Fintech Companies Need a Self-Regulatory Approach, Says RBI Deputy Governor
The Reserve Bank of India (RBI) has said that the financial technology, or fintech, sector should organize itself under a self-regulatory organization that can monitor the conduct of member fintech entities
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RBI deputy governor MK Jain said that a self-regulatory approach could also help protect the customer's interest and promote a high level of governance standard in fintech entities. He was speaking at an international research conference on fintechs on Friday, co-organised by IIM-Ahmedabad, according to a TOI report.
"Role of such an SRO (self-regulatory organisation) can include setting the standards for conduct and acting as a bridge between the sector and regulators. RBI has endeavoured to find a middle ground, trying to balance between the innovation brought by fintech while addressing the unique risks they introduce, said Jain in a statement.
According to Jain, as per the report, consumers have benefited from better customer experience and convenience. "One of the key value propositions fintechs offered was providing the same financial services as regulated entities but at a lower cost. Fintech disruption in the Indian brokerage industry is a shining example of this," he said.
The report further stated that the Reserve Bank of India (RBI) has said that the financial technology, or fintech, sector should organise itself under a self-regulatory organisation that can monitor the conduct of member fintech entities.
Mentioning the big tech companies' expansion into financial services, Jain reportedly added that, "These companies leverage the data from their large existing user base coupled with network effects to provide contextualised or embedded financial products and nonfinancial products. In addition to payment systems in many jurisdictions, Big Techs have successfully expanded into credit scoring and lending."