Fintech Growth & Opportunity In India

7 Feb 2025 , 05:32 PM

India, with a long-standing tradition of banking and financial services, has witnessed a remarkable transformation over the past decade and emerged as a global fintech powerhouse. The country now boasts 25 Unicorns, 1 Decacorn, 37 Minicorns, 87 Soonicorns fintech unicorns. The number of FinTech start-ups has skyrocketed from 2,100 in 2021 to over 10,200 in 2025, showcasing a vibrant culture of innovation and entrepreneurship fostered by innovative founders, progressive regulators and optimistic private as well as public market investors.
As per BCG research, global fintech revenues are expected to reach $1tn by 2030. APAC is expected to become the epicentre of Fintech innovation with $600Bn revenue, along with NAMR at $520Bn revenue by 2030, generating 3X revenue of next best region. India is also on ajourney to become a “Fintech Nation” and is amongst the top 3 in the number of fintechs and unicorns in the world

In India, fintech has become a compelling growth story compared to other tech segments and is expected to grow by 11.1x by 2030.Indian online retail and Indian consumer tech on the other handis expected to grow 5.8x and 3x respectively. The 11x growth is supported by government focus asall technological innovations in India have happened around fintech i.e UPI, BBPS (Bharat bill payment services), AEPS (Adhar Enabled Payment Services), E-Nach, E-KYC, Digi locker, Account aggregator etc.

UPI has become a hallmark of India’s digital transformation. Total UPI transactions surged almost 46% to a record 17,220 Cr in 2024 from 11,768 Cr in the previous year, marking a significant milestone in digital payment adoption. UPI’s expansion is now beyond domestic borders (Nepal, Qatar, Peru and Singapore). This is a testament to India’s global financial footprint.

Within India, there is a significant increase in financialization of savings.

• Demat Accounts Growth: A substantial increase in the number of demat accounts in India, indicating growing retail participation in the stock market. The number of demat accounts as onOctober 2024 stands at 17.9 crore, a growth of 54% since January 2023.
• Mutual Fund Growth: The AUM of the Indian MF Industry has grown from ₹10.90 trillion as on November 30, 2014 to ₹68.08 trillion as on November 30, 2024 which is a 6 fold increase in a span of 10 years. The total number of folios as on November 30, 2024 stood at 22.08 crore. A rise in mutual fund folios and AUM, suggesting increased investor interest in diversified investments.
• Rise of New Age Brokers: New-age brokers like Groww and Zerodha have gained significant market share, contributing to increased retail participation in the stock market.
• Retail Investor Dominance: Retail ownership of NSE-listed stocks has reached a decadal high, surpassing FII and DII ownership.
• WealthTech Growth: WealthTech platforms have experienced significant growth in AUM, catering to the growing demand for financial advice and digital investment solutions.
• Alternative Investments: Increasing demand for alternative investments like AIFs from domestic investors.
• Innovation in Product Offerings: Evolution of product offerings in the wealth space, making complex products accessible to the common people.

In essence, the Indian financial landscape is undergoing a transformation, driven by increased retail participation, technological advancements, and a growing demand for diversified investment options.

Segment-Wise Growth opportunity:

1. Digital Payments: The Biggest Winner of the Fintech Revolution

• India has experienced a remarkable surge in retail digital transactions, both in terms of volume and value.
• As digital payments gain momentum, Indian merchants are increasingly adopting versatile payment infrastructure to support various transaction methods.
• UPI has emerged as the fastest-growing and most popular payment system, commanding an impressive 80% market share.

2. Digital Lending: The Most Scalable Segment in Fintech

• Over the past decade, digital lending in India has expanded by an impressive 25 times.
• Innovative platforms with NBFC licenses are steadily capturing market share from traditional banks.
• This growth in digital lending is fostering financial inclusion, making it easier for new-to-credit (NTC) customers to access personal loans, consumer durable loans, and credit cards.

3. InsurTech: Driving Transformation in India’s Growing Insurance Industry

• The insurance sector in India is witnessing rapid change, driven by InsurTech innovations.
• Advanced digital platforms are enabling quicker, hassle-free access to insurance products, streamlining processes for both insurers and customers.
• This evolution is enhancing financial inclusion by providing affordable and customized insurance solutions to underserved segments of the population

4. WealthTech Landscape: Emerging Technology

• The expansion of capital markets has significantly increased the participation of the Indian population in asset classes that were once seen as risky.
• Technology-driven solutions are transforming the wealth management space, providing more accessible investment opportunities.
• Platforms now offer innovative options like fractional ownership in real estate, NFT-based assets, investments in unlisted companies, green assets, and offshore assets, catering to evolving investor preferences.

India’s fintech ecosystem is undergoing a transformative journey, with each segment contributing uniquely to this growth story. Digital payments have become the backbone of this revolution, driving convenience and efficiency in transactions. Digital lending with its scalability and innovative platforms aarebridging credit gaps and fostering financial inclusion. InsurTech is reshaping the insurance industry by making protection more accessible, affordable, and tailored to diverse needs. Meanwhile, WealthTech is democratizing investment opportunities, aligning with the aspirations of a new generation of investors. Together, these segments underline India’s potential as a global fintech leader, enabling a future of inclusive, technology-driven financial growth.

Mehekka Oberoi

Fund Manager, IIFL fintech Fund.