Mid-sized BFSI firms lead SaaS adoption in India, but MSMEs set to ride next wave of growth
New Delhi, June 28
Mid-sized financial institutions are driving the fastest adoption of B2B SaaS in India's BFSI sector, while MSMEs are emerging as the next growth engine, according to a new report by Multi-Act Equity Consultancy Private Limited.
"61% of the respondents believe that rapid adoption is taking place at the mid-sized level," the study found, with only 26% pointing to large institutions. "For mid-sized institutions, the play is obvious - they need to scale fast and tech acts as a key catalyst in their growth journey," said Niranjan Ananth, Vice President Marketing, Profinch, quoted in the report.
Large banks and insurers are burdened by legacy platforms, yet are beginning to see value. "Competitors with foresight are raising the bar, making it imperative for other large-sized institutions to follow suit," the report noted. At the same time, "user experiences are getting shaped by the way they engage and interact across e-commerce and social media platforms," making seamless digital journeys "almost table stakes."
For MSMEs, B2B SaaS is becoming a critical enabler. "57% of the respondents believe that B2B SaaS solutions will play a significant role in catalysing growth in medium and small businesses." These platforms help "automate invoicing, managing payments, and ensuring regulatory compliance," while also "improving access to credit" through digital invoice financing and embedded lending.
The report highlighted that "80% of the respondents said that increased automation can help add value to customer servicing" and "60% of the respondents said that increased automation can help add value to customer acquisition." Data security remains the top challenge, with "40% of the respondents said that their biggest technology challenges stem from data security, privacy, and cybersecurity."
"Five or six years ago, building SaaS for India was almost unheard of, but that has definitely changed. I believe we are somewhere between nascent and accelerating," said Ausang Shukla, Founder and CEO, CapHive. The top value propositions cited by institutions were "Scalability - 70%, Boosting operational efficiency - 57%, Accelerated innovation - 57%."
The report pointed to AI, blockchain and data residency as critical. "Incorporating AI/ML is crucial, but these services and models must also be deployed within India to ensure data security." It concludes: "India's B2B SaaS in the finance sector must embrace innovation to cater to the diverse needs of billions, prioritise security, and leverage data-driven insights. By doing so, we can empower businesses, foster financial inclusion, and drive sustainable growth."
— ANI
Reader Comments
"The data security concern is real though – 40% of respondents citing it as the biggest challenge? That's significant. We can't just blindly adopt cloud solutions without robust cybersecurity frameworks, especially for financial data. The report mentioning AI/ML deployment within India is spot on. We need Made in India solutions, not just outsourced platforms. Overall promising trajectory, but security must be the foundation, not an afterthought. 🛡️"
"I run a small manufacturing unit in Coimbatore, and honestly, this SaaS wave is a game-changer for people like us. Automating GST filing and invoice management through cloud platforms has saved me hours every week. But the cost is still a bit high for very small businesses. If the pricing becomes more affordable for MSMEs, adoption will skyrocket. Hope the government also pushes for more localized solutions in regional languages. 📑"
"Interesting analysis but I wish the report dug deeper into how smaller NBFCs are adopting SaaS vs traditional banks. Also, blockchain being flagged as critical – yes for data immutability, but it's still early days. The key takeaway for me is 'user experiences shaped by e-commerce' – so true! Indian customers expect seamless, app-like interfaces even for complex financial products. That's both an opportunity and a challenge for legacy players. Good read overall!"
"Scalability at 70% is the standout stat – this is exactly what mid-sized Indian BFSI firms need. The legacy system burden for large institutions is a global problem, not just India. But what's unique here is the MSME angle – 57% seeing SaaS as growth catalyst. In my experience in fintech, the real magic happens when SaaS lowers the barrier for small businesses to access credit through digital lending. That embedded lending piece could be huge for financial inclusion in India. 🚀"
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