NPCI: Fintechs must prepare for more compliance

NPCI: Fintechs must prepare for more compliance

MUMBAI: The chief of the National Payments Corporation of India (NPCI) has said that fintechs would need to keep aside money and management bandwidth for regulatory compliance and these requirements will keep coming up as they become part of the mainstream.

“Please reserve reasonable money that you are raising for compliance aspect. The regulator always takes a long-term view on policy. When you are already into such a mainstream, the compliance requirements will be there,” said Dilip Asbe, MD & CEO of NPCI, in a fireside chat with Amrish Rau, CEO of Pine Labs, at an Internet & Mobile Association of India (IAMAI) event.

Incidentally, the RBI last week had written to some fintechs, asking them to give details of the algorithms that they use in their business. The query comes days after the central bank set up an independent fintech department. This was created by carving out the earlier fintech unit from the department of payments & settlements.

Asbe said that the NPCI was working towards the goal of a billion transactions a day and this required a high level of customer education and awareness and a robust law enforcement agency. In addition to this, it needed what he described as the three zeros — zero-touch, zero time, and zero cost to the consumer. “From a customer standpoint, the transaction should be instant and free. If these three come together, a billion a day is possible and should be achieved in three to five years,” said Asbe.

Responding to a query from Rau on what can be done so that fintechs, which are driving digital transactions in the country, get a voice in policymaking, Asbe said that it is only the banks that are bearing the high cost of compliance. “Fintechs will start appreciating the life of a banker with compliance requirements,” he said.

Explaining the need for compliance, he said that innovation has to come with responsibilities as, without trust in the system, customers will move back to cash. “The payment ecosystem has become so complex, it has 10-12 participants involved in completing a transaction in five seconds. The efforts by the regulator in terms of tokenisation and data storage are necessary,” said Asbe.