India’s fintech sector, while one that is growing phenomenally, is also heavily compliance-driven. Despite the regulations in the sector, it has remained one of the fastest growing sectors in the country, and is expected to grow at a CAGR of 24.56 percent to reach Rs 8.35 lakh crore by 2026, according to ResearchAndMarkets data.
To understand how startups and enterprises in the sector can scale with compliance, TechSparks 2021 saw a discussion on ‘Fintech Forward- Scaling To Newer Heights With Compliance’, powered by SAP, featuring Nitya Sharma, Co-founder and CEO, Simpl; Ashish Singhal, Founder and CEO, CoinSwitch Kuber; Lizzie Chapman Co-founder and CEO, ZestMoney; Karthik Prabhakar, Partner, Chiratae Ventures; Adhil Shetty, Co-founder and CEO, Bankbazaar.com; and Sanket Deodhar, Vice President – TATA Group & Unicorns Business, SAP India on the panel.
One has to be on the right side of regulations
As per Karthik Prabhakar, Partner, Chiratae Ventures, compliance is important, irrespective of any sector. But it is also important to look at it from a stage of a business. When it comes to startups, compliance can be overbearing. Many times compliance gets overused and hurts the innovation aspect.
Echoing similar sentiments, Ashish Singhal of CoinSwitch Kuber said, “In some cases, complying with laws may hurt a business. But it’s a judicious call one has to take to be on the right side of regulations, no matter the impact on business. Ensuring user protection and partner confidence are especially key in the world of crypto.”
Regulators have become open-minded
Compliance has become more important especially during the pandemic, felt BankBazaar’s Adhil Shetty. He noted that customers want all service without contact. They don’t want to visit a bank branch or have representatives come to their house. So through it all, video KYC has emerged as a rapidly evolving compliance area. “Regulators in India have been fairly open-minded, the RBI has listened to industry associations in order to know what we need to enable financial inclusion,” he said.
The regulators have built phenomenal infrastructure, added Simpl’s Nitya Sharma. This infrastructure has allowed compliance to be low-cost and frictionless, he said.
Compliance can be turned into a competitive advantage
Lizzie Chapman of ZestMoney said that wherever money is involved, it can get a little emotional. “Banks will always be primary owners of customer deposits, so we took regulatory compliance very seriously and spent a lot of time studying regulatory guidelines from around the world to gain a competitive advantage,” she said.
Tier II and III are emerging as strong markets
Ashish said that most of their users today are not coming from metro cities. 55 percent of CoinSwitch Kuber’s users are emerging from smaller cities, he explained. “Being digital-first helped us penetrate all across India,” he said.
Lizzie added that ZestMoney’s biggest differentiating factor is the way they use technology. She explained that their technology didn’t just make the user experience better, but also helped deepen the application in places where physical products could not reach before. “This doesn’t just mean Tier II and Tier III cities where we are seeing huge traction, but it also means going into segments of the population that were previously considered unappealing by banks,” she said.
Innovation to continue in payments
SAP’s Sanket says that in the coming years, he sees innovation continuing in payments, and rising focus in face recognition and voice-based commerce. “We’re a big part in enabling companies to make the transition towards these new areas,” he said.
To watch the entire discussion, click here – Techsparks – Navigate The New. The video has been recorded and it is available to view on-demand.
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