India’s fintech sector is entering a new consolidation phase, with deal activity expected to accelerate in 2026, senior executives at Kotak Investment Banking said.
Speaking at the firm’s annual press conference on Wednesday, top executives said that fragmented markets and weak profitability are pushing venture-backed fintech players to combine rather than compete.
“(Fintech) companies have been competing aggressively, and yet it’s not as if they are swimming in profits. It makes more sense to build together than fight for the same market one-on-one,” said Rajat Rajan, managing director, digital and robotics.
Many startups, he added, are now under pressure to demonstrate exits or liquidity as investor expectations continue to pile up. Recent deals highlight the shift, such as Groww acquiring Fisdom, Amazon buying Axio, and PayU raising its stake in Mindgate to about 70%.
“We feel that this will be the year when, in some way, fintech will be reborn,” added Rajan. “Maybe in a year’s or two years’ time, you’ll see fewer, but larger, more robust companies.”
Rajan added that acquisitions could be led by banks, non-banking financial companies (NBFCs) or other large fintech players. However, there could also be inbound merger and acquisition (M&A) interest from large global technology groups. “Such groups see India as a highly competitive and complex market, but some may still look to enter through selective partnerships or acquisitions,” he added.
This aligns with the broader trends in public and private market deals in 2025. In fact, M&As have seen robust growth in 2025 at $121 billion, up about 14% from $107 billion last year, led by sectors like financial services, technology and industrials, which account for 65% of the overall M&A activity.
“Expected strong credit growth, significant inbound capital flows, and strong demand for technology assets have led to this growth,” said Sourav Mallik, managing director and deputy chief executive officer (CEO), Kotak Investment Banking.
Large M&A activity in India’s financial services sector in 2025 was dominated by cross-border deals like MUFG’s $4.4 billion stake in Shriram Finance, Emirates NBD’s $3 billion acquisition of control in RBL Bank, and Sumitomo Mitsui Banking Corp.’s (SMBC’s) $1.6 billion investment in YES Bank.
Mallik added that many such active players would want to play in the full suite of products in the Indian market. “To that extent, they may do follow-on transactions in adjacent segments…,” he added.
Ramesh Srinivasan, managing director and CEO of Kotak Investment Banking, pointed out that India has seen a greater increase in activity in M&A than in capital markets. “While capital markets have been strong, M&A volumes have been consistently healthy, with a run rate of about $70 billion over the last six months,” he said. “Financial services have stood out in particular, seeing strong momentum across both M&A and capital markets, including notable activity in the listed space.”
Nevertheless, in the capital markets, the Financial Institutions Group (FIG) sector has been very active last year, said Jayasankar Venkataraman, managing director and member of the Board at Kotak Mahindra Capital Co. Ltd.
Major listings from the financial sector included large IPOs (initial public offerings) from ICICI Pru, Tata Capital and HDB Financial Services, among others. “The three IPOs dominated most of the fundraising in the FIG sector this year,” said Venkataraman.
