According to a report released by the organisation, a total of seven fintechs raised a sum of $60 million in Chennai in 2020. Further, two of these startups were women-led. Chennai also had the highest number of early-stage startups being funded, with 70% of them being funded an average amount of $1 million.
Pant said Chennai has a strategic advantage of being the go-to location for banks that established their back offices in the city around 25 years ago. In the mid-2000s, he said, Chennai had some of the banks operating their digital banking value chains out of here and gained a lot of favour among the financial services companies with many global back offices of banks and global value chains setting up in the city.
Coupled with the thriving SaaS ecosystem, Pant said Chennai was ripe for a new type of SaaS – SaaS+Fin.
Yatra conversed with over 20 early-stage fintechs from Chennai during this lockdown, and noticed it ranks first in the ratio of Live Product: Beta Stage Startups with over 80% of the startups having live products.
He said there are around 85 startups in the Chennai ecosystem from in the Fintech space. However, he expressed concern over the fact that despite having the lowest infrastructure cost, best tech, banking and SaaS talent, the city still ranked fifth in the country in this space.
“Chennai is not able to build on all these pieces to create a fintech value chain,” he said. “Chennai ranks below Hyderabad and Pune when in actuality none of the cities, except Bombay, have as many positives. Chennai has the maximum number of financial institutions headquartered in the city and if Chennai gets its act together, there is a massive opportunity in the space to be capitalised on.”
Interestingly, the report found that while 2020 was a tough year for most industries, the fintech space saw a jump in finding by almost 24%. Pant said that while in 2019 as many as 127 deals were inked, the number went up to 167 deals happening in 2020.
Going forward, he sees that the creation of API infrastructure will be the next big trend. He said that there are numerous financial institutions with legacy infrastructure and explained that it was important to align a solution value chain that it is a plug and play value proposition but not a value proposition that is created for somebody and provided to somebody else just to save cost.
“What API infrastructure payers are doing is creating an API layer for the entire retail banking and payments solutions space and making it available to smaller financial institutions and startups to create better products and value propositions in the products and information structure that they need,” he said.