The RBI Governor predicts that by 2030, the Indian fintech industry will account for 13% of the global market.Contactless Payments: Transforming the Way We Transact
Against the backdrop of the 2023 Global Fintech Fest (GFF), which has seen a threefold surge in participation compared to the previous year, Shaktikanta Das, the governor of the Reserve Bank of India (RBI), took the stage to commend the fintech sector on the cusp of significant transformation.
Highlighting the pivotal role of innovation in reshaping financial services, he remarked, “Innovation is the bedrock of the fintech industry.”
During his address, he underscored the importance of customer-centricity, governance, and self-regulation for ensuring the stability and future readiness of the fintech ecosystem.
The fintech sector in India, having faced challenges over the past couple of years, is now experiencing a positive turn. In the fiscal year 2023, several venture-funded lending businesses turned profitable, while others seek new equity funding rounds to fortify their capital reserves.
Governor Das utilized the GFF platform to encourage fintech companies to establish a self-regulatory organization (SRO) independently. He assured the RBI’s engagement in this initiative.
“It (SRO) will give fintechs an opportunity to voice your requirements more frequently to the SRO. The other advantage is that all the aspects of regulation will not be burdened on the Reserve Bank,” he added.
He expressed hope that the fintech space would have established or be close to launching an SRO by the next GFF event in 2024, stating, “I am saying next year as an outer limit, but I am sure if we work together, we can do this even faster.”
RBI Deputy Governor T Rabi Sankar also stressed the urgent need for self-regulation in the fintech industry at the event. The central bank’s stance on regulating fintech companies appears to have shifted.
The RBI, in the past year, has taken measures against various facets of the fintech sector that employed coercive methods for expansion. Concerns raised by the RBI include data privacy, aggressive data collection, and the development of products beyond legal requirements.
While addressing industry concerns, Das said, “They (fintech companies) need to evolve industry best practices, privacy and data protection norms in sync with the laws of the land, set standards to avoid mis-selling, promote ethical business practices, transparency of pricing, etc.”
He urged fintech firms not to view regulatory measures as obstacles, emphasizing that regulators sometimes need to intervene to protect consumers and ensure consumer-centric governance.
Predicting a promising future for the fintech space, Das stated, “Indian fintech is expected to generate $200 billion in revenue by 2030, contributing 13 percent to the global fintech revenue.”
This growth projection underscores the potential and significance of India’s fintech sector on the global stage.
Providing a global perspective on the fintech sector, the RBI governor observed that despite generating an annual revenue of $245 billion, the industry accounts for only 2% of the total revenue from financial services worldwide.
He highlighted India’s crucial role in this narrative, attributing this growth to the increasing adoption of digital payments, the growth of the digital lending market, and the rise of insurtech and wealthtech companies.