7 Key Segments Shaping the Future of Fintech

From the barter system to eRupi, the history of money has been captivating all across the globe. India is one of the few countries marking its name as an innovation hub for Financial Technologies (Fintech). The future of Fintech looks promising as the third largest Fintech ecosystem globally; India is revolutionising the way money is being transferred. 

Related Read: Top Fintech Companies in India

Banking and payments have evolved from the complicated transfer of funds to quick and one-tap cross-border remittances and payments. The future of banking lies in the Fintech industry of India, as the industry has approximately 70% contribution from payments, lending, and investment tech companies. 

History of Money – Barter to Digital 

Money is a crucial component for every exchange or transfer between two parties. Money has taken several forms, such as coins, paper currency, cards, cryptocurrency, digital currency, etc. 

The concept of ‘money’ originated from when people used to exchange items called the ‘barter system’ to buy what they wanted. It then changed its form to coins, and creating currency in coins was called minting. 

Then came the banknotes, where the banks and private institutions used to issue paper currency for deposits and lending activities. Gradually, such paper currencies were issued by governments only to be treated as valid currencies. 

Future of banking

After paper currency came the era of plastic currency, where people used cards to make payments, withdraw money and deposit money – in the form of debit cards. The technology then advanced further, and people made online cash transfers while also performing transactions from mobile applications. 

After mobile banking, digital currency in cryptocurrencies, virtual currency, and central bank digital currency have emerged recently. Cryptocurrencies are decentralized and not governed by any central authority. 

The developers developed and managed virtual currency in an unregulated community. On the contrary, the Central Bank Digital Currency (CBDC) is a government-issued digital currency in India that will be issued by 2022. 

As the forms of money changed, so did the banking transactions performed by people. From in-person banking to online-mobile banking, we are heading towards a new era of digital banking. The new Fintech generation offers various options to transfer or exchange money through embedded finance, blockchain technology, open banking, neo banks, and banking as a service

The Fintech companies play a pivotal role in shaping India’s open banking and BaaS ecosystem by innovating products and services through digital payments, Wealthtech, Insurtech, and Regtech. Let’s see how vast our Fintech Verse is and what factors helped Fintechs grow in India. 

Journey of Fintechs – Emergence of Fintechverse in India

19th Century: Taking Baby Steps 1980 – 2008: An Era of Online Banking2009 – 2015: Shaping Fintech Ecosystem2016 – Present: Pioneering Fintech Verse in India
Finance and technology joined hands when the telegraphic transfer was invented to transfer funds from one place to another.
The 19th century also introduced the first financial product to the world – Credit cards which are still being used widely.
After introducing the world wide web, the fintech industry saw a massive spike in financial services and products that were being offered. 
The first introduction of ATMs and online banking was a remarkable event during this phase. 
In 2009, the first bitcoin was launched, seeing a price increase in 2010. 
Then, Google first established its base for Google Wallet in May 2011, becoming Google Pay later in 2015.
Apple Pay was also first introduced in 2014, which pushed the Indian Fintech industry further.
2016 marked a historical event in India when NPCI first launched UPI. 
During the six years of 2016 to 2021, with over 2000 Fintech companies, India became one of the strongest contenders to create a Fintech ecosystem with an adoption rate of 87% globally.

Why do Fintech Companies in India see Colossal Growth?

The core competency that Fintech companies have in common is technological advancements. They are consciously developing a product or service that solves customers’ problems, eases their efforts, and puts them at the center of their business strategy by leveraging technology. 

The Fintech space in India is leading the industry trends such as digital lending, cashless economy, WealthTech, and InsurTech platforms, while also taking the current trends of open banking, Banking-as-a-Service, and platform banking to the next level.  

Let’s learn the key driving factors for the exponential growth of Fintechs in India:

Competitive Edge for Fintechs 

Indian Fintech firms are goal-driven, customer-centric, and tech-savvy, giving them the competitive edge over the other existing traditional players in the market.  

Expansion of Products and Services

Those Fintechs that introduced a single focused product or service in the market have added many more services and products as a part of their business growth strategy. Cashfree Payments also started as a single product Fintech company and expanded to offer multiple products or service lines later. 

Technological Capabilities

Technology and digital infrastructure have made significant contributions to the growth of Fintech companies in India. Technologies such as artificial intelligence (AI), machine learning (ML), blockchain, internet of things (IoT), cloud computing, instant payments, etc., are pioneering the Fintech space with product innovations. 

Partnerships and Collaborations

Indian Fintechs efficiently use the API infrastructure to leverage product expansion through partnerships and collaborations through partnerships and alliances. 

Automated and Integrated Services

Fintech companies focus on providing automated and integrated services that allow their customers to put in the minimal effort with minimal costs.

Unbanked Customer Reach

These companies have the privilege of expansive reach to unbanked, rural regions and small and medium businesses, widespread across the country. The key to their success is their product offerings to those customer segments usually not entertained by the traditional players.

Easing Customer Efforts

The innovations they bring demand fewer customer efforts, such as easy payments, visit-less onboarding, and cashless purchases. 

Government Backing

  • RBI, SEBI, and IRDAI have considered taking a consultative approach by enabling the regulatory sandbox to experiment with various Fintech solutions.
  • The government has also promoted specific programs such as Jan Dhan Yojana, Digital India Programme, Startup India, and UPI to enable a favorable environment for these Fintech companies.

Rising Equity Funding 

Indian Fintech market size was recorded at $31 billion in 2021, which is estimated to grow at 22% annual CAGR for the next five years. Fintech funding keeps increasing year over year, which has given rise to 6,386 Fintech firms in India.

Future of FinTech

Source: BLinC Insights 

With more and more investors and venture capitalists taking an interest in the growth of the Fintech firms, payments, lending, and investment companies are leading the Fintech market in India. 

Customer-centric and Personalization

Fintech companies have disrupted the banking and payments service offerings by providing personalized banking solutions to their consumers. Due to the increased competition, high customer demands, and inefficient traditional banking system, it had become a pressing priority to address the underserved or unbanked segment.

Constant innovation, problem-solving attitude, and faster technological advancements are some of the primary reasons of the emergence of the Fintech Verse in India. 

Fintech companies are constantly working to provide a better customer experience by implementing chatbots offering transparent customer services from anywhere. Be it either a payment solution or an instant lending facility; these Fintechs work closely on providing personalized products and services to let the customers get what they want. 

Direct-to-Customer (D2C) Approach

Many Fintech companies are focused on providing services and products directly to customers. D2C enables these companies to enhance their customer experience and sustain themselves against the well-capitalized players. 

D2C Fintech companies create better customer experiences through availability, convenient delivery, pay later facilities, and reward points.  

Key Fintech Segments

The Payments and BaaS sector dominates the Fintech Verse in India due to the following reasons:

  • Widespread demand for digital and contactless payment methods and banking solutions.
  • An increased number of companies willing to offer customized banking solutions at their customers’ convenience.

Alternative payments, instant lending, Robo-advisory services, AI-enabled portfolio creation are a few solutions provided by various segments of the Fintech industry. 

While these services have become part of the digital-native Fintech landscape, other sectors such as LendTech, RegTech, Blockchain, etc., are also gaining momentum and attracting investors across the globe. 

Banking-as-a-Service (BaaS)

Banking-as-a-Service refers to digitally providing banking services and products by non-traditional players (usually Fintechs) using third-party distributors. 

Moreover, BaaS extends its presence to non-banking players who wish to provide banking facilities to their customers bundled with their core product or service line without charging higher costs or increasing the turnaround time. 

Thus, BaaS creates a single platform for these non-banking players to enable faster and smoother go-to market for banking services to their customers. 

Also, read our White Paper on Banking-as-a-Service

For example, when you buy a television (TV) from an e-commerce website, the checkout page will give you instant lending services in addition to the multiple options to make payments. Thanks to BaaS,  now you also have an option to buy now and pay later that allows you to buy TV at a minimal downpayment with the remaining amount payable in instalments later. 

In the above example, the Fintech companies can ease your TV purchase in the following manners:

  • KYC and ID proof verification
  • Customer Onboarding
  • Customer Background Screening 
  • Credit Score Calculation
  • Instant credit facility

The above services and products are provided by various Fintech segments such as RegTech, InsurTech, LendTech, and PayTech. While each component has a unique role, BaaS will enable the ecosystem of a generic finance product. Thus, the future of Fintech lies within the emergence of BaaS and its related products and services largely. 

Just as you go to the general store to buy items commonly purchased by us regularly, generic finance is a concept of new generation BaaS. We can go to a general finance store (called BaaS provider) and buy or use the most common financial products and services. 


PayTech segment focuses on offering services and products such as prepaid cards, QR code payments, payment aggregator services, point of sale, corporate cards, and bulk invoice payments for large organizations. 

The PayTech companies offer these services by using card network services, payment gateway, and API-enabled services. Cashfree Payments, offers payment solutions, revolutionising the payments sector of the country. 


The WealthTech Fintech firms are helping more millennials invest without having the expertise of it by providing personalized suggestions based on goals, willingness to invest, and risk appetite, they offer investment advisory, wealth management, mutual fund investment platforms, and alternate investment platforms using advanced technology. 

Digital portfolio management, Wealth-as-a-Services, embedded wealth, digital broker, Robo retirement, and white label Robo advisors are some of the most prominent areas of WealthTech companies. IndWealth, Zerodha, Smallcase are some successful WealthTech firms in India strengthening the digital investment ecosystem of the country. 

Future of banking


LendTech companies innovate credit facilities and ancillary services with a broad reach among small and medium enterprises. Be it either Fintech or non-fintech companies, they use technologies to enable seamless and fast personalized credit facilities for their consumers.

Buy Now Pay Later (BNPL), credit scoring, P2P lending, instant gold loan, education loans, etc., along with fixed-term finance and trade finance services, come under the purview of the LendTech companies.

There is a huge credit gap between the demand for MSME credit against the actual mainstream supply of about ₹ 20-25 trillion. A similar credit gap for the SME sector is at ₹ 82.80  trillion. 

The Lendtech companies are revolutionizing the way credit facilities are offered at the traditional banks. Thus, they are reshaping the credit supply by innovating these facilities to serve the underserved segment of the Indian economy.

The Fintech companies use loan origination systems, loan management systems, credit bureaus, collections management, and alternate credit scoring. ZestMoney, Lendingkart, InCred are emerging as the leading LendTech companies in India. 


Regulation technology companies use technology to ease customers’ compliance and regulatory requirements to ensure minimal non-compliance and streamlined customer onboarding processes. 

RegTech companies offer KYC and ID verification services, tax compliance, digital onboarding, AML compliance, fraud detection tools, and risk management tools and software that share the awareness of the regulatory requirements and help them comply with those requirements easily.

Future of Banking

ClearTax, EaseMyGST, KhataBook are leading the Indian RegTech sector by offering various compliance-related services. 


Think of InsurTech companies, and you will end up remembering only one name in your mind – Policybazaar. Other players such as Acko, Digit, Easypolicy are also proliferating as the insurance market picks up the market heat of rising insurance policyholders.

The InsurTech companies take the help of cutting edge technologies to build customer-centric insurance products and services such as digital insurance, bulk employee insurance products, insurance comparison platforms, etc. 

These services and products can be enabled by offering insurance infrastructure API, underwriting services, claims management, insurance product customization, and policy management system-related services. 

Future of Banking


2021 was remarkable for cryptocurrency investment as investors across the world invested more than $30 million, which is a 5x increase from its level in 2020. A lot of Fintech companies entering this segment are using blockchain technology to offer transparent and decentralized finance (Defi) to remove interference by the central government in the currency approval process. 

However, regulators and the Fintech companies are closely working to streamline the crypto investments and build trust among people as there is no robust regulatory mechanism that governs cryptocurrencies.  

WazirX and CoinSwitchKuber are some of the key players in the blockchain segment of the Fintech Verse in India. 


As the crypto segment emerged as one of the market giants, the cybersecurity segment of the Fintech Verse has also seen a considerable spurt during 2020 and 2021. More platform-based Fintech companies are evolving to build a robust cybersecurity environment globally. Focus remains on anti-money laundering (AML) activities and fraud detection services using proper security measures and technological advancements. 

Each segment contributes to the Fintech Verse in India independently. Still, of all these segments, Banking-as-a-Service (BaaS) has become a new norm for innovation for the majority of the Fintech firms materializing in India. 

The Bottom Line

The Fintech landscape in India is predominantly led by the PayTechs, LendTechs, and WealthTechs, which are closely interconnected with BaaS. Therefore, the future of Fintech is Banking-as-a-Service and the upcoming digital banking ecosystem enablers. 

Happy Banking!