Fintech in India – the underbanked, unbanked and widespread adoption

We can definitely be accused of using the word ‘revolution’ a little too quickly in fintech. But India really is going through something of a real fintech revolution. Estimates show that digital transactions will make up 65% of the country’s total transactions by 2026, climbing from 40% today. Almost 78% of the country’s population has a bank account.

And whilst that’s a high percentage for a developing country (the average for them being 71%) the numbers mean that nearly 190 million people over 15 years of age don’t yet have access to a bank account at all, never mind a digital one. The GSMA Mobile Economy report for 2022 lays out the biggest challenge as simply: ‘…in India and Indonesia, security and the preference for cash for payments are the biggest deterrents to more widespread adoption of mobile money services.’


Adoption of fintech so far in India has been swift and wide-reaching. EY’s Global FinTech Adoption Index 2019 revealed that whilst the global rate in 2019 of fintech adoption was 64%, in India it was 87%.

What are the challenges? Many of them are shared by banking more generally, and makeup the reasons why so many are underbanked. Mobile phone usage and internet access is essential for accessing the huge rural population through digital financial services – often required for any kind of a formal bank account. A 2020 GSMA report showed that 79% of the adult male population of India owned a mobile phone. This dropped to 63% in women, but the even bigger drop came when recording mobile internet users. Only 42% of adult males in India accessed the internet at least once in the past three months, and only 21% of adult women. However the study does also highlight that. Their updated 2022 report post-COVID showed little improvement for women:

“In South Asia, the mobile internet gender gap had narrowed significantly, from 67 per cent in 2017 to 36 per cent in 2020, but has now widened to 41 per cent. T

This is due to continued increase in mobile internet adoption among men but no notable increase among women, particularly in India where men’s mobile internet use increased from 45 per cent to 51 per cent while women’s has remained flat at 30 per cent.”

It’s mobile internet access that facilitates fintech adoption in the first place, so this will need some significant increase to allow for a wider adoption. 

So where is this current fintech adoption coming from? As in many parts of the developing world, it looks like this high adoption rate comes from the lower middle class and upwards demographic in the major cities. True fintech adoption in India will come from accessing the rural population, and founding companies that meet their needs and understand their technological literacy and access, will be crucial. 


Investment in Indian fintech is booming. In 2019 it was announced that investments in the country’s fintech industry had nearly doubled to $3.7 billion, compared to $1.9 million in 2018. Accenture dubbed India ‘the world’s third largest fintech centre behind only the US and UK.” 

In 2021 the fintech market size in India stood at $50 billion and is estimated at ~$150 billion by 2025.

In 2021 India once again topped the charts in the Asia-Pacific region: four out of top 10 fintech deals were in India. 

Whilst funding fintech rounds were fewer in the beginning of the year compared to 2019, actual investment amount was 40% more than the year before, and India’s numbers beat China’s for the same quarter. This is all despite the i of COVID-19, so the investment deals don’t appear to be slowing down any time soon. Whilst China will probably be looking to beat India in the shadow of coronavirus, it’s a battle without any real loser. The message is clear: Indian fintech is an attractive investment proposition. 

Government and regulation 

The Indian government has been quick to make room for fintech and digital payments in the Indian banking system. The Ministry of Finance set up The Steering Committee on Fintech Related Issues and in 2020 the committee raised 45 recommendations for fintech adoption, investment and security in India. This includes reforms around agricultural payment systems, paperless options, and data security. The various bodies in India are also getting ready to implement two sandboxes: one regulatory, one industry. 

The government is certainly not an unwilling participant in India’s fintech boom. The foreign investment in the industry is no doubt a huge motivator for the government to remain friendly and supportive to the changes that need to be made to drive fintech penetration. 

Although it’s not always made the best moves when it comes to digital payments. In an effort to make Indian society ‘cashless’, Prime Minister Modi brought in a policy that made over 80% of the current tender in the country illegal overnight. This was back in 2016, and whilst digital payments and card transactions shot up, it didn’t do much for the Indian economy. Since then there have been calls to continue this cashless India idea, but the steps to do so have been less drastic than literally removing cash from society overnight. The desire for less dependency on cash will no doubt have grown in 2020, a world in which touching banknotes and coins can further the spread of a worldwide pandemic. 

The future 

Whichever way you look at it, India’s fintech future as it stands now is bright, and a tangible thing that is affecting the lives of millions of Indians daily. The innovation and investment in India – by sheer impact and in terms of money being invested – is already having a huge impact on fintech in Asia as a whole. India is in competition with China every quarter over deals, investments and new financial service companies launched. 

So that means India is topping the charts in some ways – but there is a longer game that needs to be played. The sheer size of India means that total adoption of fintech throughout the country might be difficult. This is reflected in similar difficulties other regions – Africa, China – are facing, with large rural populations unable to tip the scale completely into a nationwide phase of adoption. This is even more true when it comes to the under and unbanked citizens of India who don’t yet have a bank account, traditional or otherwise. The fintech revolution could go hand in hand with this challenge. A lot of work needs to be done behind the scenes to ensure that the country can serve its own citizens with the innovation sorely needed for a population that still has high percentages of under and unbanked.