A recent report by Business Standard highlights that a self-regulatory
framework is poised to transform the business practices within the sector.
However, the report underscores the necessity of identifying capable
individuals to lead and manage the new system.
A fortnight after the Reserve Bank of India (RBI) made public its
‘Framework for self-regulatory organisation(s) for fintechs (SRO-FTs)’, the
first signs of change in the way the sector looks at itself are upon us.
The Fintech Association for Consumer Empowerment (FACE) – an SRO-FT
aspirant – “is considering its mandate to expand its membership to fintech
beyond the credit ecosystem… so that fintechs, regardless of their business and
scale, will have parity to contribute to the industry’s objectives and receive
distinct value for their unique needs,” says Sugandh Saxena, its chief
executive officer (CEO). This is in keeping with what has been spelt out in the
framework: To make SRO-FT(s) truly representative and “ensure refined
decision-making and prevent the organisation from being swayed by the interests
of a dominant few”,
here on will hinge on how SRO-FT(s) imagine their relationship
with Mint Road, and the business moves on from its long- held peeve that the
regulator acts unilaterally.
For "it will have extensive implications as to how investors
view the sector," says Uttam Nayak, former senior vice-president, Visa
Inc. Rishi Agrawal, co-founder and CEO of Teamlease Regech, agrees and says:
"The maturity levels expected of fintech will go up now.
The days of funds flowing into them generously are anyway over and
how they respond to the regulatory initiative will have a huge bearing on
it." Unlike legacy financial services and regulated entities (REs),
fintechs have had a relatively easy ride until recently:
Playing off business models based on arbitrage backed by venture
capital and private equity (PE) firms (betting on the valuation game); and a
largely indulgent media. Nayak also lets it slip that
"fintechs will have to move away from being personality
dependent to process, planning and business case driven".
According to Tran
Technologies - a data intelligence platform for private market
research - fintech funding at $2
billion in 2023 marks a decline of 63 percent and 76 per cent
compared to $5.4 billion in 2022 and $8.4 billion in 2021. Look at these
numbers from another perspective. In November, the Centre for Advanced
Financial Research and Learning, in its first
'India Finance Report (IFR)', had called attention to the immense
potential of fintech.
Read more at:
https://www.business-standard.com/amp/finance/personal-finance/fintech-to-switch-on-reset-button-as-selfregulatory-mechanism-comes-in-124061600605_1.html