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India’s fast-expanding markets and growing banking services are drawing domestic investors and savers deeper into the financial system. However, participation is growing faster than investor education and safeguards, creating gaps in readiness, said Matthew Blake, managing director and head of the World Economic Forum’s Centre for Financial and Monetary Systems.
“While opportunities to access financial services have expanded dramatically, financial and digital literacy gaps still exist, underscoring the need for broader tools and resources fit for today’s financial realities,” Blake told ET on the sidelines of WEF.
He noted that fintech innovation is flourishing in India. Digital finance—driven by platforms such as UPI and Zerodha—is expected to reach about $95 billion by 2030. Strong equity markets have pulled in households, with low double-digit annualised returns over the past five years widening participation.
Domestic capital formation, rapid industrialisation and Indian banks’ overseas expansion are lifting India’s global profile,Blake said.
Cross-border activity surged in 2025, one of the busiest years on record. “Foreign investment into financial services reached about $14-15 billion through stake purchases, control deals and capital infusions,” he noted.
At the same time, Indian institutions remain largely domestically focused. No Indian bank is classified as a global systemically important bank by the Financial Stability Board, Blake stated.
“India’s vulnerabilities lie in the speed of its growth,” he said.
Retail investors now own about 19% of the National Stock Exchange of India’s market value, and the investor base has nearly tripled in six years. As markets rise and fall, new investors will be tested, reinforcing the need for education to keep pace with participation.
Fraud risks are rising alongside adoption. Cyber-enabled scams have increased sharply, with high-value cases more than quadrupling in FY24 and causing losses of about $20 million.
Blake said wider access must be matched with tighter guardrails, including investor education, stronger fraud detection, and better consumer protection.
Global risks are also building. “High sovereign debt levels are making financial systems more vulnerable,” he said.
The International Monetary Fund projects public debt to approach 100% of global GDP by 2029, limiting governments’ ability to respond to shocks, especially in emerging markets. Geopolitical tensions add pressure, with financial fragmentation potentially cutting $5.7 trillion, or about 5% of global GDP.
On technology, Blake said automation could handle up to 39% of financial services tasks, improving efficiency and security. But overreliance without oversight could create new risks, making explainability and human oversight essential.
Regulatory divergence is another challenge, he said. Different rules across regions could split liquidity and raise costs. Shared standards—such as data interoperability and proportionate regulation—can help balance regional priorities with global stability.
The takeaway, Blake said, is clear: as retail participation spreads across credit, markets and digital finance, protection must lead. Closing literacy gaps, improving disclosures, and strengthening fraud defences are critical.
“While opportunities to access financial services have expanded dramatically, financial and digital literacy gaps still exist, underscoring the need for broader tools and resources fit for today’s financial realities,” Blake told ET on the sidelines of WEF.
He noted that fintech innovation is flourishing in India. Digital finance—driven by platforms such as UPI and Zerodha—is expected to reach about $95 billion by 2030. Strong equity markets have pulled in households, with low double-digit annualised returns over the past five years widening participation.
Domestic capital formation, rapid industrialisation and Indian banks’ overseas expansion are lifting India’s global profile,Blake said.
Cross-border activity surged in 2025, one of the busiest years on record. “Foreign investment into financial services reached about $14-15 billion through stake purchases, control deals and capital infusions,” he noted.
At the same time, Indian institutions remain largely domestically focused. No Indian bank is classified as a global systemically important bank by the Financial Stability Board, Blake stated.
“India’s vulnerabilities lie in the speed of its growth,” he said.
Retail investors now own about 19% of the National Stock Exchange of India’s market value, and the investor base has nearly tripled in six years. As markets rise and fall, new investors will be tested, reinforcing the need for education to keep pace with participation.
Fraud risks are rising alongside adoption. Cyber-enabled scams have increased sharply, with high-value cases more than quadrupling in FY24 and causing losses of about $20 million.
Blake said wider access must be matched with tighter guardrails, including investor education, stronger fraud detection, and better consumer protection.
Global risks are also building. “High sovereign debt levels are making financial systems more vulnerable,” he said.
The International Monetary Fund projects public debt to approach 100% of global GDP by 2029, limiting governments’ ability to respond to shocks, especially in emerging markets. Geopolitical tensions add pressure, with financial fragmentation potentially cutting $5.7 trillion, or about 5% of global GDP.
On technology, Blake said automation could handle up to 39% of financial services tasks, improving efficiency and security. But overreliance without oversight could create new risks, making explainability and human oversight essential.
Regulatory divergence is another challenge, he said. Different rules across regions could split liquidity and raise costs. Shared standards—such as data interoperability and proportionate regulation—can help balance regional priorities with global stability.
The takeaway, Blake said, is clear: as retail participation spreads across credit, markets and digital finance, protection must lead. Closing literacy gaps, improving disclosures, and strengthening fraud defences are critical.
