Why sustainable growth is becoming fintech's strongest competitive advantage

For years, India's startup ecosystem, comprising majorly of tech-based companies, grabbed headlines when they promised growth and delivered scale. It resulted in funding rounds and customer acquisitions becoming the benchmark for success. In 2020 came the Covid-19 pandemic. 

Since then, the startup ecosystem has seen tremendous upheavals. We have seen many edtech and new age companies rise to unprecedented heights and suddenly bite the dust. An ecosystem that celebrated achievement of scale of many players is now faced with the truth of being left with what is right, pun intended! 

It proves that sustainable and long-term strategic growth is the only way to move forward. And currently the fintech ecosystem can aptly exemplify how viable and long-term strategies can be the success mantra.

A maturing ecosystem

India has arguably one of the world's most vibrant digital financial ecosystems. Initiatives including the JAM trinity and the India Stack have given rise to a new wave of financial disruption. Over the last few years, fintechs have been riding the wave of India’s digital transformation through key interventions such as digital lending, small payment banks and Buy-Now-Pay-Later entities. However, the fintech industry, more than ever before, has realised that chasing scale and growth alone may not be par for the course. 

The churn of the past decade or so, especially after landmark periods, including the demonetisation of currency in 2016 and the pandemic, have made the industry wiser. Consequently, conversations in boardrooms, investor meetings and regulatory circles have changed. Viability is now as important as valuation.

Rightly so, capital has become more discerning. India’s fintech sector raised funding of $889 million in the first half of 2025 compared to the highs of $5.5 billion in the second half of 2021. Investors clearly seem to be rooting for businesses that demonstrate sound unit economics, disciplined growth and a clear route to profitability. It marks an important shift in how success is being measured now across India's startup ecosystem that includes fintechs.

Clearly, fintechs that participate in a marathon may get more success than those sprinting ahead. The different stakeholders are also recognising the same. 

Sustainability is what matters 

Investors are placing increasing emphasis on business fundamentals and sustainable value creation. Consumers, meanwhile, are deciding which platforms they can trust with their savings, credit and financial data. Likewise, regulators are asking how customer interests are being protected.

Regulatory expectations have also evolved with the changing ecosystem. The Reserve Bank of India (RBI) has a mission to catalyse responsible, transparent and resilient businesses. Accordingly, it has sharpened focus on strengthening governance, consumer protection, fraud risk management, and operational resilience across the financial sector. 

Accordingly, fintechs with a higher compliance quotient not only make for good press but also inspire confidence among stakeholders. Along with regulators and investors, customers are also essential stakeholders. Fintechs are now engaging with their customers in more meaningful and purposeful ways. Strategies revolving on incentives, discounts and promotional offers have outgrown their purpose. Those strategies undoubtedly accelerated digital adoption and introduced millions of Indians to digital financial services. Now, customer acquisition will have to revolve around retention. 

Sustainable businesses are increasingly focusing on solving everyday financial needs rather than optimising for downloads or one-time transactions. The emphasis is shifting towards creating solutions that customers continue to use because they are useful, intuitive and reliable, not because they are temporarily incentivised.

Here, fintechs that can provide diverse services within one platform have an edge. For instance, imagine a customer hops on to an app to borrow money. While at it, they can also invest in stocks and buy car insurance through a third-party provider by making payments over UPI. The customer gets convenience and the Fintech gets access to diversified revenue through commissions, brokerage, etc. Navigating unpredictable market cycles then becomes less challenging. 

This approach also aligns with India's broader financial inclusion journey. India’s  financial Inclusion Index for the year ending  March 2025 was 67.0 against 64.2 in March the previous year. It reflects the continuous improvement in delivery, usage, quality and access of financial services. 

As fintech reaches newer customer segments, particularly across underserved markets, long-term engagement will depend more on how much people trust entities. 

Trust is paramount

People will only deal in money where they have trust, especially when it is a digital and faceless entity. Trust in a fintech’s systems perhaps remains its most significant differentiator.

For the fintech, trust improves customer retention, encourages repeat and referrals, strengthens partnerships and reduces the long-term cost of acquiring new users. In an increasingly competitive market where products can often be replicated, trust is considerably harder to build, and far more difficult to replace.

Transparent pricing, simplified transactions, seamless grievance resolution and responsible use of personal information can perhaps be the greatest algorithm for a Fintech’s success. Trust, however, is best built through relentless customer first focus and staying in the game even when the spotlights are switched off for the day. 

While technology and tech literacy increase and Fintechs continue to deal with people and money, there is ample evidence that both care about how sustainably businesses grow rather than how fast they do so.

Amit Goyal, Co-founder and Managing Director, FatakPay