Issue: 017

FEBRUARY 2024

Issue: 017

FEBRUARY 2024

Message from the CEO

Dear readers,

Innovation is no longer a choice but a necessity.

As we navigate the digital age, the demand for seamless credit delivery has never been more pronounced. In a country where data is abundant but crucial credit information resides in silos across various entities, unlocking of data was a much required ask of the ecosystem.

The Public Tech Platform for Frictionless Credit (PTPFC), developed by RBIH under the guidance of the Reserve Bank of India (RBI),is poised to revolutionise credit delivery by seamlessly integrating disparate data sources into a cohesive ecosystem. By facilitating the seamless flow of digital information to lenders, this platform promises to streamline the lending process, cut costs, and expedite disbursement timelines.

Yet, the impact of the PTPFC extends far beyond just efficiency and accessibility—it has the power to transform lives nationwide by speeding up credit access for various loans. A recent workshop co-hosted by RBI and RBIH, saw a great response from the banking ecosystem to understand the promise of PTPFC. In the next few months, you will see the platform being scaled up. Stay tuned!

In this edition of FinWrap, we continue offering you a comprehensive overview of insights and innovations driving us forward. From tech advances to regulatory changes, stay engaged and inspired by what lies ahead.

I hope you enjoy reading this issue of FinWrap.

Warm regards,

Rajesh Bansal
Chief Executive Officer
Reserve Bank Innovation Hub

Message from the CEO

Dear readers,

Innovation is no longer a choice but a necessity.

As we navigate the digital age, the demand for seamless credit delivery has never been more pronounced. In a country where data is abundant but crucial credit information resides in silos across various entities, unlocking of data was a much required ask of the ecosystem.

The Public Tech Platform for Frictionless Credit (PTPFC), developed by RBIH under the guidance of the Reserve Bank of India (RBI),is poised to revolutionise credit delivery by seamlessly integrating disparate data sources into a cohesive ecosystem. By facilitating the seamless flow of digital information to lenders, this platform promises to streamline the lending process, cut costs, and expedite disbursement timelines.

Yet, the impact of the PTPFC extends far beyond just efficiency and accessibility—it has the power to transform lives nationwide by speeding up credit access for various loans. A recent workshop co-hosted by RBI and RBIH, saw a great response from the banking ecosystem to understand the promise of PTPFC. In the next few months, you will see the platform being scaled up. Stay tuned!

In this edition of FinWrap, we continue offering you a comprehensive overview of insights and innovations driving us forward. From tech advances to regulatory changes, stay engaged and inspired by what lies ahead.

I hope you enjoy reading this issue of FinWrap.

Warm regards,

Rajesh Bansal
Chief Executive Officer
Reserve Bank Innovation Hub

India Fintech News

Navigating India’s Economic Landscape

RBI Governor Shaktikanta Das gave a speech at the annual meeting of the World Economic Forum at Davos. The speech revolved around the essence of India’s journey from crisis to confidence. He made the following points:

Amid global economic uncertainty, India shines with resilience and confidence, surpassing growth projections, with real GDP reaching 7.2% in 2022-23 and anticipated to grow by 7.3% this fiscal year. With robust domestic demand, India remains the fastest-growing major economy, ascending to the third-largest globally in purchasing power terms.

Our economic fundamentals showcase easing inflation, strengthened balance sheets, and disciplined fiscal policies. The IMF forecasts India’s contribution to world growth to rise from 16% to 18% by 2028, highlighting our expanding global influence.

Our journey from crisis to confidence embodies resilience, adaptability, and inclusive development. Challenges overcome, opportunities seized—our narrative inspires confidence within and beyond borders.

UPI on its way to become a Global Payment system

01    Instant Remittances from Singapore with
Major UPI Apps

This innovative collaboration between the Unified Payments Interface (UPI) and PayNow allows Indians to receive instant, secure, and cost-effective transfers directly into their bank accounts.

Currently this facility is available to BHIM, Paytm, and PhonePe users. Major banks like Axis Bank, DBS Bank India, ICICI Bank, Indian Bank, Indian Overseas Bank, and State Bank of India will be offering this functionality through their apps.

Benefits of using this facility:

Instant: Funds are transferred in real-time, reaching the recipient’s bank account within seconds.

Secure: The linkage utilises robust security protocols to ensure safe and reliable transactions.

Cost-effective: Transaction fees are competitive, making the service ideal for small and frequent remittances.

Convenient: The facility is available 24/7, 365 days a year

This milestone in interoperability, facilitated by the Reserve Bank of India (RBI) and Monetary Authority of Singapore (MAS), not only enhances financial inclusion and convenience but also contributes to the growth of India’s digital payment ecosystem.

02    Google India And NPCI International Team
Up To Take UPI Global

In an exciting development, Google India Digital Services (P) Limited and NPCI International Payments Limited (NIPL) have joined forces to bring the Unified Payments Interface (UPI) to the world beyond India.

The agreement, inked on January 17, 2024, has three main goals:

  1.  Making UPI payments easier for travellers abroad;
    2. Helping other countries set up similar digital payment systems; and
    3. Simplifying cross-border money transfers.

This collaboration means that Indian users can now use UPI-powered apps like Google Pay for international transactions, making things more convenient and reducing the need for old-school payment methods.

Ritesh Shukla, CEO – NPCI International Payments Limited (NIPL), inter-alia, said, “We are also excited about enabling a seamless and more connected international remittance network by further expanding UPI’s cross-border interoperability feature. With the success of UPI in a dynamic market like India, we are excited to further our vision to transform the digital payments landscape globally.“

RBI Releases Draft Framework For Self Regulatory Organisations In Fintech Sector

The RBI recently released a draft framework for the regulation of the fintech industry. It envisages the setting up of a self-regulatory organisation for the fintech industry (SRO-FT). The SRO–FT will aim to spearhead comprehensive guidelines encompassing standard-setting, oversight and enforcement, developmental measures, and grievance redressal.

The SRO-FT outlines objectives and consultative processes for rule-making, crafting industry benchmarks, technology standards, and tailored documents. It emphasises accreditation mechanisms and codes of conduct to uphold professionalism and market standards.

Oversight and enforcement mechanisms ensure compliance and market integrity.

The SRO-FT employs structured frameworks and surveillance mechanisms to monitor industry activities, detect exceptions, and counsel against detrimental practices.

The SRO-FT focuses on promoting regulatory understanding, facilitating knowledge exchange, and fostering research and development in the developmental sphere. It disseminates sector-specific information and aids smaller entities in aligning with statutory and regulatory policies.

The SRO-FT would be expected to play a pivotal role in ensuring compliance with statutory and regulatory frameworks, adherence to industry standards and best practices, and facilitating transparent communication channels with the Reserve Bank. Its responsibilities towards the Reserve Bank would broadly encompass relaying sector-specific insights, addressing regulatory concerns, and collaboratively working towards the overall development of the FinTech sector.

Fintech News

EBA Proposes Guidelines for ESG Risk Management in Banking

The European Banking Authority (EBA), the banking regulator for European banks, is consulting on new guidelines to fortify the banking sector against environmental, social, and governance (ESG) risks, vital for the EU’s climate-neutral economy transition. Key points include:

Regular Assessments: Banks must conduct routine ESG risk assessments across various categories and time frames.

Transition Plans: Institutions in this industry need to develop plans to address climate and financial risks from ESG factors under the CRD framework.

Risk Management Focus: Unlike other regulations, the EBA prioritizes integrating ESG risks into strategies over specific sustainability goals.

The guidelines address gaps in ESG risk management observed in banking strategies and aim to ensure stability as the EU transitions to a sustainable economy. While not mandating divestment from carbon-intensive sectors, institutions are urged to consider sustainable transition impacts proactively.

Fintech Growth Dynamics in a Changing Landscape

WEF recently released a report titled, “The Future of Global Fintech: Towards Resilient and Inclusive Growth.” The report delves deep into the FinTech industry, traversing domains as to how the FinTech industry is climbing the ladders of deep penetration covering the following points:

Fintechs are navigating a dynamic landscape driven by evolving consumer demands and investment trends. According to recent surveys, 51% of fintechs recognize consumer demand as a key growth driver, with a particularly strong emphasis in Latin America (LAC), led by business-focused fintechs.

Despite growth opportunities, macroeconomic factors remain a significant challenge, as noted by 56% of fintechs globally. Regulatory environments, especially in LAC, pose hurdles to growth trajectories. The funding environment has seen a decline, impacting fintech investments worldwide.

Meanwhile, digital and financial literacy challenges persist globally, particularly in emerging markets. Advanced economies grapple with seniors’ digital literacy, while developing countries address youth education and digital access.

Amidst these challenges, fintechs exhibit resilience, focusing on enhancing consumer experiences, navigating regulations, and fostering talent pools. Innovation and adaptability will be critical as fintechs navigate the evolving global landscape.

Fintech growth reflects a complex interplay of consumer demands, regulatory environments, funding dynamics, and digital literacy challenges. Fintechs’ ability to innovate and address evolving needs will shape their future amidst changing global dynamics.

Global Fintech Is In A Slump; Investment Declines To $51.2 Billion In 2023

In 2023, global fintech investment dropped to $51.2 billion, marking a 48% decrease from the previous year, according to data from Innovate Finance. Despite this decline, the UK fintech sector maintained resilience, securing $5.1 billion in investments across 409 deals.

Key Points to understand the industry’s investments:

Tech in Focus

Securing the Digital Future: Adapting to Quantum Computing Challenges

The Indian BFSI (Banking, Financial Services, and Insurance) sector is increasingly recognizing the urgency of adopting Post-Quantum Cryptography (PQC) standards to fortify their cybersecurity measures against the looming threat of quantum computing.

Initiatives such as the National Quantum Mission and the Centre for Development of Telematics (C-DOT) under the Department of Telecommunications, have been working quite actively towards developing PQC. Furthermore, entrepreneurship is nowhere behind with startups like QNu Labs offering hope for accelerating the adoption of PQC solutions tailored to the BFSI sector’s specific needs, ensuring a quantum-safe future for financial transactions and data protection.

However, while awareness is growing, the BFSI sector faces challenges in swiftly integrating PQC algorithms into their existing frameworks due to the complexity of migration and the need for extensive testing. A complete understanding of the PQC becomes important for a secure and safe internet landscape to understand the threats.

In the dynamism of technology, quantum computing emerges as a transformative force, promising unmatched computational power. However, it poses a significant threat to current cryptographic protocols, such as Rivest-Shamir-Adleman (RSA) algorithm and Elliptic Curve Cryptography (ECC) algorithms, which safeguard our digital realm. Rapid advancements in quantum computing require the urgency of addressing these vulnerabilities.

Quantum resistance—the ability to withstand attacks from both quantum and classical computers—is necessary. It requires the development and implementation of secure algorithms and protocols capable of mitigating quantum threats. Organizations like NIST, BSI, and ANSSI offer cryptographic guidelines, including quantum-resistant algorithms, to bolster cybersecurity measures.

Achieving quantum security demands collaboration among technology providers, businesses, regulatory authorities, and the workforce. Together, they can construct a robust defence against emerging quantum threats, safeguarding digital assets and ensuring data safety.

Adapting to the challenges posed by quantum computing is essential for securing the digital future. By adopting post-quantum cryptography and fostering collaboration, stakeholders can navigate the complexities of quantum computing, ensuring the resilience and security of our digital infrastructure in the quantum era.

RBIH Updates

RBIH and RBI Host Workshop on Frictionless Credit

The RBIH and the RBI co-organized a pivotal workshop on the Public Tech Platform for Frictionless Credit (PTPFC) in Mumbai. Led by Shri Rajesh Bansal, CEO of RBIH, Shri Suvendu Pati, CGM of RBI, and Shri Rakesh Ranjan, CDO of RBIH, the event drew over 160 participants from various financial sectors.

A highlight was the panel discussion, ‘Driving Financial Innovation with the PTPFC Platform’, featuring experts from Axis Bank, Protean eGov Technologies, HDFC Bank, and Bank of Baroda, moderated by Lalitha Nataraj from IDFC FIRST Bank.

The workshop provided insights on leveraging PTPFC to revolutionize credit accessibility and promote financial inclusion. With a commitment to fostering innovation, RBIH and RBI aim to host additional workshops, facilitating collaborative efforts to address evolving financial challenges in India.

Build for Billions Accelerator – Startups enhancing access, usage and quality of financial services for the informal economy

DLabs, in partnership with the RBIH and Union Bank of India, introduces the “Build for Billions” accelerator programme. This 50-day initiative aims to bridge the gap between traditional financial services and the informal economy.

At its core, the programme equips startups with tools and resources to thrive in the dynamic financial technology landscape. Through personalized mentoring, startups receive guidance on how to navigate challenges and seize opportunities effectively.

A key highlight is fostering connections. Startups pitch to banks and investors, potentially unlocking partnerships and funding avenues. Specialized clinics refine product offerings and enhance regulatory readiness.

The programme culminates in an offline demo day, providing startups with a platform to showcase solutions to industry stakeholders and investors. DLabs, RBIH, and Union Bank of India invite visionary startups to apply and drive innovation in the financial services landscape.