Why India needs 100,000 fintech startups, now

Despite a decade of fintech-driven transformation, there is still immense potential to extend frictionless financial services to every corner of the country.

By Rajesh Bansal 

Shyam, a delivery executive from Pratapgarh, Rajasthan, pays his bills on time but cannot secure a loan for his father’s medical emergency due to the "informal" nature of his income. Similarly, Ruchi, a bright student from Ghunsuli, Jharkhand, managed to secure a scholarship just in time because no bank was willing to invest in her future through an education loan. These are not isolated incidents; they represent everyday realities in India’s financial landscape.

Despite a decade of fintech-driven transformation, there is still immense potential to extend frictionless financial services to every corner of the country. While India prides itself on its diversity, it comes with unique challenges—from language barriers and varied income levels to regional economic disparities, cultural attitudes toward money, and differing degrees of financial literacy. These challenges create distinct cohorts of individuals with specific needs, such as nano-entrepreneurs, gig workers, women’s self-help groups, persons with disabilities, farmers, and residents of underserved geographies like semi-urban and rural areas or the northeastern region, each of whom requires hyper-personalised solutions.

The question is no longer whether we need more fintech solutions—it is how fast we can build them to reach those who need them the most.

Shyam envisions creating a platform that leverages alternative data to unlock credit for gig workers like him, who often fall through the cracks of traditional banking systems. Ruchi, on the other hand, dreams of building a fintech startup that enables women in her community to formally save and invest, overcoming barriers of language and financial literacy. However, without a conducive innovation ecosystem, including bespoke mentorship, access to capital, and hands-on incubation support, their ideas risk remaining just that: ideas.

The Need of the Hour

India’s fintech ecosystem, the third-largest in the world with over 10,000 companies, according to the Department of Financial Services, has spearheaded a financial revolution. Innovations like UPI, Aadhaar, and e-KYC have significantly expanded financial access, pushing the Financial Inclusion Index from 50.1 in 2013 to 64.2 in 2024. This progress is just the beginning. Over two-thirds of fintech startups are concentrated in Tier-1 cities, leaving vast rural and semi-urban populations underserved. The next leap forward demands not just incremental change but an exponential shift—100,000 fintechs.

A hundred thousand fintechs is not just about increasing the number of startups; it is about unlocking Bharat’s economic potential at scale. A gig worker like Shyam, who can access emergency credit at the click of a button; a small farmer who can instantly secure insurance for their crops; or a young woman like Ruchi, who can invest with confidence—these are the cornerstones of a $10 trillion economy, a Viksit nation.

Democratising Fintech Entrepreneurship

Financial solutions must be designed by those who truly understand the challenges. Shyam and Ruchi need a thriving fintech ecosystem that empowers them to build, design, and scale solutions for their communities, such as the cohorts mentioned earlier. This is where industry stakeholders—including public institutions, fintech startups, banks, academic institutions, investors, and incubators—must step up.

1. Fintech-focused Incubation: India’s startup ecosystem needs incubators specialising in financial technology as a sectoral focus area. Partnering with academic institutions and organising workshops on fintech ventures, design thinking, and fintech-focused hackathons can spark curiosity and cultivate a new wave of fintech founders, leveraging India’s young, digital-native talent pool.

2. Expand Access to Capital: Investment, whether from venture capitalists (VCs), angel investors, corporations, or grants, must prioritise fintech startups beyond metropolitan cities. Regional fintech funds and targeted grants can decentralise investment, nurturing innovation while fostering balanced economic growth across the country.

3. Increased FI-Fintech Collaboration: Fintech adoption will surge when consumers—across all Indian geographies—view these solutions as safe, seamless, and reliable. Traditional financial institutions (FIs) have vast networks and established customer bases but find it difficult to innovate at the pace required to serve modern demands. By integrating fintech solutions into their systems, banks can extend their services to wider, untapped audiences while offering cutting-edge products.

The ecosystem must squarely centre on such democratisation, by supporting startups at every stage of their lifecycle: design-thinking and ideation workshops for aspiring founders, pre-incubation programs to turn ideas into Minimum Viable Products (MVPs), incubation programs that guide startups from MVP to Product-Market Fit (PMF), and acceleration programs designed to scale growth. Such efforts focused on expert mentorship, accelerated access to markets and investors, and networking forums can foster greater collaboration.

Fintech is not just about technology; it is about trust. For digital financial solutions to be ubiquitous, they must be built with deep local understanding, transparency, and accountability. Shyam and Ruchi don’t just need access to financial services; they need the means to create them. This is a clarion call to all stakeholders, including policymakers, financiers, and visionaries, to step up, collaborate, and ensure that fintech entrepreneurship thrives in every corner of the country. As India inches toward becoming a Fintech Nation that the world looks up to, the time to act is now.

(Rajesh Bansal, CEO – RBIH.)

Views are personal, and do not represent the stand of this publication.