The future of fintech is in lending-led players, not payments Report

The future of fintech is in lending-led players, not payments Report

After a sharp 30 percent drop in fintech funding in Q1, valuation is expected to shift from payments to loan-led fintechs, which the report says will gain maximum wallet share.

Against this sharp decline, funding for the sector jumped a whopping 157 percent year on year to $8 billion in 2021. Most of the funding went to payments at $2.7 billion, closely followed by loans at $2.6 billion, global consultancy BCG said in a report on Thursday.

But that will change as the lending segment is burdened by low margins as everyone tries to outdo each other in market share volumes, the report said, adding that credit-led fintech valuations will nearly triple by 2025. to 35 percent from 13 percent, while for payment companies it will be more than half to 22 percent from 50 percent.

Credit quality continues to be a key priority for fintech, with industry-wide gross NPAs hovering at 20 percent.

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