FinTech is a combination of the terms ‘finance’ and ‘technology’ and refers to any business that uses technology to enhance or automate financial services and processes. The term encompasses a rapidly growing industry that serves the interests of both consumers and businesses in multiple ways. From mobile banking and insurance to cryptocurrency and investment apps, FinTech has a seemingly endless array of applications.
FinTech is broadly used to describe emerging technological innovations in the financial services sector, with ever increasing reliance on information technology. The Financial Stability Board (FSB) defines FinTech as “technology-enabled innovation in financial services that could result in new business models, applications, processes or products with an associated material effect on the provision of financial services”.
The FinTech industry is huge and will continue to expand for years and will rapidly grow over the years. Though the industry conjures up images of startups and industry-changing technology, traditional companies and banks are also constantly adopting FinTech services for their own purposes and now RBI feels to create the separate Department to focus on this industry.
RBI Creates the FinTech Department
RBI creates an internal separate FinTech Department with the view to give further focus to the area and facilitate innovation in FinTech sector in keeping pace with the dynamically changing financial landscape, the FinTech Department will be headed by Mr. A. K. Choudhary, executive director of RBI.
This Department will the view to give further focus to the area and facilitate innovation in FinTech sector in keeping pace with the dynamically changing financial landscape, it was decided to set up a FinTech Department in the Banks. And it will also provide a framework for further research on the subject that can aid policy interventions by the Bank. Accordingly, all matters related to the facilitation of constructive innovation and incubations in the FinTech sector, which may have wider implications for the financial sector / markets and falling under the preview of the Bank, will be dealt with by the FinTech Department. Further that all matters related to inter regulatory coordination and international coordination on FinTech shall also be dealt with by the Department.
Firstly, the need of this Department has been discussed in 76th meeting of senior Management Committee of RBI, held on June 19, 2018, The FinTech unit was subsequently transferred to Department of Payment and settlement system, central office (DPSS, CO) in July 2020 and a FinTech division was formed within DPSS, CO. The FinTech unit was setup in the Department of Regulation for acting as a central point of contact in the Bank for all activities related to FinTech. The new Department has been created with the effect from January 04, 2022 by subsuming the FinTech Division of DPSS, CO.
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Highly appreciated. A timely article. With increase d frauds at all sectors RBI needs updating of it’s technology. The current governor is trying to move RBI from lazy, watch and move stance to be highly proactive and face future with confidence.