Noting that fintech has transformed the architecture of the financial sector by providing innovative solutions “I would urge fintechs to work hand in hand with banks, rather than creating a solution themselves and then going to the banks… because banks, especially public sector banks, are dealing with very important and larger problems,” he said.
It would be more appropriate for the bank to suggest the problem and then a solution to be provided by the fintech ecosystem, he said.
“Since you (fintechs) are not working hand in hand with banks, a lot of information about what kind of challenges the banking system is facing may be limited…so that is where we should be working. Many banks have started recruiting startups. So the idea is to tell them the problems and then ask them for a solution that would be very interesting,” he said.
While the potential of fintech is immense, Joshi said the growing use of technology comes with challenges.
“Digital growth “Fintech has posed some unique challenges such as governance issues, regulatory and statutory compliance, consumer protection and fair practices. It is essential to strike a balance between fintech innovation and rapid regulatory response,” he said. It is also equally important to ensure that innovation does not outpace necessary safeguards, he said, adding: cybersecurity, data privacyidentity theft, digital finances fraud Financial education and skill training are other areas that need attention. Commenting on the budget announcement, Joshi said banks should develop new models to provide loans to MSMEs.
Rather than depending on balance sheets or returns generated by MSMEs, he said, the new model will depend on the digital footprints created by MSMEs, especially micro and nano ones.
“I think fintechs can play a role in helping banks improve their digital lending capabilities,” he said.
Given the large and growing market size, he said, there are huge opportunities for the fintech sector, owing to the growing contribution of the MSME sector to exports.
With the growing internet user base in India and the conducive regulatory and policy environment, there is huge potential for all entrepreneurial ventures, including fintechs, he said.
Joshi added that emerging technologies hold immense potential for the sector to improve the quality of services, enhance security measures and increase the efficiency of the entire sector.
Speaking at the event, Indian Banks’ Association (IBA) CEO Sunil Mehta said fintech has revolutionised the sector. payment space and now it is time for the industry to transform the lending space.