Fintech companies in India are shifting their focus from digital payments to the country's largely untapped credit market, which they expect to be twice as large as the payments sector [1]. This strategic pivot comes after the success of the Unified Payments Interface (UPI), which saw transactions reach 314 trillion rupees ($3.2 trillion) in the financial year ending March, with PhonePe and Google Pay accounting for over 70% of these transactions according to the National Payments Corporation of India [1].
At the annual Global Fintech Fest in Mumbai, industry leaders discussed the next phase of digital transformation, emphasizing the rollout of credit products through UPI as a major opportunity. Sameer Nigam, founder and CEO of Walmart-owned PhonePe, stated that the credit market offers opportunities more than 'double' the size of the payment market in India [1]. The country currently faces a significant credit gap, with only 15% of adults having access to formal credit compared to the global average of 24%, and over 85% of micro, small, and medium enterprises relying on informal loans, according to Deloitte [1].
Highlighting this trend, BharatPe, backed by Tiger Global, launched BharatPe Flex at the festival, offering users a pre-approved credit line of up to 60,000 rupees for UPI payments across both online and offline merchants. Nalin Negi, CEO of BharatPe, emphasized the significant opportunity to make formal credit more accessible to consumers [1]. The increasing availability of digital transaction data is improving access to credit, particularly for small-sized, unsecured loans, with fintechs leading the charge in this segment [1].
Vipin V., managing director and partner at BCG, noted that fintech companies have 'cracked the model' for small, unsecured loans due to their high customer reach and convenience. As digital payments and services expand, more data is available to assess creditworthiness, further enabling fintechs to serve the underserved segments of the market [1].
CONCLUSION
India's fintech sector is poised for its next wave of growth by targeting the underserved credit market, leveraging the data and reach established through UPI payments. With major players launching new credit products and industry leaders highlighting the vast market potential, the shift is expected to significantly increase access to formal credit for both consumers and small businesses.