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Indian Express
2 days ago
- Business
- Indian Express
Unsecured loans seen key to meeting retail credit demand in India
Unsecured loans given by fintech firms will be instrumental in meeting demand for retail credit in India over the coming years, with the absence of collateral for many households that are in the 'early stages of the asset formation cycle' making it unlikely that secured loans will be able to completely fulfill the rising demand. 'Today, only 65 per cent of India's personal bank credit is secured, compared to 90 per cent in the US. Fortunately, India's robust credit bureau data ecosystem has enabled unsecured lending to thrive in recent years,' Boston Consulting Group (BCG) and QED Investors said in their Global Fintech Report 2025, released Monday. As per the report, Indians' demand for consumer loans is rising rapidly due to robust economic growth – India's GDP expanded by a faster-than-expected 7.4 per cent in the final quarter of 2024-25 – and 'changing cultural attitudes toward debt'. Demand for loans from the middle class is also expected to rise in tandem with the segment itself, which is projected to make up 40 per cent of the population by 2031 from 31 per cent at present, the report said. This is already reflected in data – according to credit information company TransUnion CIBIL, 61 per cent of fintech customers were less than 30 years of age compared to 36 per cent for the rest of the industry. To be sure, growth in unsecured loans has slowed appreciably in the last couple of years following tightening of regulations by the Reserve Bank of India. As on April 18, while overall bank credit was up 10.3 per cent year-on-year, credit card outstanding and the 'other personal loans' category – both of the unsecured variety – were 10.6 per cent and 9.0 per cent higher, respectively. These figures are sharply lower than where they were before the RBI took action on November 16, 2023 to dampen what it termed as 'very high growth' in certain segments: as on November 17, 2023, banks' credit card outstanding was 34.2 per cent higher and 'other personal loans' were up 24.3 per cent. Amid the tightened regulatory norms that asked lenders to set aside greater capital than before for consumer loans, excluding certain types such as housing and education, among others, Indian fintechs have continued to grow, albeit at a slower pace. In terms of live unique customers, fintech firms saw a growth of 40 per cent in 2023 and 15 per cent in 2024 compared to 16 per cent and 9 per cent, respectively, for the industry, TransUnion CIBIL data showed. These firms are particularly dominant when it comes to small loans and were responsible for nearly nine out of every 10 loans of less than Rs 50,000 that were made in October-December 2024. While BCG and QED Investors said in their report that 'demand for unsecured credit remains' in India, the latest quarterly results for some of the country's most prominent players in the space are not encouraging. In the quarter ended March 2025, Paytm distributed personal loans to the tune of Rs 1,422 crore, down 19 per cent from October-December 2024, as its lending partners tightened risk policies. 'Personal credit, unless something bigger changes, we will not see much larger growth,' Founder and Chief Executive Officer Vijay Shekhar Sharma said in a post-earnings analyst call on May 6, 2025. Paytm is not alone, with Mobikwik posting a 41 per cent fall in digital lending disbursals in FY25 after it discontinued its Zip buy-now-pay-later product in December 2024 'due to low lender appetite'. According to BCG and QED Investors' report, lending 'remains a significant opportunity' for fintechs as they only account for around 3 per cent of global lending revenues of $2 trillion. And if unsecured personal loans are excluded, the penetration by fintechs is less than 1 per cent, with banks at an advantage due to the access they have to low-cost funds in the form of deposits. '…very few fintech lenders have truly weathered a complete credit cycle; in that sense, the industry is still untested,' the report said.
Finextra
3 days ago
- Business
- Finextra
Fintechs enter new stage of profitability
The global fintech has enetered a new chapter defined by a rise in profitability and the emergence of scaled fintech and an "intensified focus on profitable growth". 1 This content has been selected, created and edited by the Finextra editorial team based upon its relevance and interest to our community. These are the findings from the third Global Fintech Report co-authored by Boston Consulting Group and QED Investors. The report found that fintech revenues grew by 21% year-on-year, an increase on the 13% growth of the previous year. Furthermore, EBITDA margins for public fintechs grew by 25% with 69% of fintechs achieving profitability, as opposed to less than half of the fintechs in the previous year that acheived the same status. According to the report, which was based on interviews with 60 fintech executives, the results come amid a fintech environment in which funding and valuations stabilised and funadamentals "improved sharply". Nevertheless, the report also found that there is still plenty of room for further growth given that fintech has only penetrated 3% of global banking and insurance revenue pools, albeit those fintechs are growing at around three times the rate of incumbent institutions. The report also found that funding and revenue is highly concentrated - 60% of all fintech revenue is generated by less than 100 "scaled players". In terms of verticals, payments represents the vast majority of fintechs ($126bn), followed by challenger banks ($27bn), crypto trading ($16bn) and BNPL providers ($8bn).
Hans India
3 days ago
- Business
- Hans India
India stands out as a Global Fintech Bright Spot as Credit Demand Surges: BCG Report
Global fintech is entering a new era of maturity and momentum. According to a new report from Boston Consulting Group (BCG) and QED Investors , Fintech's Next Chapter: Scaled Winners and Emerging Disruptors, the sector has emerged from a tough funding environment stronger, more disciplined, and with greater growth prospects than ever. In 2024, fintech revenues grew by 21%—up from 13% in 2023—marking a threefold acceleration over the financial services industry at large. Meanwhile, the average EBITDA margin of public fintechs climbed to 16%, and 69% of public fintechs are now profitable. Importantly, much of this performance is being driven by a new class of scaled players generating $500 million or more in annual revenue. These now account for approximately 60% of total fintech revenues. 'Global fintech is entering a new phase—defined by profitability, disciplined growth, and AI-led innovation. In 2024 alone, fintech revenues grew by 21%, nearly 3x the pace of traditional financial services, and 69% of public fintechs turned profitable, with average EBITDA margins reaching 16%. India is a critical part of this growth story. The Asia-Pacific region (excluding China) contributed 10% ($22 billion) to global scaled fintech revenues, with India emerging as a standout market—driven by a young, digital-first population and public digital rails like UPI, which processed over 100 billion transactions last year. Yet, vast white spaces remain—only ~2–3% of global deposit and lending revenue pools have been penetrated by fintechs, mirroring the opportunity in India across banking & insurance with only ~4-5% and ~1-2% revenue penetration by fintechs, respectively. The next generation of Indian fintechs must seize this moment: by embedding agentic AI at the core, leveraging India's digital infrastructure, and solving for underserved segments with sustainable economics.', said Yashraj Erande, India Leader, Financial Institutions Practice, and Global Leader, Fintech Practice, BCG 'A class of scaled fintechs is coming of age. Investors are demanding greater maturity, and regulators want more accountability,' said Deepak Goyal, a managing director and senior partner at BCG. 'Meanwhile, emerging disruptors are harnessing next-generation technologies like agentic AI and pioneering new business models, pushing established players to continuously innovate.' As Revenues Jump, Fintech Is Ready for Even More Growth Among the key findings of the report: Fintech revenues surged 21% in 2024, outpacing the 6% growth rate of incumbent financial services players Public fintech profitability jumped, with EBITDA margins rising from 12% to 16%, and 69% of public fintechs now in the black. AI is already reshaping the industry: Many early-stage fintechs are ahead of their larger peers in leveraging AI—particularly for software development. Agentic AI is the next wave of disruption, and will change the game in commerce, vertical SaaS, and personal financial management. Fintechs are IPO-ready, but patient: 150 private fintechs founded before 2016 with over $500 million in cumulative equity remain on the sidelines, with many poised to go public. Massive white space remains: Fintechs still penetrate only 3% of global banking and insurance revenue pools—leaving vertical and geographic gaps to be filled. Challenger banks are scaling fast: 24 institutions with over $500 million in annual revenues are growing deposits at 37% annually—30 percentage points higher than traditional banks. Private credit is emerging as a key tailwind for fintech lending, establishing itself as a core funding partner. A $280 billion white-space opportunity remains for private credit funds to acquire fintech-originated loans. 'Fintechs are winning in spaces where traditional banks have largely ceded the competitive ground, such as banking for lower-income households and buy now, pay later,' said Nigel Morris, managing partner at QED Investors. 'Fintechs are growing three times faster than incumbents as they leverage digital distribution channels and increasingly utilize AI. Having emerged from the last two years with stronger fundamental unit economics and high net promoter scores, it's easy to see why there's an appetite for IPO-ready companies that deliver profitable growth. Fintech is ushering in a new era in financial services.' Strategic Imperatives for the New Chapter of Fintech The report outlines clear calls to action for fintech founders, investors, regulators, and banks—each critical to unlocking the next phase of industry growth: For Fintechs. Scaled leaders must double down on the fundamentals and focus on their home markets while embedding AI at the heart of their business models. Fintech players should also remain alert to the right M&A opportunities. For Investors. Capital should diversify into underpenetrated areas like financial infrastructure and in regions that are primed for growth (Middle East, Africa, parts of Latin America and Asia-Pacific.). Investors should push for faster AI adoption and disciplined growth. For Regulators. Clarity, speed, and harmonization are now essential. Without agile regulation around AI and digital assets, innovation is at risk of stagnating. Governments also have a unique opportunity to spur growth through digital public infrastructure. For Banks. Banks should partner with fintechs in areas like financial infrastructure where it makes strategic sense. At the same time, they must embrace AI with purpose and the desire for experimentation. Banks should also have a strategy for digital assets.
Entrepreneur
3 days ago
- Business
- Entrepreneur
Fintech Firms Turn the Corner with 21% Revenue Surge in 2024: Report
Opinions expressed by Entrepreneur contributors are their own. You're reading Entrepreneur India, an international franchise of Entrepreneur Media. After years of turbulence and cautious recovery, the global fintech sector is entering a new phase—one defined by scale, innovation, and sustained profitability. A new report from Boston Consulting Group (BCG) and QED Investors titled Fintech's Next Chapter: Scaled Winners and Emerging Disruptors reveals how the industry has emerged from a volatile funding environment stronger, leaner, and poised for continued growth. The report captures the momentum behind fintech's revival. In 2024, revenues jumped by 21%—a substantial leap from 13% the previous year and over three times the growth rate of traditional financial services. Notably, public fintechs achieved an average EBITDA margin of 16%, with nearly 70% now operating profitably. "A class of scaled fintechs is coming of age," said Deepak Goyal, Managing Director and Senior Partner at BCG. "Investors are demanding greater maturity, and regulators want more accountability." These scaled fintechs—defined as companies with more than USD 500 million in annual revenue—now account for about 60% of total industry revenue. This marks a significant shift toward consolidation and performance-driven leadership. The report highlights standout growth across several fintech sub-sectors: Deposits : Challenger banks like Nubank, Revolut, and Monzo drove 23% growth. : Challenger banks like Nubank, Revolut, and Monzo drove 23% growth. Trading and Investment : Revenues rose 21%, led by crypto platforms such as Coinbase and a rebound in equity markets. : Revenues rose 21%, led by crypto platforms such as Coinbase and a rebound in equity markets. Insurance: Service providers and brokers propelled an impressive 40% revenue increase. These figures illustrate a broader trend of fintechs outpacing their traditional counterparts in core financial services categories. Profitability is no longer just a target—it's becoming the standard. EBITDA margins improved from 12% in 2023 to 16% in 2024, a 25% year-over-year gain. In contrast to the previous year, when fewer than half of all public fintechs were profitable, 69% are now in the black. Meanwhile, agentic AI is set to be the next disruptor, especially in software development, commerce, and personal finance. Early-stage fintechs are often outpacing larger players in AI adoption, signaling a reshaping of competitive dynamics. Challenges and Optimism The sector still faces regulatory scrutiny. In 2024, Chime was fined USD 2.5 million for delayed fund returns, while Block incurred an USD 86 million penalty for AML failures. The collapse of Synapse added to industry tension, risking USD 96 million in customer funds. However, late 2024 and early 2025 brought optimism: equity funding in Q1 2025 rose 34%, and revenue multiples increased 10%. Despite a 13% decline in equity funding in 2024, this was a marked improvement over the 51% plunge in 2023. Fintechs are also more IPO-ready than ever, with 150 privately held firms—such as Stripe and Revolut—sitting on over USD 500 million in equity funding, yet waiting for favorable market conditions. "It is hard to read the tea leaves on IPOs," said James Loftus, Managing Partner at PayPal Ventures. "Everyone wants the market to open, but tariffs are roiling the market… The best candidates are happy and able to sit on the sidelines until there is more certainty." Looking Ahead The report outlines key imperatives: Fintechs should embed AI deeply, focus on core markets, and pursue strategic M&A. should embed AI deeply, focus on core markets, and pursue strategic M&A. Investors must target underpenetrated regions like the Middle East and Africa, and promote AI-led, disciplined growth. must target underpenetrated regions like the Middle East and Africa, and promote AI-led, disciplined growth. Regulators are urged to provide clarity and speed, particularly on AI and digital assets, to avoid stifling innovation. are urged to provide clarity and speed, particularly on AI and digital assets, to avoid stifling innovation. Banks should forge alliances with fintechs and embrace AI as a strategic differentiator. Nigel Morris of QED Investors concluded, "Fintechs are growing three times faster than incumbents… It's easy to see why there's an appetite for IPO-ready companies that deliver profitable growth. Fintech is ushering in a new era in financial services."
Economic Times
3 days ago
- Business
- Economic Times
Where the fintech sector is headed next: QED-BCG Global Fintech Report 2025
Fintech may still make up only a small slice—just 3%—of global banking and insurance revenue, but its impact is growing fast. A recent QED–BCG Global Fintech Report reveals that fintech revenues rose 21% year-on-year, outperforming the broader financial services sector, which grew just 6%. Public fintechs also saw better profitability, with 69% now in the black—up from less than half the previous year. In an exclusive interview with ET, QED Investors cofounder Nigel Morris said, 'Regulators are now internalising that fintech is here to stay.' Fintechs have a role to play in the future of how financial services are delivered, he added. Here are five key trends the report says will shape the next wave of growth. Agentic AI Many top fintech firms are just starting to move from testing generative AI to full-scale use. But the next big step is agentic AI, a type of AI that acts more independently and intelligently. This tech could be as revolutionary as the internet or smartphones, the report claimed. For now, it's helping earlier-stage fintechs speed up software development and cut costs. In the long run, it could transform everything from personal finance apps to business software. The report puts it clearly: 'Agentic AI will change the game . . . eventually.' Onchain finance is gaining momentum—but there's work to do Blockchain isn't just about crypto anymore. With better technology and more regulatory clarity, the stage is set for onchain finance to grow. Onchain finance refers to financial activities and transactions performed on stablecoins are helping smooth cross-border payments. But, as per the report, the real opportunity lies in asset tokenisation —turning things like property, private funds, and bonds into digital assets. This could cut costs, speed up settlement times, and open up huge new markets. However, a few key challenges still need to be addressed: Building secure, high-quality bank-grade infrastructure. Creating common industry standards everyone can follow. Offering clear, consistent rules and guidance from regulators. Financial giants are already testing the waters, but mass adoption will take time. Challenger banks should grow deep, not wide Challenger banks, which are digital-first financial institutions, now bring in $27 billion in fintech revenue. To keep growing, they're adding new products, increasing deposits, and targeting wealthier expanding into new countries? That's trickier. Different regulations, cultures, and fierce competition make international moves for now, focusing on serving existing markets better is the smarter bet, the report opines. Fintech lending has fresh momentum 'Lending remains a significant opportunity for fintechs, given that they have only penetrated about 3% of the $2 trillion in global lending revenues,' the report now, fintechs manage $500 billion in loans—a drop in the ocean compared to $18 trillion in US household debt things are changing. Fintechs are getting better at underwriting and have more seasoned customer data. With $1.7 trillion in assets under management and increasing interest in fintech-backed loans, there's an estimated $280 billion growth opportunity for private credit funds in this there's one unknown: how well these new lending models will hold up through a full economic downturn. The next big growth wave: B2B(2X), infrastructure, and lending The first fintech boom gave us big names in digital wallets, buy-now-pay-later, crypto trading, and challenger banks. While there's still room to grow, it's getting harder to break into these report says that the next phase will focus on three fresh spaces: B2B(2X): Businesses still struggle with things like payments and accounting. Fintechs can solve these pain points—especially when their tools are built into existing software platforms. Businesses still struggle with things like payments and accounting. Fintechs can solve these pain points—especially when their tools are built into existing software platforms. Financial infrastructure: Banks and institutions need to upgrade. AI and blockchain-based systems can modernise the global financial backbone—but it'll take time and strong partnerships. Banks and institutions need to upgrade. AI and blockchain-based systems can modernise the global financial backbone—but it'll take time and strong partnerships. Lending (again): There's still a huge untapped market in business and secured lending. Fintechs are ready to move beyond personal loans and bring fresh ideas to this space.
