In recent years, India's FinTech sector has seen a remarkable surge in growth. It is on track to reach a staggering USD 150 billion by 2025, and this growth can be attributed to several key factors. The industry's success is rooted in India's advanced digital infrastructure, a vast and underserved customer base, the affordability of data plans, and widespread smartphone accessibility. However, challenges persist at the intersection of finance and technology.

The digital distribution of financial products has enabled the FinTech ecosystem to expand rapidly while keeping costs reasonable. Looking ahead, digital lending is expected to experience significant expansion in the coming years, while the payments sector is poised for substantial increases in both transactions and revenue over the next decade. Additionally, the Insurtech sector is poised for a 15-fold expansion, while the WealthTech sector is expanding by democratising access to various investment classes.

Some key sectors of India’s FinTech industry include:

Key growth drivers for FinTechs

  • Digital public infrastructure
    India entry entity set up
    1. Digital identity of Indian residents
    2. Payments layer that is interoperable, fast, and cheap
    3. Data layer of consent-based sharing of financial data
  • Demand side drivers
    Corporate Secretarial Services
    1. Indian demography of young population (early adopters)
    2. Low penetration of traditional financial services
    3. Low-cost smartphones and data packs
  • Supply side drivers
    Supply side drivers
    1. Lower barriers to entry, no regulations for FinTechs yet
    2. Availability of risk capital through VC / PE firms
    3. Impetus provided by demonetisation and the pandemic

Challenges faced by the FinTech industry

The FinTech industry’s rapid growth has also brought forth some unique challenges that companies must navigate to ensure their sustainability and success. There are three major challenges faced by the industry: regulatory compliance, heightened scrutiny from regulators, shareholders, and Government on governance and conduct, and cyber data threats.

Regulatory compliance

Ensuring compliance with a complex web of financial regulations can be both time-consuming and costly for FinTech start-ups and established players alike. Challenges in regulatory compliance include obtaining the necessary licenses, adhering to anti-money laundering (AML) and know-your-customer (KYC) regulations, data privacy and protection laws, and ensuring adherence to consumer protection guidelines. Failure to meet these requirements can lead to heavy penalties, operational disruptions, and loss of trust from customers and investors.

Heightened scrutiny from regulators, shareholders and Government on governance and conduct

The rapid growth and disruption caused by FinTech players has attracted increased attention and scrutiny from governments and regulatory bodies worldwide. Policymakers are keen on understanding the potential risks associated with FinTech services, such as digital lending, digital payments, investment advisory, cryptocurrencies, among others. It is critical for FinTechs to ensure that their corporate governance and conduct standards meet industry best practices.

Cyber threats

FinTech companies handle vast amounts of sensitive customer data, including financial information, personal details, and transaction records. This makes them attractive targets for cybercriminals seeking to exploit vulnerabilities and launch cyberattacks.

Our capabilities 

We are a team of over 100+ diverse professionals with extensive experience in the financial services industry. We provide custom-made solutions to clients, helping them transition to high-performing organisations and market leaders. We have a proven track record of providing effective solutions that support companies in achieving their objectives, both in terms of internal policies and regulatory compliances. Collaborating with FinTechs across the industry, we offer key offerings spanning core and support functions.

The Core and support solutions

How Grant Thornton Bharat FinTech Consulting Services can help you?

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    Distinguished approach and methodology
    Leveraging our FinTech experience, we employ our proven approach in process reviews, tech risk management, and third-party audits for Indian financial services clients.

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    Connects with regulators, self-regulatory organisations and industry bodies
    The team collaborates with regulators (Reserve Bank of India, National Housing Bank, etc.) for compliance and actively participates in industry workshops (Centre for Advanced Financial Research and Learning, FACE, etc.).

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    Specialised team of experts
    Experienced leadership with regulatory, process, and tech expertise. Engagement team comprises professionals who have worked with top FinTech players.

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    Tools and enablers
    Regulatory registers repository for financial services. In-house benchmarking capturing global FinTech practices.

Our Insights

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Engagement Team

Vivek Iyer

Mumbai

+91 22 6626 2600

Rohan Lakhaiyar

Noida

+91 120 485 5900