The Reserve Bank of India recommends a regulatory sandbox for fintechs while the country’s push towards a cashless society gains traction with a surge to $2 trillion in transaction value. The UAE Central Bank also develops a national strategy to facilitate the push towards cashless.
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The Reserve bank of India (RBI) is recommending a “regulatory sandbox” for fintech and digital banking initiatives. Utilizing the combined forces of the Institute for Development and Research in Banking Technology (IDRBT) and the RBI, this “safe zone” or “innovation hub” offers a more structured launch of new products that is sufficiently monitored to mitigate any risk to the consumer or the stability of the sector, according to Livemint.
PayU Payments India Managing Director Jitendra Gupta explains the initiative via the same article: “Today, as far as small companies are concerned, the access to APIs of banks is a big problem. A regulatory sandbox effectively creates a level playing field even for smaller fintech companies. Lot more innovations will happen because it will be a controlled environment with accessibility to everyone.”
The idea of a regulatory environment is not a new theme in the area of fintech innovation for both India and other countries (previous coverage can be found here and here). And in India specifically, a new data protection law is also being recommended for the fintech sector. Why all the attention on fintechs? Because of all the growth. A recent report, highlighted in the same article, estimates approximately 400 fintech firms currently operating in India with investments projected to increase by 170% in 2020.
The United Arab Emirates (UAE) Central Bank plans to develop a national strategy to support the push towards cashless. The ultimate goal? To facilitate safe, efficient and customer-centric cross-border and domestic payments via a payments system that is both interoperable and well-regulated, according to Gulf News.
Governor of the Central Bank of the UAE Mubarak Rashid Al Mansouri is quoted in the same article explaining the benefits of the recent initiative: “This will result in benefiting from higher quality services at a competitive cost, in addition to reduced transaction fees, greater levels of efficiency, improved collection cycles, and more innovative payment channels.”
Consulting company Frost and Sullivan presents its annual Fintech Outlook. And according to the press release, the fintech market in the Asia-Pacific region is expected to reach $72 billion by 2020. Driving the majority of the growth is the push towards cashless from small and medium sized enterprises – in addition to more accessibility to P2P financing and crowdfunding via blockchain.
According to the same release, 2018 is set to be a marker year for fintechs. Here are some of the highlights:
- More innovations expected in areas of financial investments, advisory services and insurance due to big data analytics, artificial intelligence and blockchain.
- With the mobile payments market in Singapore alone being estimated at $1.4 billion in 2017, global alignment is crucial to the future of mobile.
- Digitalization is the new paradigm for leading banks and financial institutions in Southeast Asia. This widespread adoption of fintech will make the financial services industry more customer-focused than ever.
- Ultimately, the digital customer experience will require more personalization and more proactive engagement.
The Indian government’s push towards a cashless society gains traction, surging to $2 trillion in transaction value. Last month, digital transaction volume reached a record high of 1.11 billion transactions, and the Reserve Bank of India (RBI) reported that the $2 trillion in transaction value this January follows closely behind the record of ~$1.9 trillion in December of last year.
According to Inc42, these numbers include payments made by credit and debit cards, United Payments Interface (UPI), internet banking, prepaid payments instruments (PPIs) and Unstructured Supplementary Service Data (USSD).
The same article also reports that UPI-enabled (inter-bank) transactions are on the rise with an unprecedented 7000% increase over the last 12 months. This payment method, designed by the RBI and the National Payments Corporation of India (NPCI) to help simplify peer-to-peer transactions and facilitate cashless, offers a “one-touch” approach to transferring money between two parties via smartphone on a unique virtual address.