Fintech's long march from disruption to discipline in its next chapter

A decade of rapid growth gives way to partnerships, governance, and the contours of Fintech 2.0. Raghu Mohan weighs in

“The foundation of the digital payment infrastructure allows financial technology (fintech) to scale rapidly and deliver targeted solutions to not only address current, but also future challenges,” said Reserve Bank of India (RBI) Governor Sanjay Malhotra at the Global Fintech Fest (GFF) 2025 in Mumbai, on October 10, 2025. 

The Centre for Advanced Financial Research and Learning, in its first India Finance Report in November 2023, highlighted the immense potential of fintech. The independent body set up by the RBI noted that of the 14,000 startups born between 2015-16 and 2020-21, nearly half were fintech, and their projected lending was expected to exceed that of banks by 2029-30 (FY30). 

The numbers are staggering. India is now home to over 10,000 fintechs, with cumulative investments exceeding $40 billion over the past decade. According to PwC’s “The Indian Payments Handbook 2025-2030”, digital payment volumes and values will reach 617.3 billion and ₹90,730 crore, respectively, between 2024-25 (FY25) and FY30. 

Two divergent trends are worth observing. Data from Tracxn Technologies — a private market research intelligence platform — shows fintech equity funding continues to fall. In the first nine months of 2025, fintechs raised $1.6 billion, down 17 per cent from $1.9 billion in the same period in 2024, and 20 per cent from $2 billion in 2023. Yet, personal loans offered by fintechs continue to grow. 

Data from the Fintech Association for Consumer Empowerment (FACE) indicates expansion both in scale and value in the first half of 2025-26, compared with the same period in FY25. Volumes rose to 64 million accounts from 59 million, values increased to ₹97,381 crore from ₹78,084 crore, and average ticket sizes grew to ₹15,177 from ₹13,327. 

What explains this dichotomy? “Equity-raise has slowed in the sector, but digital lenders are still growing their loan books by shifting away from equity-funded balance-sheet lending towards asset-light, partnership-driven, capital-efficient models,” said Rohan Lakhaiyar, partner, financial services — risk advisory, Grant Thornton Bharat. Growth is no longer dependent on deploying fintechs’ own capital. “Colending has grown significantly in the past couple of years, with larger incumbent banks and shadow banks giving 80 per cent of the loan, while the balance is funded by fintechs, limiting capital requirements.” 

 

Why fintech’s blind spots didn’t last 

Closer engagement with Mint Road has also benefited fintech. The RBI has held nearly 500 interactions with fintechs. As Malhotra noted at GFF 2025, since March 2024, “we have conducted 15 structured sessions under Finteract, covering over 1,100 fintech representatives. In addition, 14 open interactions with more than 600 participants have been held under Finquiry since June 2024”. 

This engagement has contributed to industry maturity. 

For instance, a survey by FACE, in collaboration with the Center for Financial Inclusion, found respondents placed very low priority on governance risk. The survey (Fintech Lending Risk Barometer 2022-2023: Understanding the Perception of Risks in the Fintech Lending Sector) defined governance risk as “weakness at the board level, leading to poor oversight and control”. It ranked 19th among non-lenders and 22nd among lenders. The survey suggested that other pressing factors may have overshadowed governance at the time, though it did not specify what those factors were. 

Surprisingly, the survey was conducted in November 2022 — just two months after then-RBI governor Shaktikanta Das had raised concerns at GFF Mumbai about the fintech ecosystem: “We would expect the ecosystem to pay attention to governance, business conduct, regulatory compliance, and risk-mitigation frameworks.” This followed the November 2021 executive summary of the RBI working group’s report on digital lending, which warned that pandemic-led growth in digital lending had led to the unbridled extension of financial services to retail individuals, “susceptible to a host of conduct and governance issues”. 

The report also added that digital innovations and potential Big Tech entry could alter the roles of existing regulated financial entities. 

That fintechs were slow to take note became evident at the Business Standard BFSI Summit in Mumbai (December 21, 2022), when RBI Deputy Governor T Rabi Sankar described an “unexpected regulatory challenge”, characterising it as compliance aversion. Financial entities subject to regulation understand their systemic importance, but “those outside this space are still learning to adapt… so their initial reaction to a regulation is to object”. 

We have since moved forward. “The fintech story, though chequered, is one of remarkable success, becoming inseparable from financial services in all aspects,” said Sugandh Saxena, chief executive officer, FACE. Over time, “everyone in the ecosystem has a much better understanding of their own place, risks, limitations, opportunities, regulatory and self-regulatory rules, and greater maturity in governance, processes, and responsibilities.” 

The self-regulatory organisation framework, of which FACE is a part, has also helped by providing fintechs a common platform to address issues effectively and represent their collective voice. 

What lies ahead may echo the insights of Coatue Management in its report ‘Fintech and the Pursuit of Prize: Who Stands to Win Over the Decade (October 2022)’. The report argued that “the next generation of enduring fintech requires a focus on owning the balance sheet, maniacal re-bundling, a business-to-business leaning, and building high-margin sub-verticals”. Fintech 2.0 may well be upon us. 

Growth, just not the old kind 

Equity capital is thinning: Fintechs raised $1.6 billion in the first nine months of 2025, down 17% from $1.9 billion a year earlier and 20% from $2 billion in 2023 

Credit keeps expanding: FACE data shows personal loan volumes rising to 64 million accounts in H1 2025-26 from 59 million in H1 2024-25, with loan value climbing to ₹97,381 crore from ₹78,084 crore and average ticket sizes increasing to ₹15,177 from ₹13,327 

A new growth playbook: Even as equity-raises slow, fintechs are scaling through asset-light models, colending partnerships, and capital-efficient structures