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JPMorgan has partnered with the Indian Institute of Management Ahmedabad’s Centre for Innovation, Incubation, and Entrepreneurship (CIIE) to set up a Financial Inclusion Lab, which will aim to help scale early stage fintech startups focused on Indians within the lower and middle income (LMI) segment.
Under the partnership, JPMorgan will invest up to $7 million, marking the largest philanthropic commitment made by the bank outside of its home market.
The CIIE will also use insights from JPMorgan’s Financial Solutions Lab in the US. The startups part of the lab will strive to enable access and usage of appropriate financial products and services such as savings, credit, and insurance for LMI households.
Here is why India’s fintech market may be interesting to international firms like JPMorgan:
India boasts a large population to address financial services to. In India, the middle class is said to account for up to 30% of the population, and with over 1.3 billion people in the country, that is a large addressable market for fintechs. Moreover, consumers in the LMI segment earn between $2 and $10 a day, and are therefore likely in need of tools to better manage their finances. This need for fintech solutions boosts the chances of success for these startups, and could make them attractive investments.
English is one of India’s official languages, likely facilitating collaboration. Being able to communicate with organizations and fintechs in India will likely make it easier for global companies to work with them. That could eventually make India a more attractive country for fintech partnerships than China, where language can potentially be a barrier.
Increasing interest in India may help boost Asia’s fintech funding. India already boasts two fintech unicorns, making it the only country in Asia besides China to have any. And, as more international companies grow aware of the opportunity in the Indian market, funding in the country will likely accelerate.
Moreover, JPMorgan’s involvement in this partnership could deliver it insights into the market that result in additional investments for the bank. As such, while fintech funding in Asia barely increased from $2.04 billion in Q1 2018 to $2.07 billion in Q2 2018, India’s fintech scene expanding could potentially boost the region’s funding in the future.
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Source:: Businessinsider – Finance