Third Time's A Charm?

As payments and lending lose their sheen, fintechs are betting on broking and wealth management as their next engines of growth

- Nabodita Ganguly

A quiet but unmistakable shift is emerging in fintech venture-capital (VC) circles—defined by a fatigue with lending pitches and a growing interest in segments such as wealth management and stockbroking.

Take, for instance, Arjun Malhotra, general partner at the early-stage VC firm Good Capital. In recent years, Malhotra has made it a point to avoid the lending space. “I stay away from lending completely,” he says, adding that most pitches he's se-en over the past four to five years are built around regulatory gaps or loopholes rather than sustainable businesses.

He admits to turning down most of the pitches before even stepping into a meeting room. The thrill, he says, just isn’t there anymore. “If the momentum in lending hasn't already slowed,” he notes, “it’s only a matter of time before it does.”

Acts I and II

The first phase of Indian fintech, catalysed by demonetisation in 2016, saw explosive growth in digital pay-ments. First, there was the unified payments interface (UPI) success story, with payment platforms investing billions of dollars to ride the wave.

According to the National Payments Corporation of India (NPCI), UPI transactions skyrocketed from 12.5bn in the financial year 2020 to 186bn in the financial year 2025.

Despite this scale, UPI never turned into a revenue-generating opportunity. The reason was the government's merchant discount rate (MDR) policy under which merchants were no longer charged for accepting UPI payments. While this helped digital adoption and drive volume, it choked a vital revenue stream for payments platforms.

Without MDR income, many wallet companies struggled to sustain cashbacks and incentives that were once key to user acquisition and retention. Eventually, UPI became an unsustainable model—barring a few well-funded players like Google's GPay and Walmart-backed PhonePe.