A new report by Multi-Act Equity Consultancy Private Limited has found that mid-sized financial institutions are leading the adoption of B2B Software as a Service (SaaS) in India's Banking, Financial Services, and Insurance (BFSI) sector, while Micro, Small, and Medium Enterprises (MSMEs) are poised to drive the next wave of growth.
Mid-sized institutions lead adoption
According to the report, 61% of respondents believe that rapid SaaS adoption is occurring at the mid-sized level, compared to only 26% who pointed to large institutions. Niranjan Ananth, Vice President of Marketing at Profinch, explained: "For mid-sized institutions, the play is obvious – they need to scale fast and tech acts as a key catalyst in their growth journey."
Large institutions face legacy challenges
Large banks and insurers are burdened by legacy platforms, but they are beginning to see the value of SaaS. The report noted: "Competitors with foresight are raising the bar, making it imperative for other large-sized institutions to follow suit." It also highlighted that user experiences are being shaped by interactions on e-commerce and social media platforms, making seamless digital journeys "almost table stakes."
MSMEs as the next growth engine
For MSMEs, B2B SaaS is becoming a critical enabler. The report found that 57% of respondents believe B2B SaaS solutions will play a significant role in catalysing growth in medium and small businesses. These platforms help automate invoicing, manage payments, ensure regulatory compliance, and improve access to credit through digital invoice financing and embedded lending.
Automation and customer value
The report highlighted that 80% of respondents said increased automation can add value to customer servicing, while 60% said it can enhance customer acquisition. Data security remains the top challenge, with 40% of respondents citing data security, privacy, and cybersecurity as their biggest technology challenges.
Industry perspective and key value propositions
Ausang Shukla, Founder and CEO of CapHive, commented: "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." The top value propositions cited by institutions were scalability (70%), boosting operational efficiency (57%), and accelerated innovation (57%).
Future outlook: AI, blockchain, and data residency
The report pointed to AI, blockchain, and data residency as critical factors for the future. It stated: "Incorporating AI/ML is crucial, but these services and models must also be deployed within India to ensure data security." The report 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."
