Fin-tech: Global and India perspectives
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Transcript of Fin-tech: Global and India perspectives
© Copyright Kalaari Capital 2016 Page 1
Fin-tech: Global and India perspectives
Bala Srinivasa April 2016
© Copyright Kalaari Capital 2016 Page 2
What is fin-tech?
4000+ Start-ups | $25B+ in funding
$1T+ Financial services industry
Digital consumer experience
Technology Financial products
© Copyright Kalaari Capital 2016 Page 3
Few industries face this level of attack
Unbundling the Bank
Source: Venture Scanner
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Forces driving disruption
Information connectivity and
access
Rewired consumer “spillover effect”
Low cost, secure cloud infrastructure
Advanced tech and digitization
Why Now?
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New entrants showing traction
Consumer Lending Payments Remittance SME
Lending Credit
Scoring
178K Members
$8B+ Loans
15 Min Loan
Disbursal
$1B+ Loans in 2015
100K+ SMEs
6 Min Loan
Approval
$11B+ in Fx
Volumes
70% Cheaper than Banks
20K+ Data points
scored per application
35 Sec Decision 15 Min Disbursal
500K+ Loans
23 Countries
$20B+ Payments
processed
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Fin-tech disruption formula
Better Faster Cheaper
Reimagine at the product line level
Data, analytics & Automation
Self-service digital experience
Value Creation
10x
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Neo Banks: Glimpse into the future
Germany
United Kingdom
United States
China
• Partnership (Mondo, Simple)
• Full stack
(Atom, Fidor) • Non-bank platforms
(Alibaba, Tencent)
Types of Models
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How are global banks responding?
Opportunities
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From alarm to strategic action
Board and C-level impetus
Rethinking the digital consumer experience
Heavy investments in data, analytics and automation
Aggressive participation in fin-tech ecosystem
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Engaging with Disruption
40%
20%
20%
10%
7% Incubating
Corporate Venture Funds
Partnering
Acquiring
Own Subsidiaries
19 deals in last 2 years for $700M+ through Citi Ventures 9 deals in last 2 years for $500M+
21 seed deals in last 2 years through Accelerator program
4 deals in last 2 years for $200M+ 6 deals through Accelerator program
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A new ecosystem rapidly falling in place
Timothy Draper
Peter Thiel
Angels & Incubators
Reputed VC Funds
Large Banks
Corporate Investors
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Emerging India landscape
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Regulatory impetus Payment Banks Aadhar IMPS Jan Dhan Yojana
Digital experiences
Digital footprint accelerating 700M+ Indians online by 2020
Next gen bank customer 800M under age 35 12M join workforce every year
Disruption will be larger in India
Digitization and connectivity unlocking demand
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Mobile is THE platform
AI based customer support
Core banking
Mobile data credit scoring
Consumer loans
Verification eKYC
Payments
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Representative challengers, but it’s early days
Lending
Payments
Brokerage Insurance
Credit Scoring
Personal Finance
$600M* Invested in 2015
80+ deals in 2015
22% Growth deals >=$10M
*Does not include Paytm`s $575M round by Alibaba
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Indian e-commerce platforms are a wild card
Online Bank Personal Loans
SME Loans
Credit Scoring Services
B2B & B2C Ecommerce $370B in GMV for CY14
Payments 500B+ in Annual Transaction Volume 42B+ Transactions till 2015 900M+ AliPay Accounts
Yue Bao
Money Market Fund AUM $108B
Zhaocai Bao
Lending Marketplace $50B* in Transaction Value since
launch in Apr 2015
*Kalaari Estimates
Alibaba Ecosystem example
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Yin and Yang for Indian banks
Challenges
• 20% – 40% revenue exposure?
• Massive digitization and automation gap
• Cannibalization of profitable product lines
• Potential loss of a new generation of consumers
• Cultural resistance to technology change
Opportunity • Use disruption to “rethink” • New technologies can
accelerate customer acquisition/lower costs
• Start-ups have tech but lack – Consumer reach – Brand
– Volumes
• Partner/acquire for mutual benefit
• Need a Fin-tech strategy to shape evolution
© Copyright Kalaari Capital 2016 Page 18
Thank You
[email protected] Partner, Kalaari Capital [email protected] Analyst, Kalaari Capital