FinTech, as a financial inclusion driver, is a key enabler of India’s ‘Viksit Bharat’ dream. While bank credit growth in India has slowed to 11.1% as on November 15, 2024, compared to 20% last year, by October 2023, UPI accounted for 75% of all retail digital payment transactions in India, facilitating over 10 billion transactions each month. With more than 300 million individual users and 50 million merchants, this is indeed a success story!
Intra industry, Indian fintech growth has expanded beyond payments. The lines between online and offline are quickly blurring with Fintechs adopting “Phy-gital” approaches to serve customers. Several fintechs are expected to compete for public capital over the coming few years. Compliance is critical for the sector. However, the industry is not without challenges – particularly in cybersecurity, with over USD 20 billion lost to cyber and digital attacks in the past two decades. Shri Piyush Goyal, Minister of Commerce and Industry, GoI has urged the fintech sector in India to look at ethical AI and find ways to combat money laundering and financial crimes.
Technology is a key component and determinant of the production function and new age Industry 4.0 is embedding innovation in a big way in the industrial production process in India. One of the defining characteristics of Industry 4.0 is the seamless integration of systems and technologies. FinTech by virtue of its interoperability, allowing different systems, platforms, and applications to work together to provide a unified financial ecosystem, is becoming a key facilitator for Industry 4.0.
Going forward the midterm outlook for the Indian fintech industry looks positive, with the Indian fintech market forecasted to expand at a CAGR of 32.7% increasing from USD 106.2 billion in 2024 to USD 769.5 billion, by the end of 2031.
We sincerely hope the fintech industry in India will see happier days with growing digital infrastructure, supportive regulatory changes and consistent innovation.