Trust, governance emerge as top priorities for India's fintech sector as industry matures: FACE-Grant Thornton report

India's fintech industry is entering a new phase of growth where customer trust, governance, and operational resilience have become as critical as innovation, according to the third edition of the Fintech Barometer 2026, a joint report by the Fintech Association for Consumer Empowerment (FACE) and Grant Thornton Bharat. 

The study, based on responses from 39 FACE member companies across lending, payments, regtech, collection-tech, and techfins, found that as fintech firms scale their operations, long-term success will increasingly depend on institutional credibility, effective risk management, and the ability to maintain customer trust. 

The report asked respondents to assess nine key risk areas while sharing insights on sectoral challenges, operational experiences and innovations shaping the industry's future. The risks were ranked based on weighted average severity scores assigned on a scale of one to 10. 

India's fintech ecosystem has emerged as a key pillar of the country's digital economy, driven by digital public infrastructure such as UPI, Aadhaar, e-KYC, and the Account Aggregator framework. However, the report noted that the industry's biggest challenges are no longer limited to innovation and scaling up operations but increasingly revolve around governance, compliance and building resilient institutions. 

Commenting on the findings, Vivek Iyer said balancing profitability, growth and trust has become one of the defining priorities for the fintech ecosystem. "The fintech ecosystem across payments, investments, credit and insurance has stronger revenue and governance models than a decade ago, helping firms pursue sustainable growth," he said. 

Sugandh Saxena said India's fintech sector is steadily becoming an integral part of the country's financial system, but sustained adoption will depend on the industry's ability to build trust while proactively addressing emerging risks. 

According to the report, reputation and brand risk emerged as the industry's biggest concern, with nearly 59% of respondents classifying it as a high-severity risk. The report said customer trust can be affected by data breaches, cybersecurity incidents, misconduct by unauthorised entities and poor customer experience, making reputation a direct outcome of governance and data protection practices. 

Interoperability and infrastructure risk ranked as the second-highest concern, with 51% of respondents rating it as highly severe. The findings reflect fintech companies' growing dependence on digital public infrastructure such as UPI and Aadhaar, while also expressing confidence in the continued evolution of India's digital infrastructure ecosystem. 

Market competition and conduct risk ranked third with an average severity score of 6.9, reflecting intense pricing pressure, rapid technological innovation and changing customer expectations. 

Data access, privacy, and protection received an average severity score of 6.6, with nearly half the respondents identifying it as a high-severity risk. The report highlighted the growing importance of consent management, transparency and enterprise-wide data governance as fintech companies process increasing volumes of customer information. 

Cybersecurity, technology, and business continuity followed closely, with an average severity score of 6.5. Around 46% of respondents classified cyber risks as highly severe, underlining continued investments in cyber resilience, fraud prevention, and operational continuity. 

The report also highlighted the increasing importance of regulatory and governance risks as fintech firms deepen partnerships with regulated financial institutions. In contrast, fraud, anti-money laundering (AML), combating the financing of terrorism (CFT), financial crime, and macroeconomic and funding risks were viewed as comparatively manageable under the current operating environment, supported by stronger regulatory oversight, improving fraud controls and sustained investor confidence. 

Artificial intelligence and machine learning (AI/ML) model risk received the lowest average severity score of 5.8, reflecting the relatively early stage of advanced AI adoption across India's fintech ecosystem. However, the report cautioned that AI-related governance, privacy, cybersecurity and model risks are likely to become significantly more important as fintech firms increasingly deploy AI across underwriting, fraud detection, customer engagement and decision-making. 

The report concluded that the next phase of India's fintech growth will be defined by customer trust, stronger governance, and ecosystem-wide collaboration. It added that since many of the industry's key risks extend beyond the control of individual companies, greater cooperation and integrated risk management practices will be essential to support financial inclusion and sustainable long-term growth.