Bikky Khosla | 21 Aug, 2018
Over the last few years, India has witnessed a FinTech revolution. 'Funding for financial technology' or 'FinTech' in short is basically about using technology to improve financial services, and with its ability to touch nearly every aspect of the financial value chain, the scope of this model is enormous. Experts view that these companies can play
a significantly positive role in increasing the flow of
finances to the micro, small and medium enterprise (MSME) sector. There is not
an iota of doubt about it.
A recent survey reiterates this view. The
FICCI-IBA survey, carried out for the period January to June 2018, has found
majority of respondents showering praise on this emerging model. According to
them, FinTech companies, with their innovative technologies and business models,
enjoy a competitive edge due to their cost-effective operations and fewer
regulations than the traditional finance sector. While banks are known for their
cautious approach and tougher lending norms, these companies, they view, can
make a big difference in lending to MSMEs.
If banks and FinTech players come
together, the result can naturally be even better. Banks, instead of fighting
these companies, can gain from them in terms of last mile reach, more customers,
better technology and less operational costs. Positively, some banks -- from both
private and public sectors-- have already joined hands with some FinTech
companies to reap such benefits. This trend needs to be encouraged further as
it can, besides empowering both banks and FinTech companies, make a big
difference in helping our cash-starved small businesses.
Recently, the Government has formed a Steering
Committee to study issues relating to development of the Fintech space in India
and its use to enhance financial inclusion of MSMEs. This committee will consider
various issues relating to development of Fintech space with a view to make
Fintech related regulations more flexible and to boost entrepreneurship. This is
a welcome move. A substantial step in this direction will also push some key efforts
of the government, including affordable housing, e-services
delivery and digital payments.
I invite your opinions.