Rupifi reported an annual growth of 407.7% in loan disbursal in 2022
The Embedded Finance industry in India will increase to US$23,451.6 million by 2029 from US$5,330 million in 2023, according to a report from ResearchAndMarkets.
It is expected to grow steadily over the forecast period, recording a CAGR of 36.3% during 2023-2029, said the report “India Embedded Finance Business and Investment Opportunities Databook – 50+ KPIs on Embedded Lending, Insurance, Payment, and Wealth Segments – Q1 2023 Update”.
In India, embedded finance has created new growth avenues for new-age digital business and traditional financial service providers. An increasing number of businesses are leveraging embedded finance to create a competitive advantage and increase their revenue share by offering financial services.
The sector has emerged as leading growth of the Indian fintech industry and the trend is projected to further continue amid the growing digitalization.
Owing to the young population, coupled with the growing shift towards new-age technologies, the embedded finance sector is projected to record strong growth over the next three to four years in India.
The growth will be driven by the embedded payment sector, while embedded insurance and embedded lending are also projected to become high-growth areas from the short to medium-term perspective.
B2B embedded lending firms are experiencing strong growth in loan disbursal in India, according to the report.
The working capital requirement has increased significantly among MSMEs in India.
According to a report from SIDBI and TransUnion CIBIL, the MSME loan demand has increased to reach 1.6 times compared to the pandemic levels.
As the sector continues to be underserved by traditional financial service providers, embedded lending providers are aiming to solve the working capital requirement. As a result, these firms are experiencing strong growth in loan disbursal.
In December 2022, Rupifi, one of the leading embedded finance firms in India, announced that the firm had disbursed more than Rs.20 billion in loans, since its launch in 2020.
In 2022, the firm reported a growth of 407.7% in loan disbursal compared to the year before. This growth has been attributed to the significant uptick during the pre-Diwali season.
The firm operates in the B2B space. Through its BNPL and checkout products for MSMEs it aims simplify working capital needs of businesses. It has partnered with leading B2B marketplaces across sectors, including FMCG, fashion, pharma, electronics and food among others.
The Tiger Global-backed embedded finance firm raised US$22 million in its Series A round. The firm largely works with non-banking financial institutions to provide MSMEs with working capital.
With rising interest rates and inflationary pressure, the demand for working capital is projected to further increase among MSMEs in India. Consequently, PayNXT360 projects B2B embedded lending providers to record strong growth from the short to medium-term perspective.
A growing number of renters are interested in buying insurance from rental listing providers in India.
Due to convenience, more and more customers are intending to switch to embedded insurance at the cost of traditional insurers. As a result, of these growing preferences for embedded insurance, proptech platforms are forging strategic alliances to foray into the embedded insurance sector.
With more customers demanding a seamless experience while renting and buying properties, the author expects more rental listing providers to offer embedded insurance. This will further accelerate the growth of the embedded insurance segment, which is already one of the fastest-growing sectors in the fintech space.
Embedded finance has emerged as one of the fastest-growing sectors in the Indian fintech industry. Consequently, more and more players are planning to launch embedded financial services to increase their revenue. To enable these firms to launch embedded services at a faster pace, firms are forging strategic alliances in India.
In November 2022, SBM Bank and OPEN Financial Technology announced a strategic partnership with Zwitch, an embedded finance platform. Under the collaboration, the firms will provide businesses with a no-code, low-code, and full-stack API solution.
This will enable businesses to embed financial services into their products and services. The technology offered by Zwitch reduces the go-to-market time significantly while increasing the revenue for businesses, said the report released on 6 April 2023. fiinews.com
