New Delhi/Mumbai : “Regulators will have to adopt an entity-based regulation rather than an activity-based regulation because it will be far more effective. Moreover, regulators will also have to look at cybersecurity, systemic and operational risks, data protection and data privacy issues that affect the financial markets, when dealing with FinTech companies which may range from big technology to large infrastructure companies. “So, regulation need to adapt to a world where the division between financial and non-financial firms are getting increasingly blurred and geographical boundaries are no longer a constraint” ,said Shri T Rabi Sankar, Deputy Governor, Reserve Bank of India at the Global Fintech Fest 2021. The event is organized by NPCI, IAMAI, PCI and FCC and is supported by the Ministry of Electronics and Information Technology and the Reserve Bank of India.
Since FinTech firms are transforming the entire financial landscape, the nature of the regulation has to change— widen its regulatory parameter– to take care of sheer diversity of the functions performed by FinTech companies. , he said. He added that there were no pre-defined regulations for FinTech in the world and so banks will have to learn to adopt to changes. Moreover, non-financial firms will also need to adjust to the compliance issues of the regulators.
Shri Sankar underscored the need for all stakeholders to come together for the protection of the individual and collaborations between different agencies to take care of issues of cybersecurity, cybercrime, and cross-border payments.
Fintech firms, he added will play a role of a facilitator and supporting role to the banks and not provide competition to the banks or financial institutions, because banks are providers of financial liquidity to the economy and will continue to play a crucial role in the payment system. However, because of the FinTech’s speed in processing of information, and delivery, which reduces costs and time while enhancing connectivity and reach of the transaction, they will ensure which banks will survive or not. Those banks that partner with these FinTech will obviously turn out to be the winners.
Over eight thousand delegates attended the first day of the conference which is being held virtually.
