Kiran Belsekar, Senior Vice President and Chief Information Security Officer (CISO) & IT Governance quoted in ETCIO, shared his views on how RBI’s fintech department will drive innovation and growth of the sector

The Reserve Bank of India (RBI) has set up a fintech department to focus on the segment that is rapidly growing, media reports said on January 9. The announcement was made through an internal circular of the central bank.

“The RBI is driving a lot of initiatives for fintechs through its various cohorts, programs (such as hackathons) and regulations (for fintechs and payments). So far we have seen 80+ Unicorns with about 50% to 40% emerging in 2021 itself. Also, we have seen a huge rise of Top Fintechs like Groww, BharatPe , Zeta , Slice , Or Cred. India needs more of such fintechs to become the number one economy and fintech hub in the world. We are sitting on great railroads in India like UPI, Aadhaar, etc.. We should utilize it more often,” says Prasanna Lohar, Vice President Technology (Digital, Innovation, & Architecture). Lohar has been actively collaborating and providing leadership and mentorship at various private and government forums and initiatives aimed at fintech growth.

The development is testimony to the fact that fintechs have been successful at filling in the gaps that traditional banks were unable to fill. They have been making waves in India. Lack of adequate digital infrastructure in conventional banks has meant that they have fallen behind and fintechs have been able to meet that requirement such as borrowing, investing and financial planning, besides ensuring seamless payments.

New department will promote innovation in fintech domain
The circular says that the new department will not only promote innovation in the fintech domain, but also be able to identify the challenges as well as the opportunities that are associated with the dynamically growing sector.

“With the fintech unit in place at the RBI, this will only accelerate the movement towards quality in the sector which can be a boon for the citizens of India. This unit should bring use cases for India and identity fintechs that can solve those use cases. I also feel that this development will encourage fintechs to become more aware around critical aspects such as security, compliance and banking norms,” adds Lohar.

Today, India is the third largest startup ecosystem globally. The ecosystem is valued at around $31 billion. This is expected to increase to about $84 billion by the year 2025. In fact, India has been one of the most dynamically growing fintech markets across the world, with more than 2,000 fintechs. A majority of them were set up in the past five years. Moreover, rising transactions in a digital economy have meant that an increasingly greater number of startups are jumping on the bandwagon. India was the top destination for fintech investments in the Asia-Pacific (APAC) region, with $1.93 billion raised across 66 deals in the third quarter of 2021, according to the S&P Global Report.

“Fintechs had an early-mover advantage, but banks are adapting quickly. They’re more digitized, agile and customer-oriented than ever. This means increased competition for the likes of Paytm, PhonePe, Google Pay, and they will not have it as easy as they did in the past,” says Kiran Belsekar, Senior Vice President and Chief Information Security Officer (CISO) & IT Governance at Aegon Life, a life insurance company.