Voice of the Industry

The key trends shaping India's payments and lending landscape in 2024

Wednesday 13 March 2024 10:30 CET | Editor: Estera Sava | Voice of the industry

Sameer Singh Jaini and Shashank Shekhar from The Digital Fifth explore India's fintech shift fuelled by digital payments, neobanking, and BaaS and uncover trends like B2B payments, cross-border innovations, and digitised lending.



The last decade has witnessed a revolution in India, with digital payments like UPI redefining transactional convenience and security, a vital step towards a cashless economy. Additionally, the rise of lending fintechs has opened access to finance, targeting previously underserved segments. The emergence of neobanking and BaaS platforms have also been crucial, enabling traditional banks and new-age financial service providers to integrate and offer a wide range of services. This article explores future trends and their potential impacts on India’s payments and lending ecosystem.

Future outlook: payments

The payments sector in India has undergone significant change, with UPI transactions in 2023 reaching 117.6 billion, valued at INR 183 trillion (Source: National Payments Corporation of India). National Payments Corporation of India (NPCI) has also been instrumental in the launch of new payment innovations such as AEPS and UPI123 for offline payments. While consumer payments are expected to continue growing, the industry is increasingly focusing on B2B payments and innovation in cross-border payments. We foresee these trends driving the Indian payments ecosystem forward.

Indian payments fintech ecosystem

B2B Payments to be streamlined through innovation from existing and new players

The growing number of MSMEs in India requires a more streamlined approach to B2B payments. There is a significant opportunity for the development of enterprise-grade technology stacks that can integrate B2B payment processes with business systems, simplifying payouts, collections, and cash flow management. This consolidation is expected to reduce complexities and increase efficiency in the B2B sector.

Cross-border payment facilitators will gain traction through innovation and API-led integrations

With the rise in international trade, robust cross-border payment solutions are becoming increasingly necessary. Historically, complex regulations and financial risks have limited the growth of these services. API-led payment facilitators will emerge to improve risk management, cost reduction, and faster turnaround times for cross-border payments. These solutions are set to speed up cross-border payments by simplifying international complexities and enhancing the efficiency of global trade.

Payments-as-a-Service (PaaS) platforms will gain traction with value-added services

Efficient full-stack PaaS platforms are gaining traction in India for their easy deployment and embedded payments. These platforms now support multiple currencies to facilitate global trade and feature a robust API ecosystem for seamless integration with various financial services, ensuring interoperability. As the ecosystem evolves, these platforms are integrating reconciliation services with rule-based analytics and enhancing security with AI and ML for fraud detection. Expected to grow domestically, these platforms will also look at expansion in the MENA and SEA regions.

Future outlook: lending

There has been a significant increase in loans disbursed through digital channels in the past decade, especially unsecured loans, streamlined through Digital Public Infrastructure. However, this streamlining has been limited to unsecured consumer credit. Moving forward, we expect a shift towards similar experiences in secured lending and MSME credit. Lending-as-a-service (LaaS) providers will play a key role by providing specialised stacks offering origination, management, underwriting, co-lending, and securitisation services as tailor-made solutions.

Indian digital lending ecosystem

Secured Lending to be digitised through tech-driven solutions

Looking into 2024 and beyond, lenders are working towards the digitisation of secured lending, which remains largely manual. Some startups are leading this transformation by developing the necessary digital infrastructure, while established lenders are turning to tech-driven solutions to transform this traditionally manual and expensive process. The digitisation of secured lending is expected to accelerate, driven by innovations such as digitisation of land records and AI & smart contracts and risk assessment for quicker processing.

The surge in demand for MSME lending will be fulfilled through completely digital channels

To meet the increasing demand for credit, the MSME lending landscape in India is transforming. Digital solutions are expected to streamline the process and enhance access to credit by leveraging data from GST filings, e-invoicing, and Account Aggregator networks, to propel credit growth. Digital channels are anticipated to replicate the success seen in consumer lending, providing MSMEs with innovative lending options to reduce manual interventions and operating costs. Additionally, the integration with the Open Network for Digital Commerce (ONDC) is expected to boost opportunities for small businesses, and amplify e-commerce financing.

Segment-specific use cases will be driven by full-stack Lending-as-a-service (LaaS) providers

LaaS providers are gaining traction in the market due to their core offerings of faster deployment, increased adaptability, and plug-and-play solutions. These LaaS providers are leveraging the latest technology to provide end-to-end solutions from origination to collections. As new use cases of embedded lending emerge, new and incumbent LaaS platforms will increasingly develop tailor-made solutions for these segment-specific use cases.

In summary

India’s fintech sector is rapidly evolving due to technological advances, regulatory support, and market demand, leading to more accessible, efficient, and secure financial services. The shift towards B2B and cross-border digital payments, along with more digitised lending, promises enhanced services for consumers and businesses alike. This progress is positioning India as a global fintech frontrunner and a benchmark for financial innovation worldwide.

This article was originally published in The Paypers` Global Payments and Fintech Trends Report 2024. The report compiles insights and expertise from leaders representing companies across the financial services spectrum and it delves into the latest innovations and trends in payments and fintech across key markets worldwide.

About authors

Sameer Singh Jaini, with 26 years in BFSI, spearheads digital transformation as The Digital Fifth’s CEO. He has a rich track record of digital initiatives at DCB, Kotak Mahindra, and Citibank, and is a pioneer in the Banking and Fintech space.




Shashank Shekhar, with over 20 years in tech, governance, and digital banking, has led infrastructure and Open Banking strategies, notably at DCB Bank. He’s recognised for an award-winning Omni Channel Framework and excels in security and IT governance.


About company

The Digital Fifth is Asia’s first Fintech and Digital Finance Consulting & Advisory firm, driving change in the fintech landscape as an integral part of the ecosystem. They provide specialised consulting services to the BFSI sector, including digital and Open Banking advisory, startup guidance, technical due diligence, and security and compliance services.

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Keywords: fintech, payments , BaaS, lending, paytech, artificial intelligence, digitalisation, PaaS, API, machine learning, embedded payments, B2B payments, UPI
Categories: Banking & Fintech
Companies: The Digital Fifth
Countries: India
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