How India emerged as one of the most dynamic fintech markets in the world- The Week

India has emerged as one of the most dynamic fintech markets globally, driven by a potent combination of digital public infrastructure (such as UPI, Aadhaar, and Account Aggregator), a mobile-first population, and regulatory clarity. In India, Fintech-led digital lending is growing at a 35 per cent CAGR.

Fintechs like Paytm and Lendingkart are aiming to transform credit delivery in India, leveraging alternative data and frameworks, such as the Account Aggregator, to underwrite borrowers with little or no credit history.

These are the observations as per a new report titled Global Fintech 2025: Fintech’s Next Chapter – Scaled Winners and Emerging Disruptors, jointly published by QED Investors and Boston Consulting Group (BCG). 

The report notes that tools like UPI have enabled a wave of fintech innovation, spanning digital lending, payments, and wealth management, particularly benefiting underserved and unbanked populations. These enablers have accelerated innovation and financial inclusion at scale, making India a key focus for both global investors and domestic fintech players.

Interestingly, the report finds that the investor appetite for Indian fintech is growing. The BCG report highlights that India ranks among the top geographies poised for future fintech investment. Investors are encouraged to diversify their capital into high-growth regions, such as India, with an emphasis on AI integration and disciplined scaling. 

According to the report, credit demand in India is on the rise, driven by a growing middle class. The report states that India’s affluent middle class, currently comprising 31 per cent of the population, is projected to increase to 40 per cent (approximately 600 million) by 2031. This demographic shift is fueling a surge in consumer demand for credit across retail, consumption, and SME sectors. 

Interestingly, India is still significantly underpenetrated in secured lending. The report highlights that only 36 per cent of India’s nominal GDP in 2024 is made up of outstanding retail debt, compared to 76 per cent in the US, 82 per cent in the UK, and 67 per cent in Japan.

In India, only 23 per cent of retail debt is secured (e.g., housing, vehicle), compared to 68 per cent in the US and 78 per cent in the UK.  Fintechs are enabling access without sacrificing prudence.

Fintech Players like OneCard are trying to unsecured revolving credit in a market where only 45 million Indians hold credit cards despite over 2 billion active bank accounts. Fintechs are expected to continue leading credit innovation in India, leveraging AI, personalisation, and risk-layered product design. 

As per the report, at the global level, the US and China account for two-thirds of scaled Fintech revenues. According to the BCG report, the US accounts for approximately 50 per cent (or around $118 billion) of scaled revenues, thanks to its large addressable market and easy access to capital.

China, meanwhile, accounts for a further 16 per cent ($38 billion) of scaled fintech revenues, with success also driven by a large addressable market in addition to the rise of “super apps” like WeChat and AliPay, built by Big Tech giants like Tencent and Alibaba. Success in other geographies is narrower.

Europe stands in contrast to the US and China, accounting for only about 8 per cent ($19 billion) of scaled fintech revenues, suggesting that the region’s heterogeneity and regulatory regimes have made scaling difficult.

In Europe, there are a number of scaled successes in challenger banking (for example, Revolut, Starling, and Monzo), remittances (for example, Wise), and BNPL/POS (for instance, Klarna). These fintechs have led the charge in Europe by catering to younger consumers seeking superior digital experiences and low foreign exchange fees for travelling.

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