2024 has been an interesting year of contrasts for India's fintech and financial services spaces.

Financial Services continues to be a steady compounder as listed financial services (incl. banks) market capitalisation reached ~$1.2 trillion (~25% of India’s total market cap), including 13 new listings that added $20 billion of market cap. Private financial services funding also remained robust at ~$4.8 billion in 2024 ($4.3 bn in 2023).

The listed fintech market cap in India remains at ~$35 billion (~3% of overall FS market cap), but compounding fast (~100% growth in CY24). Private fintech funding moderated to ~$1 billion in CY24 ($1.9 billion in 2023, $7.7 billion in 2021), as consumer fintech companies continue to find the right balance between growth & profitability as well as course-correct operating models basis regulatory actions.

Against this backdrop, we highlight six key trends which accelerated for the fintech and financial services industry in 2024. These cut across underlying infrastructure, role of regulation, promising business models (expanding non-lending fintech pools, BFSI SaaS, AI), and increasingly experienced founder archetype.

DPI 2.0: The LEGO Blocks of Finance

India's leadership in DPI continues to strengthen, with UPI now powering nearly half of global real-time payment transactions. India's DPI ambitions have become more audacious in 2024, with the emergence of more sophisticated applications (e.g., credit on UPI, cross-border payments, UPI circle). The Account Aggregator framework reached a significant milestone with over 100 million cumulative consents, while credit on UPI has moved from concept to reality, with RuPay credit card UPI transactions surging two-fold to almost ₹64,000 crore in just the first seven months of FY25.

The introduction of the Unified Lending Interface (ULI) represents another transformative development, particularly for rural credit. The year-end release of MuleHunter by RBI Innovation Hub (AI-powered system to combat financial fraud) represents a fascinating evolution in India's DPI approach: using artificial intelligence to build public digital infrastructure.

Regulatory Clarity: Short-Term Adaptation, Long-Term Confidence

In 2024, Regulatory authorities across the spectrum have moved to provide unprecedented clarity while keeping customer protection at the forefront. RBI has been very proactive, issuing several circulars - from streamlining KYC processes, strengthening gold-loan LTV monitoring, cracking down on unsecured lending by non-regulated entities, to establishing a new licensing regime for cross-border payments. We see the establishment of self-regulatory organizations (SROs) as particularly significant - it signals regulators' trust in the ecosystem's maturity and capacity for responsible self-governance.

Beyond RBI, other regulators have also pushed equally meaningful reforms (e.g., SEBI: adopting optional T+0 settlement in cash equities in a phased manner, the introduction of an ASBA-like facility for secondary market trading; IRDAI: ‘use and file' framework for insurance products; and IFSCA: allowing fintechs to offer payment services and escrow services globally from GIFT City).

These changes across regulators bring extreme clarity and keep customers’ interests at the forefront. While adopting them requires time and resource commitments from financial institutions (including fintechs), they ensure clarity in operating models and rightfully balance innovation with strong foundations of compliance frameworks.

All Roads Lead To Lending, No More

The notion that "all roads lead to lending" in Indian fintech has been decisively disproven in 2024 as ~80% of fintech deals by funding amount were for non-lending business models. While lending continues to remain the largest revenue pool, revenue pools have also deepened across other spaces as consumers & businesses continue to adopt digital-led solutions across payments (Paytm, PhonePe, Razorpay), wealth management (Zerodha, Groww, Dezerv) and insurance (PB Fintech, Digit, Acko). Equally importantly, we are seeing more and more BFSI SaaS models scale up (detailed below).

BFSI SaaS: India's Next Big Innovation Wave

We have seen scaled BFSI players such as Perfios, M2P, and Juspay emerge, driven by a confluence of factors: rising customer experience expectations, regulatory push for modernisation, and India's deep pool of talent across IT and Financial Services. Even in 2024, ~45% of private fintech funding was invested in BFSI SaaS models. We believe BFSI spend on technology will only continue to grow as Indian BFSIs, who currently spend 3-5% of revenue in technology, catch up with global peers, who spend 8-10% of revenue in technology. Fintech infra in India can grow to a $8-10 billion revenue opportunity over the next 7-8 years. Themes that interest us in space include:

1. Core systems with a sharp verticalized financial product wedge (e.g., Vegapay)
2. Point solutions offering 10x better outcomes and riding on business/tech tailwinds (e.g., Skydo)
3. Pipes that enable embedded finance and manufacturer-distributor partnerships (e.g., Zopper)
4. Core infra and services that will allow better data science/ML and Gen AI adoption (described below).

AI: The Great Accelerator

We believe that GenAI will have a significant impact across all aspects of financial services. Within just two years of LLMs emerging, they're already deployed in multiple production environments across financial institutions. India’s largest NBFC, Bajaj Finance, for instance, aims to become a ‘FINAI’ company, with plans to leverage AI in 20 areas, including core functions such as sales, risk and compliance.

We believe that AI adoption in BFSI will be driven by vertical AI companies focused on FS use cases with models fine-tuned to specific verticals and integration complexity. The first wave of adoption will be around vertical agents built for 4Cs:

1. Compliance (Fraud/AML Reporting, Regulatory Change Management)

2. Collections (Intelligence, Conversations)

3. Communications (Customer service, Cross-sell)

4. Control and Operations (Document processing, Audits/Recon, etc.)

There also exist opportunities for companies to build products and services to enable this AI transition. E.g., Data unification platforms, agentic governors and middleware that will lay the foundation for other agents and AI apps to build upon.

Growing Pool Of Repeat Founders & Seasoned Operators Starting New Ventures

India continues to distinguish itself globally through the quality of its financial institutions. These organizations have developed an exceptional talent pool that's now driving the next wave of innovation. There's been extensive coverage of startup mafias, but we believe an equally powerful - and perhaps underappreciated - talent engine exists within India's traditional financial institutions like Kotak, ICICI, HDFC and Bajaj Finance. A rough count tells us that of the new NBFCs we have come across in the last 18 months, 15+ were started by senior leaders/operators from such large institutions.

Additionally, scaled-up fintechs like Groww, Paytm, Razorpay and PhonePe have emerged as critical talent hubs, producing seasoned operators who go on to start up.

~60% (by value) of funding rounds >$5 million in 2024 across FS & fintech were for ventures started by such experienced/repeat founder archetype. ~35-45% of the top 100 funded FS & fintech founders are also similar archetypes.

This entrepreneurial energy from seasoned professionals is fueling category creation in new niches while maintaining high standards of execution, and we expect this trend to keep accelerating.

New Partnerships

This year, we were fortunate to partner with several pioneering companies reshaping their respective segments within fintech:

Infinyte Club caught our attention with their mission to democratize wealth creation opportunities traditionally limited to the ultra-wealthy.

We also welcomed Rupeekto the Elevation family, backing Sumit Maniyar and the team’s vision to build India’s most trusted gold-loan brand by bringing transparency in the gold loans space.

We backed Dale Vaz and Manish Jain's bold vision to democratize professional-grade trading tools and insights for individual investors with Sahi, by co-leading their Seed round along with Accel.

Vegapay is revolutionizing credit infrastructure through a cloud-native core system that helps banks significantly reduce the time and cost required to launch credit card and credit line on UPI programs. We led its Seed round, which saw participation from Eximius Ventures.

ZFunds is tackling the critical challenge of undersupply of distributors in India's MF industry. Their technology platform empowers traditional offline distributors with the right tools and training, which will have a significant impact on investor outcomes and industry growth.

Zopper impressed us with its innovative approach to insurance distribution. We co-led their Series D round with Dharana Capital. Their deep understanding of the Indian market, combined with cutting-edge technology, has positioned them as a leader in embedded insurance.

Growing Relationships

We strengthened our partnership with Dezerv through their latest $32M funding round, which was led by Premji Invest and saw participation from Z47 and Accel.

We also participated in SarvaGram's $67M Series D round, led by Peak XV Partners and also saw participation from existing investors - Elevar Equity, Temasek and TVS Capital.

We led Skydo’s $5M pre-Series A round.

We deepened our partnership with Vridhi Home Finance through their $37M Series B round, led by Norwest.

Portfolio Milestones

Axio raised $20M from Amazon Smbhav Venture Fund to scale their lending operations and expand checkout finance use cases.

Aye Finance raised $30M in a Series G round led by Singapore's ABC Impact, with participation from British International Investment.

Mintifi secured $180M in their Series E round led by Prosus Group and Teachers' Venture Growth (Ontario Teachers' Pension Plan).

Shaping The Future of Indian Fintech

Beyond investments, we devoted significant energy to analyzing and sharing our perspectives on key trends shaping fintech through various knowledge initiatives.

Our flagship research initiative, The Bottomline, saw the release of its third report - 'Reaching a Billion: India's $25 Billion Embedded Fintech Opportunity'. This report built on our previous work that had projected $400 billion in value creation by FY30 and mapped India's billion-plus addressable fintech users. The latest edition explored how financial services are becoming increasingly contextual and embedded at points of user interaction. We identified three major opportunities:

1. Large consumer platforms could create additional annual revenue of $10-15 billion by FY30 through embedded fintech across payments, lending, and insurance

2. India's unique open digital networks could generate over $5 billion in revenue through financial services integration

3. Digitization of B2B supply chains could unlock $10-12 billion in supply chain financing revenue

This year, we stepped up our community engagement initiatives to foster deeper connections and knowledge sharing within the fintech ecosystem.

A major highlight was The Bottomline: Fin x Tech Forum in Mumbai, which brought together senior practitioners from leading banks and fintechs to initiate meaningful dialogues on fintech-bank collaborations. The event highlighted how fintech-BFSI partnerships can leverage complementary advantages - banks bringing brand and distribution while fintechs excel at creating contextual, consumer-focused products. Industry leaders from SBI, HDFC Bank, Federal Bank, axio, Yubi, and M2P Fintech shared invaluable insights on building successful partnerships and driving innovation.

Recognizing the evolving role of product management in fintech, we hosted our second annual Fintech PM Mixer in Bengaluru, which brought together over 100 product managers to explore challenges unique to building fintech products.

Podcasts From Our Stable

Our founder-focused podcast series featured several inspiring conversations this year.

We explored Dezerv's journey with Sandeep Jethwani, exploring how a shocking realization about mismanaged portfolios of accomplished professionals led to building a wealth management platform with over ₹10,000 crore in client assets today.

Our conversation with Infinyte Club founders Ankita and Joy explored the emergence of a new generation of tech professionals amassing wealth through ESOPs and their unique investment needs.

Our conversation with Ram Naresh Sunku, founder of Vridhi Home Finance, explored how traditional financial services can be reimagined through a "phygital" approach. In this enlightening discussion, Ram shared how his 27-year journey across FMCG, banking, and financial services shaped Vridhi's approach to serving India's self-employed segment.

Our thematic deep-dive series unpacked several crucial trends in fintech:

We kicked off with a comprehensive exploration of the $400 billion value creation opportunity in Indian fintech this decade.

This was followed by an analysis of vertical fintech opportunities, showcasing how segment-specific solutions are creating billion-dollar-plus opportunities.

Our episode on embedded fintech broke down the $25 billion opportunity, exploring how consumer platforms can choose which financial products to embed and the key success factors for integration.

Looking Ahead to 2025

As we enter 2025, India's fintech and financial services ecosystem appears better positioned than ever to deliver on its promise of financial inclusion and innovation. The foundation stones laid this year – from regulatory frameworks to technology infrastructure – create perfect conditions for the next wave of innovation. Significant underpenetration across credit, insurance, and wealth continues to create headroom for growth in India, and drives our excitement about the space.

We expect to see the emergence of more sophisticated financial services built on existing rails, deeper integration of AI across the stack, and continued leadership in digital public infrastructure.

We're grateful to all our founders, partners, and the broader ecosystem for an incredible 2024. If you're building something exciting in fintech and financial services, we'd love to hear from you.

Here's to another year of innovation and impact!