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Central Bank of India Greenlights Fintech Efforts

by on June 8, 2016
 

Many companies see India as a breeding ground for the future of commerce. Instead of relying on e-commerce, like most other countries, India has jumped straight to m-commerce. This shift opens up exciting opportunities for Fintech startups. Even more so now that the country’s central bank wants to explore the potential of Fintech.

It is becoming apparent no country wants to be left out when it comes to the Fintech race. India seems a prone region for financial innovation, though. A lot of consumers and businesses have no direct access to standard financial services. Moreover, the growth of m-commerce goes to show there is a huge demand for mobile services, including robo-advising and mobile banking.

India Is A Hot Fintech Hub

India’s central bank has been keeping a close eye on what is transpiring in the Fintech industry lately. The institution now wants to create a committee to see where the potential for Fintech lies in the country. Moreover, the Central Bank of India predicts the fintech market in the country will double in valuation by 2020.

Don’t be mistaken in thinking India will follow the lead of Singapore and create a regulatory sandbox, though. The RBI’s executive director has indicated they will take a close look at “what should be allowed to happen” in the financial sector moving forward.  As ominous as this may sound, it remains unclear which content this statement should be placed in.

For all of the appeal Fintech has in India, there is a significant cause of concern regarding system risk for existing financial services. Disruption never comes without chaos, and banks are advised to keep an open mind towards collaborating with Fintech startups over the next few years.

Digital banking seems to be the area where regulators expect most of the Fintech growth to come forth from. This is not entirely a surprise, considering how consumers struggle with bank access right now. The digital-only approach can remove some of the hurdles consumers and enterprises in India are dealing with right now.

It is also interesting to note there is a significant increase in the number of Indian Fintech startups receiving funding. The total amount invested more than quintupled in 2015 to US$1.5bn, up from US$247m. These figures indicate an unprecedented growth in the Fintech sector in India, and that growth is expected to continue for the foreseeable future.

Header image courtesy of Shutterstock

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