Pratik Bhakta

The UPI One World service, currently used by foreign travellers in India for merchant transactions, may soon expand to include interpersonal payments. This change would allow travellers to pay small vendors and individuals using UPI. However, challenges remain, including the need for physical KYC and limited awareness of the service.

Despite regulatory hurdles impacting established brokers, new wealth-tech startups are entering the Indian stock market. Founders cite market under-penetration and economic growth as justification for their ventures, focusing on long-term investors and educational resources. However, high retail investor losses and a changing regulatory landscape pose significant challenges.

Indian startups raised slightly more funding in 2024 than in 2023, but the ecosystem remained slow. Fewer deals were closed. Several new unicorns emerged. Some existing unicorns saw valuation corrections. The IPO market surged, with some companies going public at lower valuations. Investors are cautiously optimistic about the future, citing improved public market performance and India's strong economic outlook.

Crypto enthusiasts look for pro-industry laws in the US following Trump's support, while India remains cautious with high taxes on crypto gains. Policymakers in India prefer waiting for developed nations' direction due to the asset's cross-border nature. The focus remains on protecting investors from scams. Asset tokenisation initiatives for real-time settlements may begin next year.

Heading into 2025, the fintech sector is expected to emphasise B2B infrastructure solutions, AI-driven compliance automation, and secured credit products. Despite a slowdown in consumer lending, venture investors are eyeing business lending and digital public infrastructure innovations, with AI increasing efficiency in compliance and fraud detection.

Customer onboarding for stockbrokers has been halted due to an outage of Digilocker, a key platform for digital document verification since January 1. The disruption is linked to service issues at the National Informatics Centre. Fintech firms reliant on digital KYC mechanisms are significantly affected, with no clear resolution timeline.

More than two dozen startups in India improved their financial performance in FY24 with a combined revenue of over Rs 500 crore. Startups like Purplle, Porter, Lenskart and PhonePe achieved growth and better margins while others focused on reducing losses. The trend emphasises healthier business practices as funding remained tight.

The government's move to tighten data regulations is creating opportunities for startups focusing on compliance and privacy. Regulatory-tech firms and AI-driven ventures aim to help companies manage customer data and comply with guidelines. Small enterprises and startups may face challenges, but the market for privacy-tech solutions in India is expected to be significant.

Customer acquisition costs have risen for new-age stockbrokers due to higher prices for Google keywords. The surge in IPO interest has led to increased competition for terms like 'open demat account.' Digital marketing expenses have soared as brokers focus on app downloads and direct user acquisition, shifting away from affiliate marketing.

Infinity Fincorp, a Mumbai-based NBFC, has secured $15 million in funding from Jungle Ventures and Archerman Capital after RBI approvals in October 2024. With assets under management of Rs 1,100 crore, they aim to reach Rs 2,400 crore this financial year. They plan to expand to Rs 4,000 crore by 2027 and eventually go public.