By Rohith Reji, CEO, Neokred
The fintech industry loves a good headline. Neobanks promise to ‘kill’ traditional banking. AI models will ‘disrupt’ credit scoring. Blockchain will ‘revolutionize’ settlement. Every few months, a new technology arrives draped in the language of total transformation. Investors pour in money, press coverage flows, and then the novelty fades.
Underneath the noise, a quieter kind of company consistently delivers returns and increasingly commands the market. Call them utility players or the infrastructure builders who make everyone else’s innovation possible. They capture margins, not headlines.
The numbers speak a different tale bigger than the hype
No country demonstrates the utility-player thesis more compellingly than India. The RBI’s payment system report documented a shift with no precedent in any other country. UPI’s share of digital payments stands at 49% globally. Let’s dig into the scale of the financial pipelines India is building. In February 2026 alone, UPI processed 20.39 billion transactions. That’s over 700 million transitions daily.
When you’re operating at this velocity, a single hour of downtime affects nearly 40 million transactions. In such a high-stakes environment, a fintech that solves for failed UPI transactions, automates manual reconciliation, fixes high KYC drop-off rates is worth ten times more than one with a fancy UI. For example, high-friction onboarding sees drop-off rates as high as 60% in the Indian market. Utility players using AI-driven, ‘penniless’ verification are cutting these drop-offs. That’s utility at scale. It’s where investors want to put their money.
The companies that captured durable value are not the ones with the most exciting consumer propositions. They are the ones who built and owned the infrastructure. The identity verification layers, the payment routing engines, and the compliance frameworks. The utility player won at every turn. In a zero-MDR (merchant discount rate) environment, the math for pure-play payment gateways is brutal. With profit pools compressed by an estimated 1.7% fintechs can’t survive on transaction fees alone.
Additionally, B2B fintech segments like banking-as-a-service, embedded finance and SME-focused infrastructure demonstrated the most resilient funding trajectories, growing more than 25% annually even as broader consumer-facing fintech funding dropped as sharply as 50%. The flashier business models took deeper cuts. The infrastructure layer barely flinched.
The true beneficiaries in fintech are infrastructure providers underneath. The identity verification APIs, the payment orchestration layers, and the consent management platforms serve every participant in the value chain simultaneously. In fact, when research states that the global fintech-as-a-service market is projected to touch $1.62 trillion by 2034, it is referencing the utility layer because that’s where durable market value accumulates.
Utility players win the long game
Innovation-driven fintechs always face a structural problem. Their advantage erodes the moment competitors replicate their product. Features diffuse, brand differentiation fades and CAC (customer acquisition costs) skyrocket while switching costs remain low.
Utility players in fintech face fundamentally different dynamics. Once a business embeds identity verification, a payments stack, or a data consent layer into its core operations, switching costs become prohibitive. Integration depth creates stickiness that no marketing budget can replicate.
Every new regulation, from India’s DPDP Act to Europe’s Digital Operational Resilience Act, creates a new layer of necessary infrastructure. That’s why the development of programmable KYC trust layers is a core competitive strategy for payment players in the coming decade. Compliance infrastructure is not a burden for utility players but a moat.
The fintech industry will no doubt produce a new wave of consumer-facing innovators. Agentic finance will generate press. AI-driven credit models will attract venture capital and the hype cycle will continue. But markets reward what they cannot easily replicate.
For a long time, the Indian fintech narrative was a fast-paced thriller. It was about disruption, burning the rulebook and the relentless pursuit of the next shiny front-end feature. The ongoing funding winter is teaching fintech companies new lessons. The funding winter has evolved into a season of venture capital discernment.
Headlines show a modest recovery within Indian fintechs, raising $2.4 billion, a modest 2% increase YoY. The real lesson is in the flavour of that capital. Investors aren’t chasing the next Uber of Finance. They are backing the utility players: the plumbers, the electricians and the structural engineers of the fintech ecosystem.
In short, the utility player is the new fintech MVP. Investors are tired of funding market burns. They want companies that reduce friction, ensure compliance with data privacy regulations like DPDP Act, and prove reliability like middleware that allows legacy banks to talk to modern apps.
As the CEO of a fintech startup, my message to founders and investors alike is simple: Utility is the ultimate moat. The hype phase of Indian fintech is over and frankly good riddance. We are now in the era of Infrastructure-as-an-Edge. The companies winning the market aren’t ones shouting the loudest on LinkedIn or X. They are the ones quietly ensuring that when 1.4 billion people click “pay”, money actually moves.