The importance of SRO in the financial technology sector
The importance of SRO in the financial technology sector
By Rajesh Londhe, Co-founder and Head of Payments, PhiCommerce
In the last five years, the Fintech sector in India has grown exponentially. This has been possible due to the advancements in technology and growing consumer preference. In this vast payment landscape, there is a need for a robust regulatory framework to ensure ethical practices are being followed in the industry. The establishment of the Financial Technology Self-Regulatory Organization (SRO) comes at a crucial stage when multiple fintech platforms are sprawling up across the country.
The SRO is an industry-recognized concept aimed at providing transparency, data privacy, governance, ethical use of technology as well as periodic reviews and updates. With consumer privacy and protection at the core, the SRO will foster fair competition and innovation amongst the multiple fintech companies in India. This will ensure healthy competition and build trust among the consumers.
Pioneered by the RBI, the SRO will be a link between fintech companies and the regulatory body to facilitate compliance with the existing laws and regulations for the fintech sector. The framework of grievance redressal and consumer protection aims to enhance the consumer’s trust in the fintech ecosystem. The industry, which is expected to reach $70 billion in annual revenue by FY30, according to Elevation Capital and McKinsey India required a regulation to
facilitate trust and growth. With over 9,000 fintechs in India, the country is the third-highest number of fintechs globally with a 14% share of Indian start-up funding. Hence the move by RBI to introduce the SRO will mitigate risks associated with the mis-selling of products and unethical conduct by companies, wanting to scale rapidly. As a payment aggregator ourselves, at PhiCommerce, we welcome this move as the SRO will represent the collective voice of the industry and assist in fostering relationships with the government, regulatory body and fintech companies. Together, with compliance in place, transparency, accountability, and ethical conduct will form the base of a sustainable fintech ecosystem.