The Reserve Bank of India’s Governor, Shaktikanta Das on Tuesday said that, “the fintech road ahead will witness ever growing traffic in addition to the large number of existing players who are already there. It is, therefore, imperative that every player on this road follows the traffic rules for his/her own safety and the safety of others.”
Das was speaking at Global Fintech Fest 2022, organised by NPCI, PCI and FCC. Das addressing the fintech community at GFF said, “In India, one of the most transformative roles that can be played by FinTech is in the area of credit delivery in partnership with traditional lenders, especially in rural and semi urban areas. Timely availability of credit at reasonable cost, especially for agriculture and allied activities and MSMEs, is very crucial for our economic growth.”
Das added, “The emergence of FinTech players and the growing popularity of their innovative products have challenged the existing players in financial services in maintaining their market share, margins and customer base. The incumbent firms are responding to these challenges by adopting various strategies, which include making investments in FinTech companies and partnering with them. They are also enhancing their in-house capabilities to adapt to the new realities.”
He further said, “A wave of changes brought in by FinTech have had a positive impact in terms of enhancing inclusion and further penetration of financial services. At the same time, these developments have also ushered in an era where enormous amount of consumer data is being generated and leveraged upon by a few entities (the so called BigTechs) by virtue of their huge customer base. Such developments raise concerns on concentration risk and potential spillovers as their level of engagement with the financial system strengthens in the years to come. Therefore, potential risks to public policy objectives of maintaining competition, market and business conduct, operational resilience, data privacy, cyber security and financial stability need closer attention.”
Das eamphasised that robust internal product and service assurance frameworks, together with fair and transparent governance, will go a long way to safeguard the interest of customers and ensure long-term sustainability of the FinTech entities themselves. The level of due-diligence and oversight exercised by the regulated entities on their outsourced activities needs to be strengthened further. This would help in proactive mitigation of risks at the incipient stage itself.
Addressing the mega gathering of fintech ecosystem he said, I would also like to flag certain material concerns regarding the unbridled mushrooming of digital lending apps. The need of the hour is to ensure assurance of safety after following a process of green-lighting (whitelisting) and due-diligence by the regulated entities. The RBI, in association with other relevant agencies, is taking steps to address this issue and take further steps as may be necessary.
Das concluded by saying that, “The RBI’s focus has always been on encouraging innovation by providing an enabling environment. Simultaneously, as guardian of financial stability, the RBI also remains watchful of any undue risk build up and responds to them. The Fintech players, I am sure, will join us in this endeavour.”