Fintech – How India leads and way ahead

Fintech has a key role to play in the new age economy, and governments globally have this segment as priority. They know that Fintech’s will make the system frictionless, reduce cost of delivery, better financial inclusion, bring investments and provide job opportunities.

It is therefore a matter of great pride that the Indian Fintech landscape has really shaped up so well, that not only are our solutions & approach unique, but we are also leaders in some areas.

This has largely happened because of many key initiatives by our government, regulatory agencies and driven by some enablers like increase in Mobile & Internet Access, AADHAAR based Identity (Based on the comprehensive India Stack) etc.

The policy makers realised that common to all forms of Fintech’s, is the Payment ecosystem. This thought process gave birth to Initiatives like NPCI and instant payments like IMPS (Mobile based instant payments), UPI (P2P payments with UPI Handle) etc. That’s not all, we also had other key products like RUPAY (Our own low-cost Card rail), NETC (Automated Toll collection), Common Travel Card and Bharat Bill Pay etc, all coming from NPCI. In fact, many countries have studied the NPCI model, and this is now being taken to the world.

On the financial inclusion side, we have the Jandhan, Aadhaar & Mobile (JAM) trinity, which has revolutionised direct benefits transfers (DBT’s), for payments of Govt. benefits, subsidies etc. Besides providing inclusive and easy access, JAM has also made the process smoother, error free & plugged leakages.

On the Lending side, government had many initiatives to foster a marketplace and cashflow based lending ecosystem. We have seen some decent success with the Trades Receivable Discounting System (TReDS) Platforms, and a new form of Lending marketplace called Open Credit Enablement Network (OCEN) is in advanced stages of testing. Another initiatives w.r.t Public Credit Registry (PCR) is also being planned, which will most likely facilitate Aggregation of data across Liabilities.

Very recently, we had an innovative solution called the Account Aggregator (AA) system going live. This consent-based system enables electronic sharing of data between participants, especially on asset-based products like investments and bank accounts. This will further boost the digital / fintech ecosystems by automating and bringing comfort and convenience to all stakeholders.

The investment & wealthtech segment has also been boosted by initiatives by various stock exchanges, intermediaries on Online Trading, Robo Advisory etc.  This has given rise to multiple players in this segment.

The insurance segment is also not behind there are some successful schemes and initiatives by the Govt on both personal and health insurance, besides some focus on use of drones in Agri Insurance etc.

I wish to also highlight a recent initiative by Indian Govt. called International Financial Services Centres Authority (IFSCA), where it has aggregated all financial powers (across key regulators) into a single Agency, will also go a long way especially in Institutional fund raising, capital markets, trading and movement of funds. This will enable regulatory innovation and deeper integration of Indian Financial services into the global ecosystem.

Besides the above there are multiple initiatives Sandboxes, Accelerators by various state govts.; open banking initiatives, Video KYC, Skilling, eKYC, eSign, NUE, DigiLocker, Blockchain, CBDC, e-RUPI etc. which have already or are going to play key role in enabling the ecosystem.

It is pertinent to note that, with so much happening, the systems have gradually proven their robustness & Resilience over time.

Does that mean that all is fine? Well all is fine, but we are not yet fully there, and need to accelerate certain aspects pertaining to Privacy Regulations, Cybersecurity, having centralised KYC agencies, increase digital penetration & usage, strict client servicing norms / SLA’s, a comprehensive framework for API’s including marketplaces & partnerships etc.

Fintech is not just about the convenience but also about safety, security, transparency & trust in the system. As they say “Good Brakes and Roads ensure you can drive a car fast & safely”