 "FinTech firms say RBI's competition to build tech innovations will disrupt industry")
The contest, which will be organised by the Institute for Development and Research in Banking Technology (IDRBT), the technology arm of the RBI, will allow for participation of individuals, groups and startups in the space.
"I think it's a very good idea to do that. The central bank and regulator when they show interest in innovation in the FinTech space, it sends the right message that they want innovative solutions in financial services and banking and that's a very good message to send out to companies," Srikanth Nadhamuni, chairman of Novopay, a mobile payment firm that uses Aadhaar for paperless authentication.
India's banking system is undergoing a transformation due to government's focus to bring into fold the unbanked masses using mobile phones and Aadhaar, the unique identification programme for authenticating transactions. Since its launch, banks have enrolled 196 million people with zero balance accounts under the Jan Dhan Yojana. Infosys co-founder and former UIDAI chairman Nandan Nilekani has said that a "WhatsApp moment" is coming in India's banking sector due to the massive use of mobile and policies by the government. RBI has issued new licenses to 10 small banks and 11 payment banks that would use technology to disrupt banking.
While there are certain popular areas of innovation the RBI highlights, it is keeping the competition open to entrepreneurs building financial tech solutions for end-users, banks, payment service providers and other financial sector participants.
"The Reserve Bank acknowledges the role of innovations in developing a payment system which is affordable, interoperable, inclusive and secure," said the regulator in a statement.
Rajeev Yadav, Group CEO of Fincare, a company that recently received its small finance bank license, deems the move as a phenomenal one. "When we see RBI today, through various actions it's taking, through differentiated bank licenses and other things, it's clearly in the frame of helping financial innovation happen, albeit regulated, but with a very clear line of sight," he added.
Startups and others taking part in the contest will not only be rewarded with citations and a small cash prize, but will also be given a chance to pitch their ideas to industry representatives. The entries for the contest will be evaluated by a panel of financial experts.
"There is a lot of innovation opportunities in the financial, banking space at a technology level, at a business model level and I think it's very clear in India that everybody recognises that only technology can help scale these services," said Sanjay Swamy, partner at venture firm AngelPrime.
Nadhamuni of Novopay says that the move would encourage smaller firms to innovate and disrupt the fintech space. "It also encourages small companies to take part in that sector. Often there are large companies and large banks or established companies that innovate, but when they do something like this, it encourages small companies to participate," he said.
