India is rapidly establishing itself as a leading Asian fintech hub, in part thanks to the pre-existence of a successful high-tech industry. The development of the Indian fintech sector is also being significantly aided by government initiatives largely aimed at reducing the underbanked population of the country. These projects include an ongoing scheme to give every resident a unique digital ID, the introduction of new types of banking license predominantly aimed at technology firms and telcos, and demonetization designed to drive electronic payments. Like many countries, India also offers tax exemptions for startups. The combination of these factors has attracted significant investment to the country, from both VCs and international corporations. While a lack of mega-deals drove the volume of that investment down in 2016, the number of deals actually went up, and we expect to see a healthy flow this year. In turn, that will drive further growth of the Indian fintech industry, and help it cement its position as a global fintech hub.
As might be expected given the country's size, India has a number of fintech hubs.
Bengaluru. The city houses the headquarters of a number of India's biggest and most successful tech firms as well as those of international firms like Uber and Amazon. It is also home to more startups than anywhere else in the country, and a plethora of incubators, accelerators, and coworking spaces have sprung up. Additionally, major VC firms like Sequoia Capital and Accel have set up offices there, helping to create an ecosystem of talent, funding, and support well suited to nurturing nascent fintech firms.
Mumbai. The financial center of India is working hard to earn the title of fintech center as well. [...]