Fintech potential in rural India


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The Indian fintech sector has witnessed phenomenal growth over the past few years. The penetration of internet and smartphones has helped the growth of fintech sector in India. With over 6,000 fintech startups, the sector in India was valued at around $50 billion in 2021 and is expected to grow at a CAGR of 31% between 2021 and 2025. At this growth rate, it is expected to be valued at nearly 150 billion by 2025. India’s fintech adoption rate (87%) is well above the global average (65%). Looking at the data above, the image looks very pink; however, as we dive deeper, we realize that there is a lot of underserved population in the country, especially in rural areas.


Currently, the Indian fintech industry is largely concentrated in urban areas. However, more than 65% of India’s population lives in rural areas. Only about 28% of the rural population owns an internet-enabled smartphone. Financial literacy in these regions is also extremely low. While these factors pose a serious challenge to the growth of fintech in these areas, the aforementioned figures also represent huge untapped opportunities.

Digital bank

A large portion of India’s population has not been served by traditional banking services. Lack of infrastructure, long and complicated banking processes and lack of financial knowledge are some of the reasons. Digital banking can solve this problem as it only requires a smartphone and an internet connection for the operation. Digital banking with innovations such as KYC video and paperless processes makes banking hassle-free. Most fintech companies also promote digital literacy to their customers.

Digital Loan

Digital lending is another high-potential area for fintech companies. People underserved by conventional banks turn to microfinance for their financing needs. However, in many cases, even microfinance companies find it difficult to provide loans to these clients due to lack of credit history, as it is difficult to determine their creditworthiness. Fintech involves digital technologies such as AI and ML to help determine the creditworthiness of these people. Digital loans offer huge growth potential for fintech businesses in rural India.

Digital Insurance

COVID-19 has once again shed light on the uncertainty of life. In large cities, the majority of people have some form of life or health insurance. However, in rural areas, only 8-10% of people have life insurance. Health insurance coverage in these regions is around 20%. The pandemic has underscored the need for life and health insurance. Property insurance in rural areas is almost negligible. The huge untapped insurance market in rural areas offers an ocean of opportunities for fintech companies operating in the insurance-tech space. Accessible technology-driven models and innovative products can help insurance reach every Indian.

Innovative products

The fintech industry is coming up with various new products and offerings that were previously unheard of. Buy Now Pay Later (BNPL), digital credit cards, digital stock brokerage, digital asset management, and more. have the potential to take India’s rural market by storm.

The Indian government is aiming for financial inclusiveness in the country. In a country as diverse as India, it is virtually impossible for the traditional bank to reach all citizens. Fintech has quickly emerged as the solution to the challenges of achieving financial inclusiveness in the country. The democratization of data is already underway in the country. Growing internet penetration is giving impetus to fintech in rural areas. The change is already visible in the form of large numbers of people using UPI to make and receive payments. The fintech industry is poised to create a win-win situation for itself and rural India.


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