Will India's fintech sector witness a 31% CAGR growth in the next four years?
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Synopsis
Discover how India's fintech sector is on the brink of a significant transformation, with projections of a 31% CAGR over the next four years. This article delves into the driving forces behind this growth, including digital public infrastructure and investor confidence in stable segments.
Key Takeaways
- Projected growth of 31% CAGR in India's fintech sector.
- Shift towards resilience and governance in fintech ecosystem.
- Strong investment in lending and payments segments.
- Significant rebound in deal activity in H1 2025.
- Importance of ethical innovation and governance.
New Delhi, Oct 8 (NationPress) The Indian fintech landscape is poised for remarkable growth, projected to achieve a 31% compound annual growth rate over the next four years, according to a recent report released on Wednesday.
The analysis by KPMG India indicates that the nation's fintech ecosystem is evolving, transitioning from a period of rapid growth to one defined by resilience, governance, and profitable scalability.
This transformation is bolstered by a robust digital public infrastructure, which includes UPI, Aadhaar, and the Account Aggregator framework, as highlighted in the report.
In the first half of 2025, around 60% of total fintech funding was allocated to the lending and payments sectors, reflecting strong investor confidence in these mature and stable areas, as per the report.
After the peak funding observed in 2021, deal activity has shown a resurgence in H1 2025, with 12 deals surpassing $50 million, a significant increase from just 1 deal in H1 2024. This rebound signals a strategic focus from investors on scale and quality, according to KPMG India.
"India's fintech journey is entering a transformative phase—one where embedded finance, driven by responsible AI, redefines the integration of financial services into everyday life. Innovation must align with governance, resilience, and ethical standards. Talent will be the key differentiator, fostering a workforce capable of navigating advanced technologies and regulatory complexities," stated Akhilesh Tuteja, Partner and Head of Clients and Markets at KPMG in India.
"This is the pivotal moment to develop future-ready models that prioritize compliance, customer-centricity, and scalability—where innovation flourishes responsibly, positioning India as a global standard for financial transformation," he added.
Sanjay Doshi, Partner and Head of Transaction Services and Advisory for Financial Services at KPMG in India, emphasized that the transformative capabilities of digital public infrastructure have opened significant opportunities. However, achieving lasting success will rely on institutionalizing trust, embedding strict governance, and pursuing transparent, profitable growth.
Point of View
My perspective on the evolving fintech landscape in India is clear: we are witnessing a pivotal moment of transformation. The projected growth of 31% CAGR reflects not only the resilience of this sector but also the importance of governance and ethical innovation. India's fintech journey is one of promise, and our ongoing commitment to reporting on this evolution ensures that we remain at the forefront of this dynamic narrative.
NationPress
08/10/2025
Frequently Asked Questions
What is the expected growth rate of India's fintech sector?
The Indian fintech sector is anticipated to grow at a remarkable 31% compound annual growth rate over the next four years.
What are the key factors driving this growth?
The growth is driven by strong digital public infrastructure, including UPI and Aadhaar, as well as significant funding directed towards lending and payments.
How has funding activity changed recently?
Funding activity rebounded in H1 2025 with 12 deals exceeding $50 million, a notable increase from just 1 deal in H1 2024.
What role does governance play in this sector's evolution?
Governance is critical in ensuring that innovation in the fintech sector is ethical and sustainable, especially as new technologies emerge.
What can we expect from India's fintech industry in the future?
We can expect the industry to focus on building future-ready, customer-centric, and scalable models that position India as a global benchmark for financial transformation.
