Insights from Elevation Capital's Fintech: Year in Review 2024

Observations and trends that defined the year that was 2024

Jan 21, 2025

Hey folks!

Recently got a chance to go through Elevation Capital's Fintech: Year in Review 2024 report. Had a blast going through it since it was extremely well written and detailed oriented.

The report had several interesting observations about the overall fintech sector in 2024. A few of them that I would like to highlight:

The market capitalization of listed financial services (including banks) reached approximately $1.2 trillion, representing about 25% of India's total market capitalization.
While India's listed fintech market capitalization currently stands at approximately $35 billion (roughly 3% of the overall financial services market cap), it experienced rapid growth of approximately 100% in calendar year 2024
Private investment in financial services saw a healthy increase in 2024, rising to approximately $4.8 billion from $4.3 billion the previous year.
Private fintech funding saw a significant decline in 2024, falling to approximately $1 billion, compared to $1.9 billion in 2023 and $7.7 billion in 2021.

Now, coming to the part that I think is the most interesting. The report highlighted several themes that shaped the fintech sector in 2024. Here are the ones I found the most significant.

Enhanced Clarity in Financial Regulations

2024 was definitely the year of improved financial regulations. This trend saw not only the involvement of RBI but several other regulators as well. RBI for instance issued several important circulars from streamlining KYC processes, strengthening gold-loan LTV monitoring, cracking down on unsecured lending by non-regulated entities, to establishing a new licensing regime for cross-border payments.

Other regulators like SEBI pushed for adopting optional T+0 settlement in cash equities in a phased manner and the introduction of an ASBA-like facility for secondary market trading.

The Rise of BFSI SaaS

In 2024, roughly 45% of private fintech investment targeted BFSI SaaS solutions. With Indian BFSI institutions currently allocating 3-5% of revenue to technology (compared to the 8-10% spent by global counterparts), there is definitely anticipated growth in this area. This suggests a potential $8-10 billion revenue opportunity for Indian fintech infrastructure over the next 7-8 years.

Tremendous Growth of India's Digital Public Infra

UPI's growth continued in 2024, reaching a remarkable milestone, powering nearly half of global real-time payment transactions. Credit on UPI also saw a massive uptick with it nearly doubling to ₹64,000 crore in just the first seven months of FY24.

The DPI development from the report that excited me the most was the introduction of the Unified Lending Interface (ULI), which promises to profoundly impact rural credit by organizing a currently unorganized sector.

VC Investment in Fintech, Beyond Lending

Ever wondered why all your favourite fintech products end up getting into lending? The common assumption that all fintech products ultimately gravitate towards lending was largely disproven in 2024 as ~80% of fintech funding in 2024 went to non-lending business models.

Embracement of AI in Fintech

AI's ubiquity extended to the fintech sector in 2024. We saw India's largest NBFC, Bajaj Finance, announce that it is aiming to become a "FINAI" company, by integrating AI in its core functions like sales, risk and compliance.

The report also highlighted a significant market opportunity for products that facilitate a smooth transition to AI, such as data unification platforms and others of its kind.

I'm always sharing interesting fintech finds, so if that's your thing, give me a follow on Twitter and LinkedIn.

P.S. For those who have scrolled this far, I'm currently looking for product management case study partners. If anyone is interested feel free to reach out.