The Tiger Overtakes the Dragon – India passes China as Asia’s top fintech fundraising hub
India has usurped China as Asia’s top fintech fundraising hub in the first quarter of 2019. As China sees fintech investment topple off the edge, India has seen a steady rise in its fintech funding fortunes. The tiger has overtaken the dragon.
Previously the leading lights of Asia’s fintech funding, China had led all four quarters of 2018. A mammoth drop off of between $1,698 million - depending on whose report you read – has brought China’s fintech scene down a peg. They now sit on peg number 2. And this peg is 89% lower than the previous peg.
But, as one frontrunner falls, another must take its place. India has seen its fintech funding increase 61% to $285.6 million to clamber up the podium into pole position. The fintech fortunes of the world’s most populous nations, for Q1 at least, have shifted.
Caging the dragon
2018 saw China raze the Asian competition in fintech funding. Such is the Chinese clout in the Asian fintech scene, that the Q1 drop off has seen total Asian fintech funding fall below $1 billion for the first time in five quarters.
Over the past few years, China’s lawmakers have introduced a number of measures to curb financial risks attached to its fledgling online lending industry. Peer to peer lending has been the main quarry of this crackdown. Four thousand P2P lending platforms failed in China in 2018, as they fell under the cosh of police investigation and rampant fraud.
The waves of regulation seem to have caught up with the Chinese fintech market, as investor sentiment across the country has entered a significant cooling off period. For now, at least, the dragon is tamed.
Unleashing the tiger
India’s enthusiasm for fintech remains robust, however. Like China, the lack of financial infrastructure, in part has added fuel to the fire of the fintech swing.
While Chinese regulators have halted the momentum of the lending startup market, in India that train is gathering steam. The services they offer tailor to the country’s large population of unbanked and underserved consumers and enterprises. India is now the world’s second biggest fintech hub – after the U.S. – with 2000 startups on the scene, according the Medici.
Big business has similarly found a firm footing in the Indian fintech market. Amazon recently began offering P2P payments in the country, following the slipstream of rivals Paytm, Google Pay and PhonePe.
In the face of less restrictive regulation and a rapidly growing internet user base, India has commandeered the top spot of Asia’s thriving fintech scene. 3 quarters ago, China secured 76 fintech deals. In the quarter just gone, they secured a paltry 29. India also registered 29, but by the virtue of the greater value of deals hopped on the top spot.
This then, is a telling statistic. India’s fintech scene in undoubtedly on the up, but the story of Q1 2019 may well be one of the dragon’s decline rather than the rise of the tiger.
Nevertheless, the story of Q1 rings: the king is dead; long live the king.
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