Fintech's time and tide for turning

A self-regulatory framework will reshape how the sector does business but it must find people who will helm the system

- RAGHU MOHAN

A fortnight after the Reserve Bank of India (RBI) made public its Framework for self-regulatory organisation(s) for fintechs (SRO-FTs)', the first signs of change in the way the sector looks at itself are upon us.

The Fintech Association for Consumer Empowerment (FACE) an SRO-FT aspirant - "is considering its mandate to expand its membership to fintech beyond the credit ecosystem... so that fintechs, regardless of their business and scale, will have parity to contribute to the industry's objectives and receive distinct value for their unique needs," says Sugandh Saxena, its chief executive officer (CEO). This is in keeping with what has been spelt out in the framework: To make SRO-FT(s) truly representative and "ensure refined decision-making and prevent the organisation from being swayed by the interests of a dominant few", or lobby groups acting as Trojans in SROs.

Mint Road matters

What's also sinking in is fortunes here on will hinge on how SROFT(s) imagine their relationship with Mint Road, and the business moves on from its long-held peeve that the regulator acts unilaterally. For "it will have extensive implications as to how investors view the sector," says Uttam Nayak, former senior vice-president, Visa Inc. Rishi Agrawal, co-founder and CEO of Teamlease Regtech, agrees and says: "The maturity levels expected of fintech will go up now. The days of funds flowing into them generously are anyway over and how they respond to the regulatory initiative will have a huge bearing on it." Unlike legacy financial services and regulated entities (RES), fintechs have had a relatively easy ride until recently: Playing off business models based on arbitrage backed by venture capital and private equity (PE) firms (betting on the valuation game); and a largely indulgent media. Nayak also lets it slip that "fintechs will have to move away from being personality dependent to process, planning and business case driven".