Beyond UPI: How Embedded Finance is Fueling Central India’s Next Startup Wave

Introduction (148 words)

Remember when applying for a loan, buying insurance, or getting credit meant visiting a bank or downloading a separate app? Those days are fading fast. A quiet but powerful revolution is reshaping how we interact with money: embedded finance. This is the seamless integration of financial services into non-financial apps and platforms. Think ‘Buy Now, Pay Later’ (BNPL) on your favorite e-commerce site, instant insurance when booking a flight, or in-app credit for your business’s supply chain. This isn’t just a big-city phenomenon. For Central India’s burgeoning startup hubs like Indore, Bhopal, Jabalpur, and Gwalior, this shift represents a monumental opportunity. As India’s embedded finance market is projected to soar from $5.75 billion in 2024 to $28.60 billion by 2029, the question for our region’s entrepreneurs isn’t *if* they should participate, but *how* they can lead the charge.

What’s Happening: The Data Behind the Disruption

The growth trajectory of embedded finance in India is nothing short of explosive. Driven by a confluence of factors—widespread UPI adoption, nearly 900 million internet users expected by 2025, and a supportive regulatory environment from the RBI—the market is expanding at a staggering Compound Annual Growth Rate (CAGR) of nearly 38%. This isn’t just about payments. The biggest opportunities are emerging in embedded lending, insurance, and even wealth management, integrated directly at the point of need.

Globally, the market was valued at over $104 billion in 2024 and is projected to exceed $834 billion by 2034. India is a key driver of this growth. The key insight is that financial services are becoming a feature, not a standalone product. Non-financial companies, from retail giants to AgriTech platforms, are now able to offer their customers financial products without becoming banks themselves, thanks to Banking-as-a-Service (BaaS) platforms and sophisticated APIs. This disintermediation is creating a fertile ground for innovation, particularly in markets previously underserved by traditional financial institutions.

Why It Matters for Central India’s Ecosystem

This trend is a game-changer for entrepreneurs, investors, and mentors in Madhya Pradesh. For founders, it unlocks entirely new business models. Instead of building a FinTech company from scratch, they can build tech solutions for specific industries—logistics, healthcare, education, retail—and embed financial services to create new revenue streams and enhance customer loyalty. This lowers the barrier to entry and allows for highly specialized, profitable niches.

For investors, including angel networks active in our region, this represents a chance to back capital-efficient startups that are solving real-world problems. These startups aren’t just competing with other FinTechs; they are creating value within established industries. For mentors at organizations like TiE Indore MP, the focus shifts to guiding startups on forming strategic partnerships, navigating complex regulations, and designing user experiences that build trust. The rise of embedded finance means financial literacy is no longer just a consumer issue; it’s a core competency for founders in almost every sector.

How Startups Can Respond: An Actionable Framework

For startups in Central India, the opportunity is to build for ‘Bharat’—the vast market beyond the metros. Tier-2 and Tier-3 cities are driving the next wave of consumption and digital adoption, and their financial needs are unique. A staggering 71% of FinTech personal loans in 2020 originated from beyond Tier-1 cities, proving the immense demand. Here’s a structured approach for local entrepreneurs:

1. Identify a Niche Vertical: Don’t try to be everything to everyone. Focus on a specific industry with deep roots in Central India. Is it agriculture? Logistics? Manufacturing? Retail? Understand the unique financial friction points in that sector.
2. Solve a Specific Problem: Within that vertical, what is the key financial challenge? Is it access to working capital for Kirana stores? Is it micro-insurance for smallholder farmers? Is it flexible payment options for students in vocational training centers?
3. Partner, Don’t Build (Everything): Leverage BaaS providers and partner with existing financial institutions. Your startup’s core value is in owning the customer relationship and the user experience, not in becoming a regulated bank.
4. Build for Trust and Simplicity: The user interface must be intuitive and build confidence. In a market where digital literacy is still evolving, simplicity is a key differentiator. Ensure data privacy and security are paramount.

“हमारे इंदौर में, व्यापार और तकनीक का संगम हमेशा से हमारी ताकत रही है। अब फाइनेंस को इसमें जोड़कर, हम असली भारत के लिए समाधान बना सकते हैं।” (In our Indore, the confluence of business and technology has always been our strength. Now by adding finance to it, we can create solutions for the real India.)

The Local Lens: Indore, Bhopal, and Beyond

Central India is not just a market; it’s an emerging hub for building these solutions. Indore, with its vibrant ecosystem of over 156 FinTech startups that have collectively raised over $23.6M, is a testament to this. Companies like BimaKavach (insurtech) and FingPay (last-mile financial services) are already making waves. The city’s supportive infrastructure, including the MPSEDC IT Park and Crystal IT Park, coupled with a strong talent pipeline from institutions like IIM Indore and IIT Indore, provides the perfect foundation.

Bhopal is also rising as a significant hub, with incubators like B-Nest fostering the next generation of tech talent. The Madhya Pradesh Startup Policy, which aims to double the number of startups to 10,000, provides crucial government support. The opportunity lies in connecting the state’s industrial strengths—in agriculture, textiles, and manufacturing—with these emerging financial technologies. For example, a startup from Jabalpur could create an embedded finance platform for the region’s garment manufacturers, offering invoice discounting and credit lines directly within their supply chain management software.

Structured Opportunity: Embedded Finance Use Cases for Central India

To make this tangible, here is a table of high-potential opportunities for startups in our region:

Takeaways: A TiE Mentoring Perspective

From a TiE mentorship standpoint, the rise of embedded finance requires a shift in how we advise early-stage founders. The core principles of entrepreneurship—finding a product-market fit, building a strong team, managing cash flow—remain unchanged. However, three new pillars become critical:

1. Regulatory Acumen: While you don’t need to be a bank, you need to understand the regulatory landscape governed by the RBI and other bodies. Mentors can connect founders with legal and compliance experts.
2. Partnership Strategy: Success is no longer just about your product, but about your ability to forge strong partnerships with banks, NBFCs, and the platforms you integrate with. Networking, a core pillar of TiE, is more important than ever.
3. Building Trust at Scale: When you’re handling people’s money, trust is your most valuable asset. This means investing in robust security, transparent communication, and excellent customer service from day one.

Programs like TiE Nurture are designed to help founders navigate these complexities, providing the guidance needed to build sustainable, scalable businesses in this new paradigm.

Conclusion: The Dawn of a New Financial Era

The embedded finance revolution is more than just a technological shift; it’s a powerful engine for economic growth and financial inclusion. By embedding financial tools into the daily digital lives of millions, we can unlock productivity and create opportunities where none existed before. For Central India, this is a golden chance to move from being a consumer of technology to a creator of it. The pieces are all in place: a large and untapped market, a growing pool of skilled talent, a supportive government, and a vibrant startup ecosystem. The challenge now is for our entrepreneurs to seize this moment, to build with vision and integrity, and to define the future of finance not just for our region, but for all of India.