Governance mechanism can aid in sustainable growth of fintech: RBI official

Sustainable growth of the fintech ecosystem can be achieved by putting in place a governance mechanism and focusing on customer-centricity, a senior RBI official said on Thursday.

On Wednesday, RBI Governor Shaktikanta Das had asked fintech companies to form a self regulatory organisation and improve governance standards.

“What is needed for the sustainable development and growth of the fintech ecosystem is the right thrust on customer-centricity and better governance standards. These can be achieved by balancing the needs of tomorrow with the wants of today,” Ajay Chaudhary, an executive director who heads the fintech department at the Reserve Bank of India, said.

He was addressing the final day of the three-day global fintech summit here.

Noting that fintech companies have vastly improved the efficiency of service delivery and customer experience, he said that what is needed is more focus on these matters which can be better achieved through the above points.

Underlining the need for incremental and gradual regulation in the sector, Chaudhary said that it could be rule-based, outcome-based or even need-based regulation but the first step towards such a regulated existence is starting with a supervisory framework which could be in the form of a self-regulatory organisation or SRO.

At the summit, the RBI Governor had said he expected the industry to have an SRO at the earliest and latest by the next edition of the summit.

Responding to the demand and suggestion on Thursday, Naveen Surya, co-chairman of the Fintech Convergence Council, said that there will be an SRO by the time the next edition of the fintech summit is held.

Further, Chaudhary said regulation can wait a bit longer but what is needed more urgently is better governance standards and a mechanism focused on customer centricity, data privacy and data protection, among others.