Realising India’s Fintech Potential

Context: Regulation and technology must both evolve simultaneously. 

Way forward for Fintech Sector in India:

• Complement as well as compete with Banks: It is capable of providing payment and credit services to the geographically dispersed masses with small-ticket needs far more effectively than banks.
  • Indian banking underserves the poor and the rural; while the Jan Dhan scheme has forced banks to open accounts for the rural poor, these remain underutilized.
• Rethink Myopic Restriction: such as scrapping of Merchant Discount Rate (MDR) which is a vital source of revenue for payment service operators and disincentivize new entrants.
• Guarding Against Vulnerabilities: Building capacity of the banks’ technological infrastructure to provide safeguards of ever-rising sophistication.
  • Educating and training customers to guard against practices that harm them. (guarding against cybercriminals)
• Safe access to critical data: Making available the data that fintech utilizes to assess credit requirements and viability.
  • Regulation needs to makes sure that such data access does not harm the data subjects (citizens).
  • For e.g. Ant Group utilizes 3000 data points to take credit decisions, while Indian firms are far behind.
• Fintech has the potential to transform other financial services: insurance, investment, remittances.