Andhra Pradesh chief minister N Chandrababu Naidu speaking at a Fintech Valley meeting in Vizag.

Andhra Pradesh (AP) chief minister N Chandrababu Naidu is heading the Chief Ministers Committee on Digital Payments to boost digital payments in the country. Parallelly, Andhra Pradesh is witnessing an explosion of fintech companies. While the committee is identifying global best practices for ushering in a digital economy, it is also evolving an action plan for creating an ecosystem for grooming fintech companies. The state government recently established Fintech Valley in Vizag which has become the hub for start-ups and innovators, with KPMG as the knowledge partner.

Naidu’s vision is to create five lakh jobs in AP by 2020 through technology-enabled services. The Fintech Valley—which is the first of its kind in the country—focuses on converging finance and technology by enabling market access, world-class infrastructure, funding, human capital and innovation. With 50 million potential fintech users in AP, the government is enabling market entry through PSUs, banks and financial institutions and promoting self-help platforms with fintech solutions.

Besides, the state is also in the process of setting up a ‘fintech incubator fund’ with a corpus of Rs 100 crore, becoming the anchor investor for Fintech Valley. The state government is in talks with bankers, financial institutions and fund managers for pooling in another Rs 400 crore for kick-starting an ecosystem for fintech startups. It is also in the process of identifying a fund manager to manage the ‘fund of funds’ having a total corpus of about Rs 500 crore which is expected to be operational in the next six months.

Says JA Chowdary, special chief secretary and IT advisor to Naidu, “Indian IT 1.0 is facing difficulties. The next flight towards IT 2.0 will be backed by fintech. The tectonic shifts this will cause is captured by the expression ‘fintectonics’. It is a fintech culture we are creating here—a culture of doing something for the betterment of the common man, a culture of creating an ecosystem by getting the right industry linkages and finding the right formula for the critical manpower.”

Chowdary explains that the Fintech Valley will house a number of tech-centric companies which are into innovation in fintech areas. “The Fintech Valley will act as a facilitator for information flow—a playground for innovators to disrupt traditional processes with new, more efficient, economically beneficial technologies that will change the way India does business,” he adds.

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To set up a platform for financial and technological inclusion, the AP government is providing free infrastructure for six months, free high speed internet connectivity and preferential market access to facilitate proof of concept (PoCs) of start-ups. The funds of funds strategy will also be implemented soon. “We have started with one lakh square feet (sqft) Fintech Tower and Paytm is the anchor client developing newer fintech innovative products. By next year, we are readying three lakh sqft space which will be housing three categories of fintech startups —cyber security, financial technologies and blockchain technologies,” he adds.

About 10 partnership agreements have been signed between the AP government and private organisations which include Lattice 80, Pearson, Anthill Ventures, HackerEarth, F6S, Forum Synergies, Hyderabad Angels, Zone Startups, Paradigm IT and Trade Land Finance Tech Consortium (TLF).

A Nasscom-KPMG report said the fintech market soared $1.2 billion in 2016 and is projected to hit $2.4 billion by 2020 in India. “There is a need for an enterprise exchange similar to an employment exchange which will connect the entire ecosystem designed for developing Fintech Valley,” says Utkarsh Palnitkar, partner and head, infrastructure, government and healthcare, KPMG.