Case Study | 31 December 2025
How Did a FinTech Startup Expanding into the Banking Sector Overcome Its Product Analysis Challenges
Posted by : Preeti Wani
After establishing a solid foothold in the online payments market, a rising FinTech startup set its sights on the banking and financial services sector with the launch of a digital lending platform. But the rollout faced hurdles, limited market research, uneven product performance, and overlooked compliance requirements slowed progress. These issues quickly affected customer confidence, exposed security vulnerabilities, and caused adoption rates to slide. Determined to turn things around, the company engaged Research Nester Private Ltd. for in-depth product analysis consulting. With a combination of targeted strategies, operational adjustments, and improved security systems, RNPL helped the startup restore stability, rebuild trust, and secure a competitive position in the digital banking space.
An overview:
- A young FinTech startup, already recognized for its smooth online payment services, sought to break into the digital lending market by launching a platform offering instant personal loans, SME financing, and credit scoring integrations.
- While the concept had strong market potential, the product lacked a detailed functional analysis. Problems like inconsistent loan approval algorithms, insufficient fraud detection, and inadequate compliance checks soon surfaced.
- In the motive to launch faster and capture early market share, critical phases such as detailed product testing, market validation, and user feedback were neglected.
- Within months, customer complaints came up, starting from inaccurate credit scoring to data privacy concerns, leading to a sharp decline in adoption rates and mounting operational costs.
- To address these setbacks and meet regulatory demands, the company brought in RNPL analysts for a full-scale product evaluation and corrective roadmap.
The Story
Founded in 2018, the startup set out to make digital transactions easier for individuals and small businesses. Its payment gateway and wallet services were well-received, attracting over 25 million active users in its first year.
Encouraged by this fast growth, the leadership decided in 2020 to expand into digital lending, offering instant loan approvals, AI-powered credit evaluations, and repayment options integrated with its existing wallet system. The target was to cater to urban professionals, small merchants, and gig workers who demanded quick, accessible financing.
However, rushing the product to market came at a cost:
- Inconsistent loan algorithms led to over-approvals for some borrowers and unjust rejections for others.
- Fraud incidents increased due to limited identity verification measures.
Compliance gaps, especially with KYC rules and data protection laws, drew attention from regulators. - Consumer frustrations went high with slow loan releases and frequent app breakdowns.
- By early 2021, adoption rates fell by 35%, loan defaults rose by 20%, and poor reviews dominated app store listings. Additionally, reports of data misuse linked to unsafe APIs further destroyed the brand’s reputation.
With investor confidence at risk and regulatory warnings increasing, the leadership realized urgent action was important. That’s when they consulted Research Nester Private Ltd. to get a thorough product analysis and recovery strategy.
Our Solution:
RNPL started by conducting a full product performance audit, examining technical functionality, market fit, compliance alignment, and consumer experience. The primary recommendations provided were:
Defining Product Objectives
- Define the primary borrower profile.
- Determine the product’s competitive edge, i.e., speed, affordability, or security.
- Plan how the lending platform fits within the existing wallet ecosystem.
Enhancing Security
- Develop AI-based fraud detection for real-time alerts.
- Include biometric authentication systems to restrict identity theft cases.
- Secure all data exchanges with end-to-end encryption.
Improving Credit Assessment Models
- Use behavioral scoring and alternative credit data like bill payments and rental history.
- Integrate adaptive machine learning to refine accuracy over time.
Strengthening Compliance
- Build a KYC-AML framework that matches RBI and global standards.
- Set up an internal compliance unit to track regulatory changes.
Advancing User Experience
- Optimize the app’s architecture to increase speed and reliability.
- Add real-time loan tracking and status updates.
- Make the onboarding process easy for first-time users.
Expanding Revenue Streams
- Offer the platform as a white-label service for banks and microfinance firms, enabling B2B revenue.
Ongoing Product Monitoring
- Schedule quarterly product reviews.
- Form feedback channels and beta testing cycles to catch issues early.
The recommendations were provided in a structured 12-month action plan, which the startup adopted in phases.
Results
The transformation was highly remarkable and measurable:
- Loan Default Rate Reduction: Defaults dropped from 20% to 8% within the first year after security and risk model enhancements.
- Customer Base Growth: Active lending customers increased by 45% in 2022, crossing pre-crisis adoption rates.
- Revenue Recovery: Lending revenue rose from USD 4.5 billion in 2021 to USD 8.2 billion in 2023, supported by the white-label FinTech-as-a-Service offering.
- Regulatory Clearance: The company achieved total compliance with RBI guidelines and regained operational approvals in all its target states.
- User Trust Rebuilt: App ratings accelerated from 3.1 to 4.6 stars in major app stores, with positive reviews indicating quicker lending outflows and better transparency.
- Partnership Expansion: By mid-2023, 15 regional banks and microfinance institutions adopted the lending platform under white-label agreements.
Today, the startup has grown into a reliable digital banking solutions provider for both end consumers and B2B clients. By embedding security, compliance, and customer experience, the company not only resolved its immediate challenges but also discovered new growth opportunities for the future. This success story reflects that security, compliance, and user experience must be core pillars from day one as it is fueling its next growth phase.
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