India’s digitally-driven transformation has attracted major players like Citigroup, Barclays, and MUFG, despite challenges such as trade headwinds and account dormancy. With 89% adult account penetration and 25% dormancy, investors are leveraging fintech innovations and data-based credit scoring to reach new consumers.

The shift from a cash-based economy to a digital ecosystem has unlocked economic potential across sectors. Every transaction now generates valuable data, helping lenders design microloans, insurance, and savings products for low-income users through platforms like Paytm and PhonePe using UPI technology.

The report highlighted that India’s inclusive digitisation has reduced transaction costs and boosted financial usage, leading to over $50 billion in FDI inflows during 2024–25. The publication suggested Africa could replicate India’s success by investing in digital infrastructure and using innovation to reduce account inactivity.

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Early-stage startups witnessed an increase in funding, securing $598 million compared to $555 million in 2024, reflecting continued investor confidence. However, late-stage funding fell to $863 million from $1.2 billion, and seed-stage investment dropped to $129 million. Despite this dip, two major funding rounds — Groww’s $202 million and Weaver Services’ $170 million — boosted overall momentum.

The sector recorded 23 acquisitions, slightly more than last year, with Diginex acquiring Resulticks for $2 billion. It also saw one IPO, Seshaasai, and the addition of two unicorns, matching 2024 figures. Bengaluru remained the leading hub, capturing 52% of total FinTech funding, followed by Mumbai with 22%.

Tracxn Co-Founder Neha Singh said India’s FinTech market continues to show resilience amid funding moderation. She added that strong early-stage activity and steady unicorn creation indicate long-term investor confidence and technological innovation.

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To tackle fraud in the financial sector, SEBI and NPCI have launched dedicated UPI handles for registered intermediaries. Major brokers covering over 90% of investors and all mutual funds have enabled these secure handles.

The SEBI Check platform allows investors to verify UPI IDs and bank accounts of registered intermediaries before making payments. This ensures privacy, security, audit trails, and quick detection of mismatches.

FM Sitharaman emphasized responsible regulation, innovation, and growth in the FinTech and AI sectors. India now contributes 16% of global AI talent and aims to become a hub for AI-enabled products and services.

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