Fintech landscape in 2024: How regulatory reinforcement drives innovation and inclusivity – ET Government

Blog 4 min read Fintech landscape in 2024: How regulatory reinforcement drives innovation and inclusivity India has been a pioneer in adopting customer-centric initiatives, like the implementation of Aadhaar-based eKYC & DigiLocker, which has made onboarding processes a lot simpler, frictionless and secure. On the other hand, the UPI has revolutionised digital payments, the volume of which stands today at Rs. 13,462 crore, driving fintech solutions across the country. Emerging as an economic powerhouse, India has much to credit its upward ascent to an increasingly supportive regulatory framework. Breaking away from traditional shackles, the country’s financial landscape is now being sculpted by an enabling regulatory environment. Embracing a consumer-centric ethos, there is now a far greater focus on enhancing transparency, flexibility and efficiency for the end consumer. Visionary strategies and a relentless commitment to progress by authorities like the RBI, IRDAI and SEBI among others are a guiding force for India’s thriving fintech ecosystem at this stage. India has been a pioneer in adopting customer-centric initiatives, like the implementation of Aadhaar-based eKYC & DigiLocker, which has made onboarding processes a lot simpler, frictionless and secure. On the other hand, the UPI has revolutionised digital payments, the volume of which stands today at Rs. 13,462 crore, driving fintech solutions across the country. Additionally, the endeavour of providing financial services to the previously underserved areas through small finance banks and payment banks is a significant step towards financial inclusion. As regulatory reforms continue to be less binding and more facilitating while firmly protecting consumer interest, they instill a profound trust in India’s fintech, banking, and financial services at a global scale. Here’s reimagining India’s 2024 fintech landscape with regulatory reinforcement: MSMEs (Micro, Small, and Medium Enterprises) and SMEs (Small and Medium Enterprises) have been rightfully recognised as the future of the economy, and so, India’s concerted efforts to improve the ease of doing business have greatly benefitted them. The processes have been made more streamlined with reduced bureaucratic barriers and an enabling digital infrastructure. Regulatory initiatives such as the introduction of GST have further simplified taxation procedures, bringing in both compliance and transparency for the MSMEs and SMEs. More digital marketplaces have emerged providing businesses with better accessibility to a range of customers across geographies and broader supply chains. The regulatory backing for fintech innovations has also facilitated financial support to MSMEs and SMEs. With initiatives like the Pradhan Mantri Mudra Yojana and other schemes promoting digital lending, these enterprises can secure funding quickly and efficiently, overcoming traditional barriers posed by stringent lending criteria. The Digital India campaign has also spurred the adoption of cutting-edge technologies among MSMEs and SMEs, enhancing operational efficiency as well as wider market reach. Overall, the synergy between regulatory reforms, digital innovation, and the ease of doing business in India has created a conducive environment for MSMEs and SMEs to thrive, thus making India’s global footing stronger. India hosts a diverse demographic and geographic cohort and so, financial inclusion is a pivotal step in unifying the country’s potential. The transformation transcends to all crucial pillars including insurance, banking and credit space. The Insurance Regulatory and Development Authority of India (IRDAI) has embraced technology-driven customer-centric solutions facilitating the digitisation of processes such as policy issuance, claims settlement, and customer service. With a principal-based approach, the compliance burden is set to ease for the sector, which will translate to streamlined operations, product innovation, and enhanced customer experience. This has paved the way for a more financially inclusive India. At the recent World Government Summits 2024 in the UAE, the Prime Minister also emphasised the country’s steadfast commitment to ensuring social and financial inclusion in the country. This included providing bank accounts to over 50 crore people lacking access to financial services and extensively promoting digital payments to ensure seamless and secure transactions. It’s because of regulatory enablement that initiatives like the Open Credit Enablement Network (OCEN) & ONDC in India came to life and are now revolutionising access to credit for underserved populations by simplifying and standardising the digital credit infrastructure. Extending the regulatory nod for frameworks like Peer-to-Peer lending, Account Aggregators and flexible credit scoring models have massively empowered individuals and small businesses previously excluded from the digital financial services ecosystem. Meanwhile, to safeguard consumer interest, stricter regulations have also come into play that protect borrowers from fraudulent or predatory financial practices. Amidst the global headwinds, India’s economy continues to attract global investor confidence. Several factors like skilled manpower, ease of business and flexible FDI policy can be attributed to it. The government has also concentrated its efforts to further scale up FDI in India, which will make way for robust investments in digitisation and technological innovation. Also, the renewed focus on infrastructure development, ease of doing business, and initiatives like ‘Make in India’ and ‘Start-Up India’ have enhanced the country’s attractiveness as an international investment destination. India also has an edge over several other countries in terms of having a younger demographic and a human-capital-intensive economy. Coupled with the government’s commitment to economic growth, these factors further reinforce investor confidence in India’s financial sector for long-term growth. By harnessing the potential of digitisation, innovation and human capital, these regulatory reforms are taking India on a trajectory of sustained growth and relevance on the global stage. As regulatory reforms pave the way for innovation and inclusivity, India’s fintech landscape stands poised for unprecedented growth and global recognition.

Embracing a consumer-centric ethos, there is now a far greater focus on enhancing transparency, flexibility and efficiency for the end consumer. Visionary strategies and a relentless commitment to progress by authorities like the RBI, IRDAI and SEBI among others are a guiding force for India’s thriving fintech ecosystem at this stage. India has been a pioneer in adopting customer-centric initiatives, like the implementation of Aadhaar-based eKYC & DigiLocker, which has made onboarding processes a lot simpler, frictionless and secure. On the other hand, the UPI has revolutionised digital payments, the volume of which stands today at Rs. 13,462 crore, driving fintech solutions across the country. Additionally, the endeavour of providing financial services to the previously underserved areas through small finance banks and payment banks is a significant step towards financial inclusion. As regulatory reforms continue to be less binding and more facilitating while firmly protecting consumer interest, they instill a profound trust in India’s fintech, banking, and financial services at a global scale. Here’s reimagining India’s 2024 fintech landscape with regulatory reinforcement: Welcoming the era of innovation and ease of doing business MSMEs (Micro, Small, and Medium Enterprises) and SMEs (Small and Medium Enterprises) have been rightfully recognised as the future of the economy, and so, India’s concerted efforts to improve the ease of doing business have greatly benefitted them. The processes have been made more streamlined with reduced bureaucratic barriers and an enabling digital infrastructure. Regulatory initiatives such as the introduction of GST have further simplified taxation procedures, bringing in both compliance and transparency for the MSMEs and SMEs. More digital marketplaces have emerged providing businesses with better accessibility to a range of customers across geographies and broader supply chains. The regulatory backing for fintech innovations has also facilitated financial support to MSMEs and SMEs. With initiatives like the Pradhan Mantri Mudra Yojana and other schemes promoting digital lending, these enterprises can secure funding quickly and efficiently, overcoming traditional barriers posed by stringent lending criteria. The Digital India campaign has also spurred the adoption of cutting-edge technologies among MSMEs and SMEs, enhancing operational efficiency as well as wider market reach. Overall, the synergy between regulatory reforms, digital innovation, and the ease of doing business in India has created a conducive environment for MSMEs and SMEs to thrive, thus making India’s global footing stronger. Democratising and accelerating financial inclusion for the masses India hosts a diverse demographic and geographic cohort and so, financial inclusion is a pivotal step in unifying the country’s potential. The transformation transcends to all crucial pillars including insurance, banking and credit space. The Insurance Regulatory and Development Authority of India (IRDAI) has embraced technology-driven customer-centric solutions facilitating the digitisation of processes such as policy issuance, claims settlement, and customer service. With a principal-based approach, the compliance burden is set to ease for the sector, which will translate to streamlined operations, product innovation, and enhanced customer experience. This has paved the way for a more financially inclusive India. At the recent World Government Summits 2024 in the UAE, the Prime Minister also emphasised the country’s steadfast commitment to ensuring social and financial inclusion in the country. This included providing bank accounts to over 50 crore people lacking access to financial services and extensively promoting digital payments to ensure seamless and secure transactions. It’s because of regulatory enablement that initiatives like the Open Credit Enablement Network (OCEN) & ONDC in India came to life and are now revolutionising access to credit for underserved populations by simplifying and standardising the digital credit infrastructure. Extending the regulatory nod for frameworks like Peer-to-Peer lending, Account Aggregators and flexible credit scoring models have massively empowered individuals and small businesses previously excluded from the digital financial services ecosystem. Meanwhile, to safeguard consumer interest, stricter regulations have also come into play that protect borrowers from fraudulent or predatory financial practices. Drawing global investor confidence in a well-regulated environment Amidst the global headwinds, India’s economy continues to attract global investor confidence. Several factors like skilled manpower, ease of business and flexible FDI policy can be attributed to it. The government has also concentrated its efforts to further scale up FDI in India, which will make way for robust investments in digitisation and technological innovation. Also, the renewed focus on infrastructure development, ease of doing business, and initiatives like ‘Make in India’ and ‘Start-Up India’ have enhanced the country’s attractiveness as an international investment destination. India also has an edge over several other countries in terms of having a younger demographic and a human-capital-intensive economy. Coupled with the government’s commitment to economic growth, these factors further reinforce investor confidence in India’s financial sector for long-term growth. By harnessing the potential of digitisation, innovation and human capital, these regulatory reforms are taking India on a trajectory of sustained growth and relevance on the global stage. As regulatory reforms pave the way for innovation and inclusivity, India’s fintech landscape stands poised for unprecedented growth and global recognition. (The author is Chairman and CEO, PB Fintech; Views are personal)