Fintech firms report reputation, infrastructure, data risks as top threats: Report
New Delhi, July 7
India's fintech sector is shifting focus from growth to trust, governance and resilience as nearly 59 per cent of firms rank reputation and brand risk as a high‑severity concern or the highest risk facing them, a report said on Tuesday.
The report from Fintech Association for Consumer Empowerment (FACE) and Grant Thornton Bharat said reputation risk was followed by interoperability and infrastructure risk at 51 per cent.
The report noted that customer trust can be affected by issues ranging from data breaches and cybersecurity incidents to misconduct by unauthorised entities, making reputation an outcome of governance, compliance, customer experience and data protection.
The findings reflected fintechs' growing dependence on digital public infrastructure such as UPI and Aadhaar, along with confidence in the continued evolution and resilience of India's digital infrastructure ecosystem.
India's fintech ecosystem has become a critical pillar of the country's digital economy, powered by digital public infrastructure such as UPI, Aadhaar, e-KYC and Account Aggregators.
Market competition and conduct risk ranked third in terms of risks and carried an average severity score of 6.9, while data access, privacy and protection scored 6.6 and cybersecurity, technology and business continuity scored 6.5, the report added.
Risk rankings are based on weighted average severity scores assigned by respondents on a scale of 1 to 10.
The report highlighted growing emphasis on consent management, customer transparency and enterprise-wide data governance, making effective data stewardship a strategic business priority.
"Balancing profitability, growth and trust has become one of the key drivers for the fintech ecosystem, which is the key message that the Fintech Barometer report reinforces. The fintech ecosystem across the domains of payment, investment, credit and insurance has stronger revenue and governance models than a decade ago, helping them walk the path of growth," said Vivek Iyer, Partner& Financial Services Risk Advisory Leader, Grant Thornton Bharat.
Around 46 per cent respondents rated cyber and continuity risks as high severity, reflecting continued investment in cyber resilience, fraud prevention and operational continuity.
Meanwhile, fraud, AML/CFT and financial crime, along with macroeconomic and funding risk, were viewed as comparatively manageable within the current operating environment, supported by regulatory interventions, improving fraud controls and continued investor confidence in India's fintech sector.
The report is based on a survey of 39 FACE member fintechs across lending, payments, regtech, collection-tech and techfins.
— IANS
Reader Comments
Interesting read. I've been using Indian fintech apps for remittances back home—they're way ahead of Western counterparts in terms of innovation. But this report highlights a universal truth: once trust is lost, it's hard to regain. The 59% figure on reputation risk is sobering, especially with so many new players in the market. Hope they learn from global mistakes.
As someone who works in compliance, I'm glad the report mentions consent management and data governance. Many fintechs rush to launch features without robust privacy frameworks. The RBI has been strict, but self-regulation is equally important. If fintechs want to be the backbone of our digital economy, they need to prioritize ethics over speed. 👏
India's UPI system is a marvel, but it also creates a single point of failure. The 51% citing infrastructure risks is spot-on. What happens if Aadhaar servers go down for a day? Or if there's a major cyberattack on NPCI? Fintechs need redundancy plans and offline fallback options, not just reliance on government infrastructure. Still, it's impressive how far India has come.
The report focuses on risks, but I wish it had also highlighted success stories. Despite the challenges, India's fintech ecosystem has brought millions into the formal economy. Never thought I'd see street vendors accepting UPI payments! That said, data privacy and fraud prevention need continuous improvement—especially for rural users who may not understand digital risks fully.
Honestly, 39 fintechs
We welcome thoughtful discussions from our readers. Please keep comments respectful and on-topic.