<strong>in</strong>g market disrupted or enabled by radical developments, the evolution journey is driven by multiple market forces for which an <strong>in</strong>terplay and cause-effect relationship is reflected retrospectively. The learn<strong>in</strong>gs and <strong>in</strong>terplay of relationships is the ma<strong>in</strong>stay for quantitatively and qualitatively deriv<strong>in</strong>g a def<strong>in</strong>itive strategic guidance for emerg<strong>in</strong>g markets. Selection of attributes/track<strong>in</strong>g criteria We have identified six key attributes/track<strong>in</strong>g criteria on which to calibrate the identified mature markets: 1. Entrepreneurial and <strong>in</strong>novative m<strong>in</strong>d-set 2. Government programmes and <strong>in</strong>centives specific to f<strong>in</strong>tech 3. Technology read<strong>in</strong>ess of the market 4. Regulatory support of the market 5. Bus<strong>in</strong>ess environment 6. Fund<strong>in</strong>g The constituents of the six attributes/track<strong>in</strong>g criteria are given <strong>in</strong> the adjo<strong>in</strong><strong>in</strong>g table. To analyse these attribute s’ components, a total of 30 data po<strong>in</strong>ts collated from IMD, World Bank and the World Economic Forum are taken for each market. © 2016 KPMG, an <strong>India</strong>n Registered Partnership and a member firm of the KPMG network of <strong>in</strong>dependent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.