The report divides the Indian market into three segments. The affluent segment — the top 10% of the population — accounts for roughly 70% of discretionary spending and 80% of financial assets. The emerging cohort, i.e., the next 30% of the population, represents the most dynamic growth opportunity for financial services. The sustaining segment, which comprises the remaining 60%, is characterised by a largely informal economy.
“What stands out today is the combination of scale, resilient growth, stronger digital rails, deeper founder maturity, and a market that is steadily becoming more investable over time. India is a layered opportunity, with the top 5-10% already comparable to a large middle-income country and the rest compelling in its own terms. We see these strengths reinforcing one another,” said Sandeep C Patil, partner and head of Asia-Pacific, QED Investors, in a statement.
Per the report, the layered market structure allows startups to build more customised AI solutions instead of uniform offerings.
While the report does not quantify total AI spending in the BFSI sector, it expects investment to be driven equally by incumbents and early adopters. Legacy institutions are expected to outspend in the near term due to their scale, but innovation will be driven by startups.
“Large banks, insurers, and other established financial institutions will likely account for a significant share of the near-term spend because they already have the scale, the data, and the incentive to automate repetitive workflows and improve risk and fraud management, and operations,” Patil told ETtech.
Early adoption is likely to be led by high-volume use cases such as fraud detection, verification, collections, outbound engagement, and customer service, he added. “Areas involving more sensitive decision-making, higher regulatory scrutiny, or greater human oversight may move more gradually.”
As financial services providers upgrade legacy systems to meet evolving customer needs, the company has identified three key opportunities for fintech startups. These are fraud and risk systems, agentic compliance workflows, and voice AI applications.
India accounts for just over half of QED’s Asia-Pacific portfolio, including startups such as OneCard, Jupiter, Mudrex, and Refyne. The firm plans to invest $250–300 million in India over the next two fund cycles, which typically span 10–12 years.