Varun Dube

All roads to monetization in fintech lead to lending, that's where the profit pools lie. "Fintech is not dead," Akshay Sarma who's spent the last 9 years building axio (formerly Capital Float (now axio)), one of India's most valuable fintech companies. Watch here: https://lnkd.in/gvHqB4zM We've talked about all things Fintech: > The Landscape of the Fintech Ecosystem, opportunities, and different business models > How Axio evolved from MSME lending to consumer lending post the pandemic > Are the regulators (RBI & SEBI) unsupportive of Indian fintech companies? > How should fintech founders navigate the tough fundraising environment? > Public markets, investing in equity vs debt + Akshay's personal investing strategy > The High-Risk, High-Reward Nature of Angel Investing > Do you need a NBFC license to succeed as a fintech company? > The Frenzy Around SME IPOs and Risk Appetite > The Importance of Profitability and Cost of Funds in Determining Margins Must watch for all fintech founders and investors in the country!

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The Indian fintech ecosystem is in its 'middle journey,' with challengers having created over $100B in value, compared to $600B+ in market cap from incumbents, and is poised to create large public market institutions. However, financial services penetration remains a significant challenge. To put this in perspective: ➔ Mutual Funds Penetration: India’s mutual funds penetration is 21% of GDP, far below the global average of 70-100%, with a 20% CAGR expected over the next five years. ➔ Life Insurance Density: India’s life insurance premium is $70 per capita, compared to the global average of $361, with a projected 12% CAGR over five years. ➔ Non-Life Insurance Density: Non-life insurance in India stands at $25 per capita, versus the global average of $528, with an 11% CAGR expected over five years. ➔ Unsecured Retail Loans: Only 9% of India’s population holds unsecured loans, far below the global range of 90-120%, with a projected 23% CAGR over five years. Addressing these gaps will likely drive growth and scale for both incumbents and challengers, highlighting the potential ahead, as detailed in our "State of the Fintech Union 2024" report in collaboration with Boston Consulting Group (BCG). The report, based on insights from over 60 fintech founders and CXOs, provides an in-depth analysis of the sector, emphasizing strategies for growth, better decision-making, and sustainable development. This year, it highlights key shifts, including a focus on the phy-gital user journey and a doubled emphasis on profitability and governance. At Z47, we remain confident that the fintech ecosystem is investing in the right areas, emerging stronger, and will create scaled public market institutions. I would like to extend my gratitude to Anuj Kumar, Gaurav Kumar, Harshil Mathur, Jitendra Gupta, Madhusudanan R, Neetu Chitkara, Sandeep Jethwani, V.R Govindarajan, Vasudevan P, #MadhusudanEkambaram and William Hockey who joined us at the Global Fintech Fest 2024, to launch the report. 🔗 Download the report: https://lnkd.in/gcaVRHDc Z47: Avnish Bajaj | Anand Khetan | Anish Patil | Taha Tinwala | Nipun Singhal BCG: Yashraj Erande | Vivek Mandhata | Nisha Bachani | Vikram Khanna | Akshat Raj | Jinia Rao | Chirag Sharma #FoundersFirst #Z47Fintech #SOFTU2024

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When some systems work at the speed of autobahn and other systems work at the speed of bullock cart, you can't achieve 100% synchronization between the two, no matter how much money you spend on technology. This is a huge technical problem, not just a commercial problem. This is also one main reason why banks in USA, who have even more bullock cart systems since they began their computerization decades before India, have soft pedaled FedNow and TCH-RTP, the equivalent of UPI / A2A RTP in their country. It's not that they lack the technology - virtually every building block underlying UPI is owned by an American company. Last year, there was talk of using UPIlite to solve this problem in India but we don't hear much about UPIlite now. https://lnkd.in/dRURzact. Reg Kotak. UPI. CBS. Housekeeping.

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6. Contextual finance will be ultimate, hence customer journey should be designed carefully..

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This week, the RBI Governor announced the upcoming launch of the Unified Lending Interface (ULI) It was fantastic to see a small demo of ULI at the Global FinTech Festival 2024 on Thursday: Similar to how UPI provided a “standard” for payments, ULI aims to provide a “standard” for sharing of lending data. Few points worth highlighting ⤵️ (1) This is NOT the 1st attempt to build a lending protocol in India - iSPIRT (a volunteer driven org) began work on OCEN (Open Credit Enablement Network) back in Sept 2020 - The OCEN framework is now on v 4.0; lots of volunteers from Juspay Razorpay etc are contributing to the framework - OCEN has had a series of successful pilots in cashflow based lending to FPOs (Farmer Producer Orgs) (2) This is also NOT the 2nd attempt to build a lending protocol in India - ONDC (India’s e-commerce protocol) began work to launch lending on its rails in August 2023 - The ONDC loans offering is very similar to ULI i.e. any ONDC Buyer App can (subject to review) enable loans as a category - Loans as a category is already live on ONDC with players like Paisabazaar (you can find some videos online about the 6-minute unsecured loan journey) (3) What we know about ULI so far? - ULI is going to go one step further by integrating with the digitized land records from the Dept of Land Resources; which means borrower credit worthiness can be assessed via alterative means. - Similar to how NPCI was spun out as a bank-backed consortium company to run UPI, we should expect a similar entity will run ULI; perhaps banks will need to invest their money here too! ➡️Overall, quite bullish on ULI —> It is great to see RBI promoting Digital Public Infrastructure, I love the RBI Governor’s line that the new trinity will be “JAM - UPI - ULI”

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