homefinance NewsRBI deputy governor says the ‘sweet spot’ lies in fintechs being competitors and collaborators
RBI deputy governor says the ‘sweet spot’ lies in fintechs being competitors and collaborators
RBI Deputy Governor T. Rabi Sankar was addressing the Global Fintech Fest 2023 on Tuesday, September 5, where he said the payments system infrastructure already exists in the public sector and now the private sector can freely innovate.
Addressing the Global Fintech Fest 2023, RBI Deputy Governor T. Rabi Sankar on Tuesday (September 5) emphasised the evolving landscape of financial innovation, highlighting the symbiotic relationship between fintech firms and traditional financial institutions.
Sankar began by acknowledging the foundational infrastructure that has been established in the public sector for the payments system, with the private sector enjoying significant freedom to innovate. He stressed that innovation in finance is not a recent development, citing the unique anonymous price discovery system in the government securities market as one of the sector's early innovations.
However, he noted that what sets current innovations apart is their speed and scope, without fundamentally altering the financial ecosystem's core functions.
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Digitisation of information, direct interactions between buyers and sellers, and expanded accessibility have all led to faster transactions and increased financial inclusion, he said.
Fintech entities can excel in functions where they hold a competitive advantage, he pointed out. The "sweet spot," according to Sankar, lies in fintech firms simultaneously acting as competitors and collaborators.
Collaboration is crucial for fintech innovations to smoothly integrate into the financial system, and the balance between competition and cooperation will ultimately be determined by market dynamics, he asserted.
Sankar also highlighted the RBI's active involvement in the technological transformation of the financial ecosystem. He mentioned the recent announcement of a public platform for frictionless credit delivery by the RBI's innovation hub. The RBI, as a regulator, plays a vital role in maintaining the stability of the evolving financial system.
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However, Sankar acknowledged that the agility of new-age fintech firms can challenge existing regulatory models. With fintechs amassing sensitive data, the importance of data privacy and security cannot be overstated, and Sankar suggested self-regulation as a way forward for fintech companies.
In this context, he proposed that self-regulatory organisations (SROs) could play a pivotal role in the fintech industry as regulators continue to develop regulations.
Sankar emphasised that fintech firms should maintain a spirit of collaboration and innovation, recognising that they are best positioned to understand the intricacies of the evolving system.
In conclusion, he stressed the potential for fintechs, traditional banks, the RBI, and SROs to work harmoniously to drive progress for all stakeholders in the rapidly evolving financial landscape.
(Edited by : Shoma Bhattacharjee)
First Published: Sept 5, 2023 6:03 PM IST
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