Reputation biggest risk for Indian fintechs, ahead of cyber, AI: Report

Nearly 59 per cent of fintechs surveyed rated reputation and brand damage as a high-severity risk, ahead of infrastructure, competition and data privacy concerns

Reputation and brand damage have emerged as the biggest risks facing India’s fintech sector, ranking above infrastructure disruptions, competition, data privacy, cyberattacks and regulatory concerns, according to a new industry report.

 

Nearly 59 per cent of fintech companies surveyed rated reputational risk as a high-severity concern, giving it an average severity score of 7.2 out of 10, the highest among nine risks assessed in the Fintech Barometer 2026 released by the Fintech Association for Consumer Empowerment (FACE) and Grant Thornton Bharat.

 

The report ranked interoperability and infrastructure risk second, with an average score of 7.0. About 51 per cent of respondents rated the risk of failures, outages or policy changes affecting digital public infrastructure such as UPI and Aadhaar as highly severe.

 

 

Market competition and conduct risk ranked third with a score of 6.9, reflecting concerns over pricing pressure, rapid technological change and evolving customer expectations.

 

Data access, privacy and protection followed with a severity score of 6.6, with 49 per cent of respondents rating it as a high risk. Cybersecurity, technology and business continuity, as well as regulatory and governance risks, were rated at 6.5 each.

 

Fraud, money laundering and other financial crime risks, along with macroeconomic and funding risks, scored 6.3 each.

 

Artificial intelligence (AI), machine learning and model-related risks ranked the lowest among the nine categories, with an average severity score of 5.8. The report attributed the lower ranking to the relatively early stage of advanced AI adoption across the financial sector.

 

However, it said AI-related risks involving governance, privacy, cybersecurity and model failures are likely to become more significant as fintech companies increasingly use the technology for underwriting, fraud detection, customer engagement and decision-making.

 

The findings are based on a survey of 39 FACE member fintech companies operating across lending, payments, regulatory technology, collection technology and techfins. Respondents ranked the nine risks on a scale of one to 10.

 

The report said India’s fintech sector was entering a phase in which trust, governance and operational resilience were becoming as important as innovation in determining sustainable growth.

 

“Balancing profitability, growth and trust has become one of the key drivers for the fintech ecosystem,” said Vivek Iyer, partner and financial services risk advisory leader at Grant Thornton Bharat.

 

Sugandh Saxena, CEO at FACE, said sustaining fintech adoption would require companies to earn trust by creating value and addressing risks as they emerge.

 

The report concluded that stronger governance, customer trust and collaboration across the ecosystem would shape the next phase of India’s fintech growth.