‘Regulators must keep pace with tech disruption’

Regulators including the Reserve Bank of India (RBI) must keep pace with the technological disruption that is taking place, Amitabh Kant, CEO, NITI Aayog, has said.

Technology will always be ahead of regulation, Kant said at a fintech event organised by the Internet and Mobile Association of India (IAMAI) here on Thursday.

“The challenge is the sharing economy is upon us and the challenge is different regulators including RBI must keep pace with the disruption that is taking place. Because this is going to give dynamism and vibrancy to the economy,” he said.

Kant further said that innovation must come from the private sector.

“The fintech revolution must come from the private sector. We (in government) have done our bit on innovation by bringing out BHIM and BHIM Aadhaar. The private sector must become the biggest disruptors in India and the government must provide the back end infrastructure,” he said. The real challenge for the government is not in brining out the innovation, but ensuring that connectivity spreads across India (across panchayats), he said, adding:

“The challenge is to ensure that we can take rural India into financial inclusion, there are digital payments taking place and ensure that there is credit history for those in rural areas.” This year the government is trying to make the internet reach 150,000 panchayats. Another 150,000 are expected to be reached next year.

Asserting that India is riding a major wave of technological revolution, Kant said that three years from now all Indians with smartphones will be a “walking ATM”. “We will be using our mobiles to do cash in or cash out for those who don’t have a mobile,” he said.

The technological revolution is so swift and significant that five to six years from now “one would see the death of physical banks”, he noted. It will be difficult for physical banks to survive because the cost of a physical bank will be high compared to an online one.

India is home to 900 fintech players that have received $3 billion in lending. This is forcing Indian banks to transform themselves, riding the fintech wave, he observed.

Kant also said that the monthly digital payments volumes have grown enormously, from $15 million in November 2016 to $359 million in March 2017, marking a 24X increase.

“We are in the midst of a major technological revolution in India. Most of this is driven by young people. Fintech will be the key driver of India’s growth,” he said.

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