Foster growth seen for Indian fintech industry

Muzaffar Rizvi

The Reserve Bank of India’s Payments Vision 2025 aims to triple the number of digital payment transactions, significantly boost mobile and PPI transactions, and expand payment acceptance infrastructure, underscoring a transformative period for the Indian fintech sector, says an expert.

Bal Krishen, Chairman and CEO, Century Financial, said the outlook for the Indian fintech sector is highly promising, driven by a combination of technological advancements, favourable demographics, and expanding digital infrastructure.

“India's robust digital ecosystem, including open API platforms like Aadhar, UPI, Bharat Bill Payments, and GSTN, is set to foster further growth. Technological innovation, particularly in Artificial Intelligence and Machine Learning, is paving the way for new business models,” he said.

Diverse fintech trends

Krishen said the continuous stream of disruptive models has proven progressively game-changing, resulting in diverse fintech trends in India.

Referring to some of the rising trends in the fintech space in India, he said one of the most notable developments is the rise of embedded finance and Banking as a Service (BaaS).

“This paradigm shift enables non-financial companies to offer financial services, leading to a more integrated customer experience. The adoption of API-based business models across various industries, such as e-commerce, allows consumers to seamlessly access financial services like instant loans at the point of sale,” Krishen told Khaleej Times.

Another groundbreaking development is exploring and implementing Central Bank Digital Currencies (CBDCs). These digital alternatives to traditional currencies are poised to revolutionise the monetary system with faster, more efficient cross-border transactions, addressing financial inclusivity and privacy issues.

“Technological advancements such as decentralised finance (DeFi), the integration of AI for personalised financial solutions, the expansion of blockchain applications, and the increased adoption of contactless payment technology are also reshaping India's fintech landscape,” he said.

Evolving Fintech Landscape

Uday Rathod, CEO and Co-Founder of TOTL, said the Indian fintech landscape has been rapidly evolving, introducing innovative features that enhance the user experience and broaden financial inclusion.

He said Unified Payments Interface (UPI) 2.0, building on the success of its predecessor, now includes advanced features such as overdraft facilities, one-time mandates, and invoicing in the inbox, making transactions smoother and more accessible.

“Digital lending platforms are leveraging artificial intelligence (AI) and big data to offer instant credit scoring and quick disbursal of loans to individuals and small and medium enterprises (SMEs), significantly reducing the time and paperwork involved,” Rathod told Khaleej Times.

Neobanks, operating entirely online without physical branches, provide a seamless banking experience with features like expense tracking, automated savings, and investment management, catering particularly to tech-savvy users, he said.

“The Buy Now, Pay Later (BNPL) option is gaining popularity, allowing consumers to purchase goods and services and pay for them in instalments, often without interest, thus increasing purchasing power,” he said.

Additionally, there is growing interest in blockchain technology for secure and transparent transactions, and cryptocurrency trading platforms are emerging despite regulatory uncertainties.

“Regulatory sandboxes by the Reserve Bank of India (RBI) are fostering innovation while ensuring compliance, allowing fintech companies to experiment with new solutions in a controlled environment. These advancements are enhancing convenience, efficiency, and financial inclusion across India,” he said.

Fastest-growing sector

Rathod said India's fintech sector is valued at approximately $50 billion in 2024 and is projected to reach $150 billion by 2025.

“This sector is among the fastest-growing in the world, driven by factors such as a large young population, increased smartphone penetration, and supportive government policies promoting digital payments and financial inclusion,” he said.

In the next two to three years, he said the fintech sector in India is expected to witness significant growth. “Continued adoption of the UPI will be a major driver as UPI expands both domestically and internationally, further increasing digital payment adoption. Regulatory support through government initiatives like Digital India and financial literacy programs will also play a crucial role in sustaining growth,” he said.

Additionally, technological advancements, including the integration of AI, machine learning, and blockchain, will create more personalised and efficient financial services. Increased investment from both domestic and international investors is anticipated, fostering innovation and expansion within the sector.

“Overall, the outlook for the fintech sector in India is highly optimistic, with substantial potential to contribute significantly to the country's GDP,” he said.

Revolutionalised Payment Solutions

Rathod said fintech has revolutionised payment solutions in India, making transactions faster, more secure, and accessible to a larger population.

“One of the key roles of fintech in this domain is promoting financial inclusion. By providing access to digital payment methods even in remote areas, fintech has been instrumental in bringing the unbanked and underbanked populations into the financial system,” he said.

— muzaffarrizvi@khaleejtimes.com

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