1. Summary
  2. Difficulties long-faced by credit Fintechs
  3. Credit FinTechs long-faced a liquidity crunch
  4. Insurers and InsurTechs
  5. Payment sector FinTechs


“Investor sentiment is comparatively neutral at this time; investors try still to stay far from models that are focused around the disposal. Even those United Nations who get to speculate wish the startup to be well-prepared to control expeditiously with the pandemic still dogging. We are going to still build and report back to potential investors to conversations further”

Difficulties long-faced by credit Fintechs

Credit FinTechs faced difficulties in collection

Although investors are cautious whereas finance, they’re willing to speculate on property, well-proven business models

  • Indian credit and disposal FinTechs received total funding of INR sixty-9.8 billion1 (USD 939 million) in FY twenty-one, showing 16.5% Y-o-Y growth in terms of investment from the previous year.
  • The graph demonstrates the next quantity of investment. However, it’s going to be noted that this quantity is across fewer deals. This can be a result of well-established FinTechs having seen some giant rounds of funding, that raise the entire total of investments.
  • Generally, for smaller, newer FinTechs, 2020 has been an arduous year. However, a number of these FinTechs that showed sturdy and property business models were supported by investors and received investments with the next average investment quantity compared to the investments created for brand new startups in FY twenty.
  • Despite receiving a lot of funding than the previous year, credit FinTechs suffered losses because of the pandemic, worsened by the moratorium. Capitalist interest in credit FinTechs remained sturdy till April, however, wavered thanks to the dearth of recipient repayments.

Credit FinTechs long-faced a liquidity crunch

Impact on product

  • Refinements across the UI and married women of e-commerce platforms, a variety of products, and shopping for and payment choices to draw in a lot of users and stay relevant within the market.
  • Customization of product offerings supported distinctive client wants. The target of this move is to extend the uptake of the latest product by specifically targeting low-risk customers in multiple segments.
  • A forceful fall in P2P disposal and earnings advances thanks to delinquencies and defaults have junction rectifier to a proportional fall in usage for several startups in these sub-domains.

Impact on organizational culture

  • Lay-offs to retain core workers and maintain assets for essential expenditures.
  • 15-20% pay cuts were introduced to prolong the runway and divert funds toward immediate structure needs.
  • Social distancing and dealing remotely have not hurt credit FinTechs, since the foremost integral elements of their business that is credit grading and analytics are tech-driven.

Impact on the business model

  • P2P-based disposal business models have suffered the foremost and lots of face closure of business.
  • Adoption of all-digital model for selling, client onboarding, and maintenance of services.
  • Credit FinTechs are introducing new ways to prolong client engagements. As an example, a credit FinTech we tend to interviewed reduced its price tag size throughout the pandemic from INR 12000 (USD 160) to INR 6,000 (USD 80) to continue serving its customers. This alteration helped it maintain the 15 August 1945 MoM portfolio growth, and limit recipient delinquency on the platform to three.

Insurers and InsurTechs

  • Impact on product – Micro-insurance1 product became well-liked.
  • Several InsurTechs are increasing their product portfolio, whereas some have additionally widened their geographical presence
  • InsurTechs, through insurance firms, have developed need-based COVID-19 products.
  • Embedding academic and awareness modules onto their platforms to tell existing customers concerning availing insurance plans to hide COVID-19-related unhealthiness expenditures.

Impact on organizational culture

  • InsurTechs have seen overall growth, which needed a stronger force and scaled-up hiring. However, inbound geographies, declining COVID-19 cases have additionally junction rectifier to layoffs to some extent.
  • Companies undertook remote operations thanks to restrictions on most field-based activities. As travel restrictions were largely withdrawn at the time of writing, field operations have begun to look at a lot of possibilities.

Impact on the business model

  • InsurTechs have restricted their physical presence whereas moving to digital onboarding and verification. This has helped scale back business expenses and CAC.
  • FinTechs have ramped up their virtual interaction with users on platforms through chat-bots and in-app pushbutton solutions to scale back CAC and OPEX whereas increasing user LTV.
  • Health insurance has seen high demand and will catch up on losses in alternative segments, like motor insurance.
  • Regulatory tweaks, like digital claim settlements, have allowed seamless digital operations of InsurTechs

Payment sector FinTechs

  • Payment FinTechs, thanks to their a lot of mature stage as compared to alternative subcategories of FinTechs, haven’t introduced layoffs or furloughs.
  • However, a couple of companies have introduced pay cuts and postponed bonuses as customary cost-cutting ways.
  • Employers are following a lot of holistic approaches toward hiring by preferring multiskilled candidates, seeking higher potency in work, and by lowering prices.
  • Thanks to the pandemic, several businesses have mostly shifted their focus from field activities to development and selling.
  • Increased target product expertise over incentives, as payment FinTechs look to maximize contactless norms. This interprets as a 40%4 reduction within the CAC.
  • Growth has started showing a formed recovery as digital payment transactions through UPI has bounced back. this can be primarily a result of folks have started mistreatment digital payments a lot for basic wants like groceries and bill payments by reducing their discretionary outlay.
  • FinTechs like Fino have begun levying a charge for low-value person-to-merchant (P2M) transactions.