Led by AI disruption and rising credit demand, India emerges as global fintech hotspot

Fintechs are focussing on profitability by banking on AI-driven innovation and rapid expansion in high-growth markets such as India
| Photo Credit:
cueapi

India is one of the most promising fintech markets globally, according to the Global Fintech 2025 report by QED Investors and Boston Consulting Group (BCG). The report noted that fintechs are focussing on profitability by banking on AI-driven innovation and rapid expansion in high-growth markets such as India.

Fintech revenues surged 21 per cent globally in 2024, far outpacing the 6 per cent growth seen in traditional financial services. Notably, 69 per cent of listed fintechs publicly are now profitable, with EBITDA margins improving from 12 per cent in 2023 to 16 per cent in 2024. India stands out in this landscape due to its robust digital public infrastructure — UPI, Aadhaar, and the Account Aggregator framework — paired with a mobile-first consumer base and regulatory clarity.

“India’s fintech growth story is powered by structural digital rails and a rising middle class,” the report notes. Currently, 31 per cent of Indians fall into the affluent middle-class category, a figure projected to reach 40 per cent (around 600 million people) by 2031. This demographic shift is fuelling unprecedented demand for credit across consumption, retail, and SME sectors.

Despite this growth, India remains underpenetrated in secured lending. Only 36 per cent of the country’s nominal GDP in 2024 comprised outstanding retail debt, with just 23 per cent of that being secured. This compares starkly with countries such as the US and UK, where secured debt forms the bulk of retail credit.

leading players

Fintech-led digital lending is growing at a 35 per cent CAGR, with players such as Paytm, LendingKart, and OneCard enabling access to credit for previously underserved segments. These firms are leveraging AI and alternative data to underwrite borrowers with limited credit histories, while maintaining prudence in risk management.

With investor appetite rising and credit demand accelerating, India’s fintech ecosystem is poised for its next chapter of scaled innovation.

Published on June 2, 2025