RBI Deputy Governor MK Jain, ET BrandEquity
Representative imageThe Reserve Bank of India (RBI) has said that the financial technology, or fintech, sector should organize itself under a self-regulatory organization that can monitor the conduct of its members. fintech entities.
Addressing an international research conference on fintechs on Friday, co-organized by IIM-Ahmedabad, RBI Deputy Governor MK Jain said a self-regulatory approach can also help protect customer interests and promote a high level of governance standards in fintech entities. “The role of such an SRO (self-regulatory organization) could include setting standards of conduct and acting as a bridge between the sector and regulators,” Jain said.
Fintech companies have evolved in recent years, with some growing by facilitating payments for consumers and merchants, while others have risen from being banking service providers to independent players in the sector. Jain said a hands-off approach can promote innovation but does not risk protecting the financial system from adverse outcomes. At the same time, maintaining the status quo will mean that there is no relaxation to accommodate the new developments, which risks losing the benefits of innovation.
“The RBI has tried to strike a middle ground, trying to balance the innovation brought by fintech while addressing the unique risks it introduces,” Jain said.
According to Jain, thanks to fintechs, consumers have benefited from better customer experience and convenience. “One of the key value propositions that fintechs offered was to offer the same financial services as regulated entities but at a lower cost. Fintech disruption in the Indian brokerage industry is a shining example of this,” Jain said.
At the other end, major technology companies such as Alphabet, Meta and Amazon have also expanded into financial services. “These companies leverage the data from their large existing user base combined with network effects to offer contextualized or embedded financial and non-financial products. In addition to payment systems in many jurisdictions, Big Techs have successfully expanded into credit scoring and lending,” Jain said.
The interest from D2C brands to advertise on these fintech apps comes as these platforms have amassed a large captive user base and are witnessing high daily user engagement with use cases such as digital payments.
