Enabling Indian Fintechs to Expand Beyond Borders

Founders and leaders from some of India’s largest FinTechs across a diverse range of sectors including LendingTech, InvestTech, Payments, Digital-first NBFCs, and Payment Gateways gathered for the inaugural session of the Reserve Bank Innovation Hub’s FinTech Forum in March 2024. The agenda for the session was to share insights on global expansion under the theme, ‘Indian Fintechs Going Global: From Koramangala to California’.

The discussions shed light on the varied strategies for global expansion and highlighted the specific challenges that Indian fintechs face as they strive to extend their reach beyond domestic markets. This gathering of minds provided a dynamic overview of the opportunities available to Indian fintech companies looking to navigate the complex landscape of international business.

India’s fintech landscape is dynamic and diverse, presenting unique challenges and opportunities for innovation and expansion. During our discussions at the forum, it became evident that while many fintechs have considered expanding globally, the volatile and complex nature of the Indian market often encourage them to first consolidate their presence at home.

This domestic focus allows them to build a strong foundation and navigate local complexities before they pursue opportunities abroad. The conversation underscored the reality that, despite global ambitions, the priority for most remains to secure and expand their foothold within the Indian market.

Global Aspirations vs Local Realities

During the forum, we explored the contrast between emerging markets and developed economies. In places like Indonesia and Vietnam, similar demographics to India offer high volume but lower margins. Conversely, markets in the US and Europe offer higher margins but come with their own set of challenges, including intense competition and stringent regulations.

For instance, Indian payment fintech Razorpay’s expansion into Malaysia, facilitated through acquiring a digital banking licence via partnership, underscores the potential benefits of such collaborations. This approach not only eases market entry but also provides valuable insights into regional financial ecosystems.

For a fintech company to successfully expand globally, three key elements are essential: a proven business model, a scalable framework, and a robust network that facilitates collaboration and opens doors internationally. The discussions also highlighted that the vastness of the Indian market provides ample opportunities for domestic growth, which can serve as a solid foundation before stepping onto the international stage.

However, for those looking to expand, several factors need consideration:

Understanding Local Regulations: Navigating through foreign regulations remains a daunting hurdle. Each jurisdiction has its own set of rules which can significantly impact operational capabilities.

Establishing Local Connections: Success in new markets often requires building relationships with local banks, financial institutions, and regulators. These connections can prove crucial in understanding and integrating into the local ecosystem.

Adapting to Market Needs: Each market has its unique needs and challenges. Fintechs must be willing to adapt their offerings to meet these demands while staying relevant to their core business model.

The global expansion of Indian digital public infrastructure such as the Unified Payments Interface (UPI) signals a ripe opportunity for Indian fintechs to explore international markets. Traditionally, Indian fintechs have focused more on domestic growth, unlike their counterparts in the US and UK, such as Google Pay and Revolut, which are designed with global ambitions in mind. This trend highlights a potential untapped direction for Indian fintechs to consider broadening their operational horizons.

In this context, the Reserve Bank Innovation Hub (RBIH) is set to play a crucial role. By initiating and facilitating discussions with global regulators and creating a supportive framework for collaboration, the RBIH is well-positioned to help Indian fintechs navigate the complexities of international expansion. This strategic support will ensure smoother transitions for those looking to expand their horizons beyond Indian borders.

Balancing Act Ahead: Navigating Challenges and Seizing Opportunities

The path to global expansion for Indian fintechs is fraught with a complex mix of challenges and opportunities. The intricate legal landscapes require considerable investment in legal and market research to ensure thorough preparedness before entering new markets. Additionally, unlike the Indian SaaS sector, which has achieved global reach due to the ease of selling services from India, fintechs face unique demands. Successful fintech operations need to be deeply embedded within local ecosystems, necessitating large local teams and the ability to cater to local customer needs.

Establishing a robust local presence is crucial for effective market penetration but requires significant resource allocation. This is particularly challenging for startups and smaller firms that may not have the financial or human resources to scale internationally. Such barriers emphasise the need for Indian fintechs to engage in strategic planning for their resource management and operational expansion.

The RBIH Fintech Forum emphasised the vast opportunities that await those who can navigate these challenges. There is a strong push towards financial inclusion, advocating for the expansion of fintech services beyond the urban centres to include underserved areas. This not only aligns with RBIH’s critical goal of broadening financial access but also opens up new markets for Indian fintechs, potentially increasing their customer base and impact.

The discussion during the Fintech Forum highlighted the crucial role of the RBIH in facilitating this complex journey by providing necessary insights, resources, and connections. Providing this support is vital for fintechs to navigate through regulatory and operational hurdles, enabling them to successfully establish a foothold in the global market. By leveraging RBIH’s resources, Indian fintechs can better manage the challenges of international expansion while capitalising on the opportunities to drive financial innovation and inclusion worldwide.

In conclusion,

the forum was not just a meeting of minds but a clarion call for Indian fintechs to think globally. As we move forward, RBIH remains committed to empowering these ambitions, ensuring our fintech ecosystem thrives both at home and abroad.

Contributors

Gaurav Noronha, Sr Associate, RBIH
Chaarmikha Nagalla, Associate – Incubation and Startup Engagements
Mantegh Singh Anand, Associate – Incubation and Startup Engagements

Enabling Indian Fintechs to Expand Beyond Borders

Founders and leaders from some of India’s largest FinTechs across a diverse range of sectors including LendingTech, InvestTech, Payments, Digital-first NBFCs, and Payment Gateways gathered for the inaugural session of the Reserve Bank Innovation Hub’s FinTech Forum in March 2024. The agenda for the session was to share insights on global expansion under the theme, ‘Indian Fintechs Going Global: From Koramangala to California’.

The discussions shed light on the varied strategies for global expansion and highlighted the specific challenges that Indian fintechs face as they strive to extend their reach beyond domestic markets. This gathering of minds provided a dynamic overview of the opportunities available to Indian fintech companies looking to navigate the complex landscape of international business.

India’s fintech landscape is dynamic and diverse, presenting unique challenges and opportunities for innovation and expansion. During our discussions at the forum, it became evident that while many fintechs have considered expanding globally, the volatile and complex nature of the Indian market often encourage them to first consolidate their presence at home.

This domestic focus allows them to build a strong foundation and navigate local complexities before they pursue opportunities abroad. The conversation underscored the reality that, despite global ambitions, the priority for most remains to secure and expand their foothold within the Indian market.

Global Aspirations vs Local Realities

During the forum, we explored the contrast between emerging markets and developed economies. In places like Indonesia and Vietnam, similar demographics to India offer high volume but lower margins. Conversely, markets in the US and Europe offer higher margins but come with their own set of challenges, including intense competition and stringent regulations.

For instance, Indian payment fintech Razorpay’s expansion into Malaysia, facilitated through acquiring a digital banking licence via partnership, underscores the potential benefits of such collaborations. This approach not only eases market entry but also provides valuable insights into regional financial ecosystems.

For a fintech company to successfully expand globally, three key elements are essential: a proven business model, a scalable framework, and a robust network that facilitates collaboration and opens doors internationally. The discussions also highlighted that the vastness of the Indian market provides ample opportunities for domestic growth, which can serve as a solid foundation before stepping onto the international stage.

However, for those looking to expand, several factors need consideration:

Understanding Local Regulations: Navigating through foreign regulations remains a daunting hurdle. Each jurisdiction has its own set of rules which can significantly impact operational capabilities.

Establishing Local Connections: Success in new markets often requires building relationships with local banks, financial institutions, and regulators. These connections can prove crucial in understanding and integrating into the local ecosystem.

Adapting to Market Needs: Each market has its unique needs and challenges. Fintechs must be willing to adapt their offerings to meet these demands while staying relevant to their core business model.

The global expansion of Indian digital public infrastructure such as the Unified Payments Interface (UPI) signals a ripe opportunity for Indian fintechs to explore international markets. Traditionally, Indian fintechs have focused more on domestic growth, unlike their counterparts in the US and UK, such as Google Pay and Revolut, which are designed with global ambitions in mind. This trend highlights a potential untapped direction for Indian fintechs to consider broadening their operational horizons.

In this context, the Reserve Bank Innovation Hub (RBIH) is set to play a crucial role. By initiating and facilitating discussions with global regulators and creating a supportive framework for collaboration, the RBIH is well-positioned to help Indian fintechs navigate the complexities of international expansion. This strategic support will ensure smoother transitions for those looking to expand their horizons beyond Indian borders.

Balancing Act Ahead: Navigating Challenges and Seizing Opportunities

The path to global expansion for Indian fintechs is fraught with a complex mix of challenges and opportunities. The intricate legal landscapes require considerable investment in legal and market research to ensure thorough preparedness before entering new markets. Additionally, unlike the Indian SaaS sector, which has achieved global reach due to the ease of selling services from India, fintechs face unique demands. Successful fintech operations need to be deeply embedded within local ecosystems, necessitating large local teams and the ability to cater to local customer needs.

Establishing a robust local presence is crucial for effective market penetration but requires significant resource allocation. This is particularly challenging for startups and smaller firms that may not have the financial or human resources to scale internationally. Such barriers emphasise the need for Indian fintechs to engage in strategic planning for their resource management and operational expansion.

The RBIH Fintech Forum emphasised the vast opportunities that await those who can navigate these challenges. There is a strong push towards financial inclusion, advocating for the expansion of fintech services beyond the urban centres to include underserved areas. This not only aligns with RBIH’s critical goal of broadening financial access but also opens up new markets for Indian fintechs, potentially increasing their customer base and impact.

The discussion during the Fintech Forum highlighted the crucial role of the RBIH in facilitating this complex journey by providing necessary insights, resources, and connections. Providing this support is vital for fintechs to navigate through regulatory and operational hurdles, enabling them to successfully establish a foothold in the global market. By leveraging RBIH’s resources, Indian fintechs can better manage the challenges of international expansion while capitalising on the opportunities to drive financial innovation and inclusion worldwide.

In conclusion,

the forum was not just a meeting of minds but a clarion call for Indian fintechs to think globally. As we move forward, RBIH remains committed to empowering these ambitions, ensuring our fintech ecosystem thrives both at home and abroad.

Contributors

Gaurav Noronha, Sr Associate, RBIH
Chaarmikha Nagalla, Associate – Incubation and Startup Engagements
Mantegh Singh Anand, Associate – Incubation and Startup Engagements