MUMBAI: In a move to enhance security, integrity and privacy of financial sector data and bring transparency on fintechs in the country, the Reserve Bank of India (RBI) is set to establish a cloud facility and a repository for capturing information on fintech firms.
The Indian Financial Technology and Allied Services (IFTAS), a wholly-owned subsidiary of the RBI, will set up and operate the cloud facility.
It will be rolled out in the medium term and eventually be transferred to a separate entity owned by financial sector participants, the regulator said.
“The Reserve Bank is working on establishing a cloud facility for the financial sector in India. The proposed facility will enhance the security, integrity and privacy of financial sector data. It is also expected to facilitate scalability and business continuity,” the regulator said in a statement.
Industry participants have welcomed the move, stating the cloud facility would ensure security of customer data. “RBI’s proposal to establish a cloud facility for the Indian financial sector is a move in the right direction. We’ve seen numerous instances of data breaches and all of us understand the importance of keeping customer data secure. In a world that is becoming increasingly digital, a cloud facility will be a win-win for everyone involved — regulators, companies and customers,” said V Balasubramanian, chief executive officer (CEO), Financial Software and Systems (FSS) Cash Tech.
Similarly, fintech companies expect smoother operations with the cloud facility.
“The proposal to set up a cloud facility for the financial sector is a proof of India’s indigenous tech capabilities. Besides safeguarding the safety, security, and privacy of all financial data, it will also help early-age fintech startups to scale up their operations,” said Anil Sinha, chief technology officer (CTO), Fibe.
Meanwhile, the central bank also said it will set up a repository for recording information about fintech companies by April next year.
This repository will record information about a fintech’s activities, products, technology stack and financial information, among others. This will help design policy approaches, the central bank said.
It will be voluntary for fintechs to provide information to the repository.
“For better understanding of the developments in the fintech ecosystem, with an objective to appropriately support the sector, it is proposed to set up a repository for capturing essential information about fintechs, encompassing their activities, products, technology stack and financial information, among others,” the RBI said in a statement.
Fintech players in the country have cheered the move stating that the system will act as a source of transparent information about such firms. The RBI will release separate guidelines on the repository.
“This becomes much more important, especially in the context of emerging issues like unauthorised lending apps and cyber frauds. The Digital Lenders Association of India (DLAI) and its members will be open and willing to contribute to the repository. We look forward to the detailed guidelines,” said Jatinder Handoo, CEO, DLAI, an industry association for digital lenders.
RBI aims at understanding the developments in the ecosystem, which includes fintechs utilising technologies like distributed ledger technology (DLT) and artificial intelligence/machine learning (AI/ML).
“The RBI also wants to understand the sector better and go deep into the technology and algorithms being used by fintechs. This repository can reduce the gap in understanding of the sector in the eyes of regulators and banks,” said Aditya Damani, founder & CEO, Credit Fair.
Fintech players said that a repository will help the regulator with real-time insights to adopt an agile decision-making process.
“RBI’s proposal to create a fintech repository is a very positive move for the industry. It will further catalyse innovation by fostering transparency and improved collaboration among fintechs, other financial services industry players, and regulators. The approach to encouraging voluntary contributions from fintechs will empower regulators with real-time insights. It will enable informed, agile, and risk-mitigating decision-making,” said Anand Agrawal, co-founder and CPTO, Credgenics.
With inputs from PTI