A Brief Overview Of The Current Banking & Payments Landscape In India
An IIT Delhi alumnus, Aditi boasts of a decade long career during which she has successfully handled key responsibilities across companies such as Schlumberger, Tata Sons and Roche, prior to joining Cashhree Payments in 2021. Additionally, she had also co-founded another startup named Myelin Foundry, which was a deep tech company providing edge based AI solutions. In a recent conversation with Charulatha M (Correspondent, Siliconindia), Aditi shared her valuable insights on the current payments landscape in India, emerging trends and many other related aspects. Below are a few key excerpts from the exclusive interview –
Tell us about the emerging trends in the India payments landscape and how they can be effectively managed from a regulatory perspective.
A key trend that will no doubt revolutionize the way people make payments is the availability of UPI on credit. This will be a path-breaking advancement in the way people consume and use personal loans as part of their daily lives. However, there is high risk of borrowers being harassed by the lenders due to lack of proper regulatory frameworks if they fail to repay the amount. As a result, RBI has come-up with its Digital Lending Guidelines last year which clearly define how a lender and borrower must be interacting with each other throughout the entire loan dispersal process. This will ensure that while UPI on credit as an effective means of credit will grow in the country. In terms of the overall fintech vertical, a key emerging trend is the alternative investments.
Traditionally, people used to invest in fixed deposits, mutual funds, and stock markets. However today, people are increasingly driven towards alternative investment options such as invoice discounting, specialized bonds, debt instruments for unlisted companies and many others. Today, an increasing number of fintechs are coming into the market and enabling these kinds of investments for smaller sized tickets as well, making it accessible for people who want to make an investment but lack the funds to make a large ticket investment. However, the regulatory challenge here is that if an instrument is not properly regulated and is a grey instrument, the person might end-up losing his/her money and will not even have any recourse. Thus, RBI is now coming-in to ensure that these instruments are properly regulatory and the investor do not lose-out on his investments. P2P lending and investment is one example for this.
Briefly explain the impact of mobile banking and digital wallets on traditional banking and payment systems.
I strongly believe that mobile banking, digital wallets and other new instruments are extensions of banking and not competitors for banking. Today, fintechs are acting as the partners to banks, and these instruments are means for people to access their banking instruments. For instance, today, most of us think of a bank as a multi touchpoint, wherein you don't have to go there physically to get our work done; you can just open your mobile banking app and avail a variety of services. Additionally, you can also integrate your bank account with a third-part application such as GPay or PhonePe and make payments. Thus, my opinion is that tools such as mobile banking and digital wallets are all plugins into the core banking system.
What is the importance of Know Your Customer(KYC) and Anti-Money Laundering (AML) regulations in the banking and fintech sectors?
KYC guidelines are the set of frameworks laid down by RBI for banks and fintechs to define the process and set of documents that are mandatory for onboarding a customer or ensuring the money movement of the customers. Also, KYC as a process varies for each instrument, and its requirement depends on the instrument that you are using, its limit, use cases and many other aspects. On the other hand, AML guidelines are a set of frameworks that every financial institution must follow to ensure that they are not being misused for any illegal activities.
Enlighten us about the concept of open banking and its implications on the fintech sector.
Open banking is the concept of using APIs to give third-party platforms access to banking data in a secure manner. For instance, you can check you bank balance or statements through apps such as GPay or PhonePe. Also, you want to make an investment and are using a fintech app for it. If you aren’t sure if you have enough savings in your bank account or want to check which bank account of yours has how much money, you can do it on the app itself without having to visit the bank physically. Open is enabling safety and security of banking for both financial services sector and the consumers, along with offering the flexibility that the customers demand.
Tell us about the emerging trends in the India payments landscape and how they can be effectively managed from a regulatory perspective.
A key trend that will no doubt revolutionize the way people make payments is the availability of UPI on credit. This will be a path-breaking advancement in the way people consume and use personal loans as part of their daily lives. However, there is high risk of borrowers being harassed by the lenders due to lack of proper regulatory frameworks if they fail to repay the amount. As a result, RBI has come-up with its Digital Lending Guidelines last year which clearly define how a lender and borrower must be interacting with each other throughout the entire loan dispersal process. This will ensure that while UPI on credit as an effective means of credit will grow in the country. In terms of the overall fintech vertical, a key emerging trend is the alternative investments.
Traditionally, people used to invest in fixed deposits, mutual funds, and stock markets. However today, people are increasingly driven towards alternative investment options such as invoice discounting, specialized bonds, debt instruments for unlisted companies and many others. Today, an increasing number of fintechs are coming into the market and enabling these kinds of investments for smaller sized tickets as well, making it accessible for people who want to make an investment but lack the funds to make a large ticket investment. However, the regulatory challenge here is that if an instrument is not properly regulated and is a grey instrument, the person might end-up losing his/her money and will not even have any recourse. Thus, RBI is now coming-in to ensure that these instruments are properly regulatory and the investor do not lose-out on his investments. P2P lending and investment is one example for this.
I strongly believe that mobile banking, digital wallets & other new instruments are extensions of banking & not competitors for banking
Briefly explain the impact of mobile banking and digital wallets on traditional banking and payment systems.
I strongly believe that mobile banking, digital wallets and other new instruments are extensions of banking and not competitors for banking. Today, fintechs are acting as the partners to banks, and these instruments are means for people to access their banking instruments. For instance, today, most of us think of a bank as a multi touchpoint, wherein you don't have to go there physically to get our work done; you can just open your mobile banking app and avail a variety of services. Additionally, you can also integrate your bank account with a third-part application such as GPay or PhonePe and make payments. Thus, my opinion is that tools such as mobile banking and digital wallets are all plugins into the core banking system.
What is the importance of Know Your Customer(KYC) and Anti-Money Laundering (AML) regulations in the banking and fintech sectors?
KYC guidelines are the set of frameworks laid down by RBI for banks and fintechs to define the process and set of documents that are mandatory for onboarding a customer or ensuring the money movement of the customers. Also, KYC as a process varies for each instrument, and its requirement depends on the instrument that you are using, its limit, use cases and many other aspects. On the other hand, AML guidelines are a set of frameworks that every financial institution must follow to ensure that they are not being misused for any illegal activities.
Enlighten us about the concept of open banking and its implications on the fintech sector.
Open banking is the concept of using APIs to give third-party platforms access to banking data in a secure manner. For instance, you can check you bank balance or statements through apps such as GPay or PhonePe. Also, you want to make an investment and are using a fintech app for it. If you aren’t sure if you have enough savings in your bank account or want to check which bank account of yours has how much money, you can do it on the app itself without having to visit the bank physically. Open is enabling safety and security of banking for both financial services sector and the consumers, along with offering the flexibility that the customers demand.
