Essentially, funding for Indian fintechs is recovering faster than the rest of the world with a 30% increase in the first half than last year’s second half, but it still remains lesser than the corresponding half last year, says the report.

Moreover, the industry is witnessing a capital momentum. The first half of CY23 has shown signs of recovery with a 33% higher capital momentum compared to H2 CY22. India’s differentiated tech infrastructure and operating models are gaining major global recognition as well.

While the industry was undergoing a funding winter in 2022, early signs of recovery are evident in 2023.

Yashraj Erande, managing director and partner at BCG, shares, “Indian Fintech continues to command the third largest share of the global funding and deal volume. Significant increase – 2X in 2023 versus 2022 – in the profitability outlook across Indian fintechs has been observed.”

Experts believe that fintech companies hold a lot of promise and have the potential to become scalable businesses. Furthermore, the fintech sector is expected to continue witnessing the creation of large companies, more fintech IPOs across various segments (payments, lending, insurance, etc.), and the disruption of newer segments by challengers. Traditional businesses, such as Five Star Business Finance have also embraced tech to enhance operational efficiency.