Impact of COVID-19 on FinTechs: India

MSC conducted a three-phase study to understand and assess the impact of the pandemic on the fintech ecosystem. This report is the second in the series, and delves deep into the innovative strategies fintechs used to overcome the pandemic, measures taken by the government and regulators to enable ecosystem players, and the support fintechs received from investors and accelerators. It also explores the change in behavior and adoption of digitized products by Indian customers.

Key findings include:

• Indian fintech startups witnessed a 53 percent decline in investments in the first six months of 2020. They managed to raise almost $1.7 billion through 70 deals, compared to $3.6 billion through 102 deals during the same period in the previous year.
• Credit or lending fintechs have suffered greatly owing to delayed payments because of the moratorium imposed by the Reserve Bank of India (RBI) and its extension coupled with multiple lockdowns. Post-June, disbursal volumes diminished by approximately 80 percent compared to pre-COVID levels, with ~50 percent of lenders halting new disbursals altogether.
• Dismal market liquidity and a crunch in prospective external investments have led to several fintechs failing to remain afloat in these trying times.