Every time the economy crosses another level of digitisation, the fintech sector gets more room to innovate and introduce newer services. Covid-19 accelerated this trend by pushing several business and consumer behaviours online.

Fintech adoption grew rapidly in 2020 and 2021 and is expected to stay the course in the new year. Digital payments, credit transactions through buy now, pay later, online insurance sign-ups and wealth management are all gaining wide acceptance.

There are clear indicators of this momentum. Transactions on the Unified Payments Interface (UPI), for instance, doubled to more than 4 billion a month from 2.3 billion at the start of 2021.

The funding surge, backed by foreign investments, continued to drive up valuations, with a number of startups across fintech segments turning unicorns (a valuation of $1 billion or more):

• Credit: BharatPe, Cred, Slice
• Insurance: Digit, Acko
• Wealthtech: Groww, Upstox

In further signs, Policybazaar debuted on the stock markets at a premium of 17%, while Zerodha, the largest player in the wealthtech space, grew even bigger. In payments, Razorpay and Pine Labs saw their valuations surge.

Because of its very nature, fintech attracts greater scrutiny than other sectors. The Reserve Bank of India, markets regulator Sebi and insurance watchdog IRDAI either put more guardrails or provide new impetus to entrepreneurs depending on their evolving outlook.

In 2021, regulatory action was a dominant theme, affecting payments, investments, crypto and lending. The central bank moved to regulate online payments and Sebi cracked down on digital gold and other unregulated investment options. Crypto players had to navigate a shadow banking ban in India.

This was not the kind of disruption companies were expecting. While some measures will change how the industry works, a few have opened up fresh business opportunities. The CapTable examines the impact of six major directives.