Reputation and brand damage have emerged as the biggest risks facing India's fintech sector, according to the Fintech Barometer 2026 released by the Fintech Association for Consumer Empowerment (FACE) and Grant Thornton Bharat. Nearly 59% of fintech companies surveyed rated reputational risk as a high-severity concern, giving it an average severity score of 7.2 out of 10, the highest among nine risks assessed. The report found that reputation and brand damage have emerged as the biggest risks facing India's fintech sector, ranking above infrastructure disruptions, competition, data privacy, cyberattacks and regulatory concerns. 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 reflect how 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.
The report ranked interoperability and infrastructure risk second, with an average score of 7.0, with about 51% of respondents rating the risk of failures, outages or policy changes affecting digital public infrastructure such as UPI and Aadhaar as highly severe. Market competition and conduct risk ranked third with a score of 6.9, reflecting concerns over pricing pressure, rapid technological change and evolving customer expectations. Data access, privacy and protection followed with a severity score of 6.6, with 49% of respondents rating it as a high risk. The report noted that 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.
Artificial intelligence (AI), machine learning and model-related risks ranked the lowest among the nine categories, with an average severity score of 5.8. The report attributed the lower ranking to the relatively early stage of advanced AI adoption across the financial sector. However, it noted that AI-related risks involving governance, privacy, cybersecurity and model failures are likely to become more significant as fintech companies increasingly use the technology for underwriting, fraud detection, customer engagement and decision-making. Cybersecurity, technology and business continuity, as well as regulatory and governance risks, were rated at 6.5 each. Around 46% respondents rated cyber and continuity risks as high severity, reflecting continued investment in cyber resilience, fraud prevention and operational continuity.
The findings are based on a survey of 39 FACE member fintech companies operating across lending, payments, regulatory technology, collection technology and techfins. Respondents ranked the nine risks on a scale of one 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. The report concluded that India's fintech sector was entering a phase in which trust, governance and operational resilience were becoming as important as innovation in determining sustainable growth. According to Vivek Iyer, partner and financial services risk advisory leader at Grant Thornton Bharat, "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".
Sugandh Saxena, CEO at FACE, emphasized that sustaining fintech adoption would require companies to earn trust by creating value and addressing risks as they emerge. The report concluded that stronger governance, customer trust and collaboration across the ecosystem would shape the next phase of India's fintech growth. The findings highlight how trust, governance and operational resilience are becoming as important as innovation in determining sustainable growth for the Indian fintech sector. 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.
