Monday, May 31, 2021 11 Economy & Business Investment flows into India’s fast-growing FinTech sector showing signs of a recovery The COVID-19 pandemic took a toll on start-ups raising funds in 2020 but FinTech has made a strong comeback in 2021, analysts say Agencies

Banking technology start-up Zeta this month became India’s latest company to cross the $1 billion val- uation mark, raising $250 million from SoftBank Vision Fund amid signs that investment flows into the country’s FinTech sector are begin- ning to recover. Zeta, which is now valued at $1.45bn, is a platform for banks to operate credit and debit cards, eve- ryday transactions, loans and mobile banking through a cloud-based sys- tem. The platform acts as “a bank in a box” for an industry that still uses outdated software, , a seasoned entrepreneur and the chief executive of Zeta, says. “The simple problem we’re ad- dressing is that banking software is still kind of stuck in the stone ages,” Turakhia, who co-founded Zeta in 2015, says. “Banks spend close to probably $300bn a year on IT infra- structure and IT spends and our role is to try to capture as much of that market for Zeta.” The start-up is part of India’s fast-growing FinTech sec- tor, which is seeing green shoots of a recovery after the Covid-19 pandemic tightened funding in 2020, analysts say. Last year, India’s FinTech sector received $2.7bn of funding, down from $3.5bn in 2019, according to data from KPMG. “FinTech has made a strong comeback in 2021,” says Devendra Agrawal, founder and chief executive of Dexter Capital Advisers. “We have seen big funding rounds already.” Bangalore-based online payments company Razorpay raised $160m in April from venture capital company Sequoia Capital India and GIC Pri- vate, Singapore’s sovereign wealth fund, taking its valuation to $3bn. Credit card rewards firm CRED also raised $215m in April from investors A pedestrian walks past an advertisment for the Central ’s digital banking services in Mumbai. The Covid-19 pandemic has helped to boost the acceptance of many FinTech platforms in India as it including Falcon Edge Capital and has accelerated a move towards digital, analysts say Tiger Global. Meanwhile, one of the biggest resumed work on raising funds in with FinTechs, he adds FinTech’s Clearly, the first rush of companies ple – where nobody is questioning Sinha says. names in India’s FinTech sector, Pay- November and went to market in growth is helped by the fact that has been discovered and the new whether you can build a large fran- “Now that they are back with a tm – backed by Alibaba and Softbank January 2021. India’s financial services remain stories that are coming out are much chise,” Mankad says. renewed focus on unit economics, – is working on plans to raise $3bn “There was already some level “under-penetrated compared to more nuanced in their business mod- “The question now to be solved is that gives confidence to earlier stage in what could be the country’s biggest of pandemic fatigue and we had a developed countries”, according to els.” Experts expect to see more in- what is the monetisation for this vast investments.” Zeta plans to plough initial public offering if it material- greater reception, spoke to bunch of Agrawal. novative FinTech companies emerge customer base and franchise you’ve the money from its latest fund rais- ises, according to Bloomberg. funds, narrowed down the top three “FinTechs have come up with in India over the coming years. built?” Customer acquisition costs ing into an aggressive expansion. Its The Covid-19 pandemic has and signed with SoftBank,” Turakhia multiple innovative products and “While this FinTech revolution will only reduce as volumes grow, customers include 10 banks, among helped to boost the potential and ac- adds. services, including pay later, online- is unfolding in India, many of the paving the way for profitability and them HDFC, one of India’s biggest ceptance of many FinTech platforms India’s FinTech sector is projected only insurance, app-based loans incumbents [such as] banks, insur- significant scope for businesses to lenders, and 25 FinTech companies, in India as it has accelerated a move to grow in value to between $150bn within minutes, to cater to this vast ance companies, have also started expand in India, according to Ut- such as Sodexo, an employee ben- towards digitalisation, analysts say. and $160bn by 2025, up from $50bn untapped market, hitherto ignored to figure out and think through how karsh Sinha, managing director at efits company with some 30 million Other favourable trends for the sector to $60bn in 2020, according to a re- by traditional players.” Investor in- they should engage with these play- Mumbai-based Bexley Advisers. global users. include the country’s rapidly growing port by Boston Consulting Group and terest in the FinTech sector started ers,” Mankad says. “The Indian FinTech ecosystem Up to 25 to 30 per cent of the use of the internet amid expanding Ficci. However, the sector will require to rebound at the end of 2020 “when However, there are still issues continues to be under-tapped, leav- capital will go towards adding more smartphone ownership and lower $20bn to $25bn of investments over people realised that the pandemic that need to be fixed, industry in- ing significant room for growth,” products to its platform, Turakhia data costs in recent years. Movement the next five years, the report added. is here to stay and it has triggered siders say. This includes a pressing Sinha says. “We are still to monetise says. The rest is earmarked for sales restrictions imposed to curb the “There is no doubt that an in- tremendous momentum on many need to improve cyber security in the the largely untapped smaller towns and marketing and expanding its spread of the virus have also led to a creasing number of foreign investors digital businesses”, Shishir Mankad, FinTech sector. and the advent of 5G will rapidly ac- teams in those departments five-fold boom in contactless payments. are betting on the Indian FinTech managing partner and head of fi- “The development of strong and celerate their ability to transact on- as Zeta aims to ramp up its presence “While certain FinTech segments, industry,” says Raj Phani, founder nancial services at Praxis Global Al- supportive regulatory policies for line.” These opportunities “indicate in the Americas, Europe and the such as lending, were negatively im- and chairman of Indian FinTech liance, says. the financial technology industry is that foreign investor interest in this Middle East. pacted due to Covid, the pandemic company Zaggle. “Moreover, India Another factor driving invest- essential to promote the country’s space should continue”, he adds. He believes there has been no has led to a digital shift in consumer has evolved into one of the biggest ment into the sector is the fact that business environment,” Phani says. SoftBank’s recent investment in better time for expansion. behaviour when it comes to availing FinTech hubs in Asia.” The pandemic companies such as CRED and Zeta Another major challenge for Fin- Zeta should only support this trend, The pandemic “definitely has ac- financial services,” Agrawal says. has been a “blessing in disguise, with are coming up with new and more Tech is to generate profits. he adds. celerated the receptiveness and the Zeta started meetings to raise the FinTech industry witnessing un- sophisticated offerings, Mankad “The FinTech space in India is “We entered 2020 shaky on the pace at which financial institutions funds in January last year, but the precedented growth”, Phani says. says. certainly at a point – especially for news of the poor year SoftBank had are looking to transform to launch process was “paused” amid the pan- This has also led to many banks “There has been a clear sign some of the mature businesses like in 2019, which chilled both late and new modern products on a platform demic, Turakhia says. The company and financial institutions partnering of maturity in the FinTech sector. the payments business for exam- early stage investor sentiments,” like Zeta”, Turakhia says.

French oil major Total rebrands amid push into renewables

Agencies greatly increase greenhouse takes effect immediately, was The International Energy saw as an overly conservative emission cuts and Exxon Mo- backed by 99.88 per cent of Agency has said new fossil fuel approach. Oil and gas group To- bil battled with an activist votes. projects must stop this year if Bruce Duguid, head of tal won more than 90 per investor over its record on cli- Total is investing in a pivot the world wants to reach net stewardship at the governance cent backing for its climate mate change. towards renewable energy zero carbon emissions by the advisory arm of asset manager plan to gradually reduce its Total’s climate strategy, with solar or wind power pro- middle of the century, a faster Federated Hermes, which emissions on Friday, when which lays out its aim to reach jects. pace than envisaged so far by holds shares in Total, said he shareholders also voted over- carbon neutrality by 2050, It is seeking to derive rev- oil producers, including Total. had not supported the transi- whelmingly in favour of its was backed by 91.88 per cent enues from electricity produc- “Without new oil projects, tion plan. rebrand as TotalEnergies to of shareholders voting at its tion and reduce its reliance on global oil production is set to “The challenge is there’s mark its shift to renewable annual meeting. oil products, including with naturally drop by about 4 per just not sufficient evidence it’s energy. “This outcome is, I think, staggered targets to 2030, and cent to 5 per cent every year,” aligned with the Paris goals,” Some shareholders had the best response to com- mirroring moves by rivals to Pouyanne told the sharehold- he said, referring to the UN campaigned to reject Total’s mentators who predicted, and try to cut emissions. er meeting, while oil demand accord on curbing climate green goals as not ambitious in some cases even hoped for Pouyanne said he wanted was projected to only start change. enough, echoing growing in- an investor rebellion against the company to become a tailing off from 2030. “With- Lucie Pinson, founder and vestor rebellions in the sector. the company, and responds to “green energy major”, but said out new oil projects, it’s highly executive director at Reclaim Demands for oil compa- those who act more as activists a more radical shift would not likely that oil prices would Finance, a non-governmental nies to speed up the shift from than shareholders,” chairman be appropriate as the compa- reach new highs,” he said. organisation, accused Total of fossil fuel reached a crescendo and chief executive Patrick ny needs to fund its transition Non-governmental organ- greenwash and said its share- this week as a Dutch court Pouyanne said. from revenues derived from isations and some investors holders had “voted willingly ordered Royal Dutch Shell to The rebranding, which fossil fuels. Total Chairman and Chief Executive Patrick Pouyanne spoke out against what they for climate chaos”.