The Digital Fifth, a leading banking and fintech consultancy firm in the country, will host the third edition of the Bharat Fintech Summit in February.
This year’s theme, ‘Navigating the Next Wave of Digital Finance’, will focus on important regulatory updates including the Digital Personal Data Protection Act (DPDPA) and Reserve Bank of India guidelines (RBI) on IT governance. The summit will also focus on innovations in embedded finance, blockchain, artificial intelligence (AI) and wealth management, showcasing advancements such as UPI Lite for offline payments and AI-based fraud detection.
CXOToday recently spoke with Sameer Jaini, the founder of The Digital Fifth, about India’s growth as a leading fintech innovator.
How have fintech startups contributed to the innovation ecosystem in India and what role do they play in the future of digital finance?
Fintech companies have significantly transformed India’s innovation landscape over the past decade, positioning the country as a major player in the global FinTech sector. Key innovations include paperless lending, mobile banking, secure payment gateways and mobile wallets, all of which contribute to a digitized India. Recent advances by fintech startups include wealth management tools for goals-based investing, green finance initiatives promoting ESG-based lending, and AI-driven credit solutions aimed at underserved populations.
As drivers of financial inclusion, startups will continue to innovate in areas such as lending, insurance and decentralized finance (DeFi). Collaborations with traditional banks will further enhance product innovation and expand market reach.
Can you explain the potential global impact of the Unified Payments Interface (UPI) and its importance for international transactions?
India’s Unified Payments Interface (UPI) has already transformed domestic payments and is poised to be a game-changer on the global stage. Processing over ₹18 trillion in monthly transactions (as of December 2024), UPI’s interoperability, scalability and low transaction costs set a high benchmark.
Key global impacts include seamless cross-border remittances. Partnerships like UPI-PayNow (Singapore) help remove traditional barriers to remittances by enabling instant, low-cost transfers. Additionally, UPI’s expansion into markets like the UAE and Europe could revolutionize remittances, which currently account for $87 billion annually for India.
We can also expect standardization of real-time payments. UPI’s open API architecture could inspire global adoption of standardized payment frameworks, reducing reliance on current systems with outdated technology. UPI’s low-cost model can facilitate financial inclusion in underbanked regions around the world, particularly in Africa and Southeast Asia.
Additionally, the acceptance of UPI among international merchants can have a positive impact on tourism and commerce. This will improve ease of payment for Indian travelers abroad.
However, as UPI expands globally, it faces challenges such as cross-border regulatory compliance, cybersecurity and the complexity of foreign exchange. The potential of this model lies in its ability to become a model for seamless, real-time global transactions.
How have recent regulatory changes influenced the fintech sector, and what other changes do you foresee in 2025?
The recent Digital Personal Data Protection Act (DPDPA) has shifted the focus of everyone within the ecosystem towards more consent-based data practices, accompanied by strong governance frameworks for fintech companies and financial institutions that manage sensitive data.
Additionally, the Reserve Bank of India’s (RBI) key guidance on IT Governance, Risk and Compliance (GRC) highlights the importance of resilience, cybersecurity and IT governance, particularly for corporates non-bank financial institutions (NBFCs) and banks adopting new technologies. New Know Your Customer (KYC) regulations and digital lending come with stricter KYC standards, which require affordability assessments to improve transparency and consumer protection.
Looking ahead to 2025, we can expect increased scrutiny of fintechs as the RBI plans to introduce additional licensing requirements for high-risk fintech activities such as Buy Now Pay Later (BNPL) models and co -ready. Additionally, there will be an increased focus on environmental, social and governance (ESG) compliance, with regulations requiring ESG alignment to reshape funding and operational priorities.
Finally, strengthened cross-border frameworks and policies will likely be implemented to streamline international transactions and align with global anti-money laundering (AML) standards.
What is your assessment of current investor sentiment in the fintech market and how can companies best position themselves to attract investment?
In 2024, the fintech market received $627 million in funding, primarily in enabling segments such as embedded finance and insurtech. Although overall funding levels remain cautious due to macroeconomic challenges, investors are optimistic about startups that focus on compliance, scalability and inclusion.
To position themselves for investment, these startups must prioritize regulatory compliance to align with frameworks such as DPDP and ESG mandates. Additionally, they should emphasize innovation-driven models that feature unique value propositions, including AI-based credit scoring and integrated financial solutions. It is also important to highlight the scalability of their business models, demonstrating how they can expand across different demographics or geographies. Additionally, there will be a strong focus on developing pathways to profitability and implementing low-cost customer acquisition strategies.
As we approach 2025, what is your vision for the fintech sector in India and how do you see it evolving in the coming years?
Vision for 2025 and beyond:
- Global leadership in fintech: India’s fintech sector will consolidate its position as a global leader, with innovations such as UPI setting international standards.
- Integrated ecosystems: APIs and BaaS platforms will dominate, integrating financial services seamlessly into non-financial applications.
- Inclusive finance: Technologies such as voice payments and microcredit will bring financial services to previously underserved segments.
Key trends to watch:
- AI and Blockchain: promoting operational efficiency and trust.
- Green finance: catalyzing growth aligned with ESG criteria.
- Cross-border integration: Streamlining remittances and trade payments globally.
India’s fintech sector will thrive on collaboration, innovation and regulatory foresight, positioning it as a strong pillar of the global economy.