In 2017, the Reserve Bank of India (RBI) closely watched the fintech industry and came out with guidelines for e-wallet companies and peer-to-peer (P2P) lending platforms. This looks like it is just the beginning of regulatory tightening for fintech industry. Here is a look at what you can expect this year.
Earlier, there was a clear distinction among fintech companies such as a payment companies, lending platforms and loan aggregators. In 2017 that changed completely. Blame it on lower margins for payment transactions, a stronger government payment mechanism or increased focus on providing credit and financial instruments to under-penetrated segment; but the fintech companies are now turning into financial supermarkets, which calls for more regulation. “The industry will continue to expand horizontally and become a financial supermarket. This also means that real value creation will happen. As the place gets crowded, it won’t be surprising to see Sebi (Securities and Exchange Board of India) interfere and get more cautious about the proliferation of newer avenues for financial instruments," said Srikanth Meenakshi, founder and director of FundsIndia.com.
This will be true for small credit, unsecured lending, mutual funds and insurance space as well on the fintech platform. “You will see fintech companies using data that they were able to collect through mutual funds, insurance or payments to cross-sell other products. Regulations will come in for data and there will be discussions on privacy in the coming year. However, if it comes too early, it will kill innovation," said Naveen Kukreja, co-founder and chief ececutive officer, Paisabazaar.com
In 2018, e-wallet companies will have to follow stringent Know Your Customer (KYC) guidelines, while P2P companies will now be termed as non-banking finance companies (NBFCs). P2P companies, which have seen regulatory tightening, are likely to make their presence felt in the mainstream lending space. “In 2018, P2P will be known as an asset class for retail customers who will be able to lend," said Vinay Mathews, founder and chief operating officer, Faircent.com. According to Mathews, more companies have applied for P2P licences. Many e-wallet companies have shifted their focus from payments to lending and selling other financial products.
As a consumer, you will have multiple platforms to access financial products such as mutual funds, insurance, unsecured loans and payments. But remember that your financial behaviour—including payment transactions—will also be watched closely, which can impact your future finances.