Inside India’s fintech resilience playbook: Building trust, scale, and speed in digital lending

Building a lending business in India is as much about resilience as it is about managing risk. The country's lending sector is one of the most dynamic and challenging markets globally; it needs a landscape where innovation and regulation coexist to achieve scale, and technology delivers both speed and trust.

With credit penetration increasing and risk models evolving rapidly, the key question remains: what does it take to succeed in one of India's most competitive and regulated markets?

At TechSparks 2025, YourStory’s flagship startup-tech summit, a panel discussion, ‘The Resilience Playbook: Scaling in India’s Lending Landscape’, unpacked what it really takes to build and sustain a lending business in this fast-evolving environment.

Moderated by Shivani Muthanna, Senior Director – Strategic Partnerships & Content at YourStory, the session brought together four fintech leaders who’ve built defining institutions in India’s lending ecosystem: Hemant Gala, CEO of PhonePe Lending; Anuj Kacker, Co-founder of Freo; Gaurav Hinduja, Co-founder of Axio; and Bharat Krishnamurthy, CTO of Yubi.

Redefining scale through trust

The discussion opened with how India’s credit landscape is changing, where rising penetration also means constantly tested risk appetites. For PhonePe, the shift from payments to lending wasn’t a simple extension of business; it meant unlearning speed and mastering patience.

Gala explained that while payments is a high-volume, instant transaction business, lending demands a more deliberate journey — one that begins with trust and continues through KYC, mandates, and repayment. He said PhonePe had to “reorient the team with a zero-to-one mindset”, going back to the ground to understand what customers actually needed. The company chose to focus on micro-enterprises within the MSME segment, building a full experience around the loan life cycle rather than just a loan offer.

From mono-product to full-stack

Freo’s evolution followed the opposite trajectory, from lending outward. Kacker described how the company began as a pure-play credit platform, catering to Tier II and Tier III India, only to realize that not every customer needs or qualifies for credit at the same time. “You can have a 100 people knocking on your door and only five make it in,” he said. The rest, he noted, needed reasons to stay connected.

That insight led Freo to expand into payments, savings, and insurance, a multi-product approach designed to keep customers engaged even when they weren’t borrowing. Over time, these products began to inform one another: transaction behavior improved credit confidence, investment patterns suggested disposable income, and insurance coverage offered lending security.

The strategy was less about cross-selling and more about staying relevant, about building an ecosystem where the customer saw ongoing value.

Growing without overreaching

For Axio’s Hinduja, scaling responsibly has always meant pacing growth. “Lending isn’t like payments,” he said. “You can’t grow 10X in a month and still expect your risk model to hold.”

Now part of Amazon, Axio benefits from a larger balance sheet and lower cost of capital, but Hinduja emphasized that even with those advantages, the focus remains on sustainable compounding rather than explosive expansion. By starting small with first-time borrowers and growing alongside them over two to three years, Axio has been able to deepen customer trust while maintaining credit discipline.

Resilience built into the backbone

On the infrastructure side, Yubi sits at the intersection of lenders, NBFCs, and businesses. Its platform processes nearly 150,000 loan applications a day across 60 lenders, which means reliability isn’t optional; it’s fundamental.

Krishnamurthy explained that the company’s systems are designed for both technological and business resilience. The technical side focuses on speed and uptime, ensuring loans move from application to disbursal in under nine seconds. The business side, however, is about adaptability. “A regulatory change can stop an entire model overnight,” he said. “Our job is to help partners pivot fast and stay compliant.”

That network flexibility, being able to move from one lender to another seamlessly, has become one of Yubi’s strongest advantages.

AI as an enabler, not a replacement

When it came to technology, the conversation naturally turned to how AI is reshaping lending, from underwriting to fraud detection and collections.

At PhonePe, AI helps anticipate customers with high propensity for credit and market to them effectively, localize communication, and flag early signs of fraud. Yet Gala noted that risk “can’t be left entirely to machines” and AI works best as an assistant, offering signals and insights while humans make the final calls.

Yubi uses AI to make lending journeys seamless, automatically detecting when APIs like NSDL are back online and prompting customers to complete stalled applications, a small intervention that’s significantly improved conversions.

For Axio, the biggest impact has been in collections, with most early recoveries now handled without human intervention. The next step, Hinduja said, is making automated collections more empathetic.

Meanwhile, Freo uses AI to deepen customer insights across its ecosystem. As Kacker put it, AI has simply made “an old science faster”, speeding up how lenders understand financial behavior without changing its fundamentals.

Compliance by design

As regulations around digital lending tighten, all four leaders agreed that compliance has become a defining business pillar, not an afterthought.

For PhonePe, which grew up in one of the most regulated spaces in fintech, compliance is “part of the company’s DNA”. Every team member, be it an engineer or product designer, is trained around digital lending guidelines, ensuring every layer of the product meets regulatory expectations.

Kacker acknowledged that the industry has matured significantly. The old “grey zone” of innovation has given way to clarity: either you’re compliant or you’re not. He pointed to the RBI’s sandbox framework as an important evolution, a space where new ideas can be tested responsibly.

Hinduja, however, believes clarity starts with self-awareness. Fintechs, he said, must decide whether they’re lenders or platforms. “You can’t be both,” he noted. “There’s enough room to innovate within regulation. Step outside it, and it will catch up with you.”

At Yubi, compliance is operationalized through transparency. The company has opened its internal dashboards to clients, allowing them to see everything from queue times to system latency in real time. It’s a move that, Krishnamurthy said, “turns compliance into trust”.

Building resilience, together

The session closed on a unanimous note that resilience is not just about withstanding change, but adapting faster than it arrives. In India’s lending landscape, resilience comes from clarity, discipline, and the ability to balance automation with empathy.

The moderator summed it up: “It’s about finding balance between innovation and compliance, automation and empathy, growth and governance.”

And that, perhaps, is India’s true resilience playbook.