K Rajaraman, Additional Secretary, Investment and IER, Department of Economic Affairs (DEA), Ministry of Finance, has emphasized the need for creating an environment for Fintech companies to partner with large financial institutions and offer innovative solutions.

Addressing a web-conference ‘PICUP Fintech’ organised by FICCI jointly with the Indian Banks’ Association (IBA), Rajaraman said: “With all the partnership that we have, we should be able to have an environment which enables the Fintech industry to innovate. It will also provide better penetration of financial services, security, and lower cost of business. Ultimately, this will offer better convenience and comfort to the users.”

Rajaraman further said that there are opportunities for Fintech to collaborate with companies in the insurance, pension sector also. “There is an opportunity for us to harness and marry the Fintech companies with the flagship programs of the government. I urge the insurance industry to collaborate on micro insurance and micro pension schemes rolled out by the government,” he said.

To promote innovations in the Fintech sector, Rajaraman said that most of the last mile KYC and other issues are being sorted by the regulators. “SEBI, IRDA and RBI have already rolled out regulatory sandbox which will enable the next wave of innovations benefiting the financial services sector,” he noted. Elaborating on the initiatives taken by the govt, he added that we are working in the inter-ministerial steering committee on Fintech to support the sector. We are also working with other countries to enable cross border innovations, he said.

He also stressed on the need to promote small investors to invest in the capital market. “Investment by Indians in the financial markets has been slowly rising, but a lot more work needs to be done to ensure that an ordinary citizen can invest effortlessly in the capital market. This is also a challenge that lies before us to enable investment advisory services comfortably for the ordinary Indian,” Rajaraman added.

He further said that during the pandemic, the digital payment transactions have also improved and soon will explode as more and more preference is given to digital transactions. “Digital payments have come back to almost 85-90 per cent of the transactions in January and February. I believe in some time, this is going to explode because now people have realised the importance of going digital,” said Rajaraman during the webinar held on September 7.

He also said that the committee for payment market infrastructure and banks for international settlement is coming up with a roadmap on the cross-border payment system. “All stakeholders must work together to seize the opportunity to open up cheaper payment corridors across the borders,” added Rajaraman.  

Rajnish Kumar, Chairman, IBA and Chairman, SBI expressed hope that the pandemic situation will improve in next 3-4 months. He further said that Fintech companies have played an important role in strengthening the financial sector and providing many innovative solutions leveraging the latest technology.

He said that globally many countries have adopted the open banking system and India is also adopting this. “Aadhaar and UPI today are receiving global recognition. With all large companies becoming part of this, it is leading to a Fintech revolution. The regulatory sandbox is providing a lot of innovation in the financial sector,” Kumar added. 

He said that all banks are coming forward and supporting the Fintech companies. “As far as the Indian financial system is concerned, a partnership between the large players and the Fintech is a win-win situation. There are challenges of scaling-up which at times arise, but it can also be resolved. The innovations which the Fintech can bring are amazing,” said Kumar.

T Rabi Sankar, Executive Director, RBI said that Fintech has gathered the required pace in redefining the way companies and customers are consuming finance. He added that we need to further work on adopting the global best practices in terms of digital penetration. He added that RBI has been focusing on innovation through the regulatory sandbox. “We are also coming up with an Innovation hub to create ideas using evolving technologies tat will be useful for the financial sector,” said Sankar.

Sunil Mehta, Chief Executive, IBA said that digital lending is evolving and would require greater involvement of Fintech. He said that there is also an equal opportunity for the Fintech in the e-commerce sector with a growing number of online customers.