There will be no growth for fintechs without profitability.

India’s GDP will likely grow to $25 trillion size in the next 25 years and digital fintech players could contribute to about 25%-30% of the overall growth, NaBFID Chairman KV Kamath said at the Global Fintech Festival here today. “When you talk to this August company and considering that they (fintechs) will drive India, we need to talk about a $25 trillion number…for India at 100,” he said.

India’s fintech industry has grown fast and has the potential to give banks a run for their money if the incumbents do not beef up their technological prowess. Kamath shared the example of how traditional stock brokers are losing their business to fully digital stock broking companies. “There is a lot of work to be done by incumbent players,” he says, adding that mainstream banks have no option but to evolve their processes as the ability of fintechs to disrupt businesses and collaborate is enormous in nature.

Kamath said that it is essential for fintech companies to generate reasonable profit as well. While fintechs can burn capital at the starting stages for building solutions, it becomes imperative overtime to take stock on what is their pathway for generating adequate profit which will further lead to the valuations that they desire.

“I always believe in profitable growth, there is no growth without profitability because it will be short lived and I do not want anyone here to fall consequent to that approach.”

Further, Kamath said that Chinese companies such as WeChat and Alipay entered into the payments space very early, however, if one looks at Chinese banks, they far less digital than Indian banks. Technology enablers in China were ahead of Indian companies five years back, however, currently there is “virtually no area” where Indian companies are held back.

The banking veteran said he struggles to believe that Indians use the largest quantity of data at the lowest price point. He says elsewhere data centres were set up at a price point which was much higher and therefore the end user also face dhigher cost. India, meanwhile, in the last 3-4 years has been to able to roll out data at a globally lower price point and therefore a majority of users can access it.

https://www.financialexpress.com/policy/economy-indian-economy-could-grow-to-25-trillion-size-in-25-years-kv-kamath-3236345/