With digital payments constantly growing, financial service providers need to collaborate with fintech developers to build “resilient front-ends” to safeguard consumer interest in view of rising cyber frauds, a top finance ministry official said on Monday.
Speaking at a Ficci event on ‘FinTech’, K Rajaraman, Additional Secretary in the Finance Ministry, said an area that “needs to be highlighted is cyber security and fraud prevention. Now that there is an explosion in the use of digital platforms. A lot of the activities of fintech have been focused on how to provide resilient front-ends for the financial services providers”.
Financial service providers must not hesitate to actually collaborate with fintech (financial technology) innovators for beefing up cyber security and fraud prevention, he said.
Citing an example of a recent cyber attack on New Zealand’s stock market, he said, cyber security should get continuous attention from all stakeholders.
Last month, New Zealand’s Stock Exchange Market (NZX) suffered an apparent overseas cyber attack forcing the government to activate the country’s National Security System.
The challenge needs to be handled by “not just one set of stakeholders, but a wide variety of stakeholders, and I believe that the fintech innovators have a critical role in this regard”, he said.
Rajaraman also said that the pending KYC (Know Your Customer) issue is being sorted out with the RBI and the Department of Revenue.
“…the last mile issues in KYC need to be sorted out by the regulators, especially on cKYC (central KYC), video KYC, eKYC. We have been intensively interacting with the RBI and the Department of Revenue to enable these issues to be sorted out quickly,” he said.
The applications of fintech are not only about digital payments but also feature a lot of other initiatives such as wealth technology, for instance, he noted.
“For example, he said, the investments by Indians in the savings and financial markets have been slowly rising, but a lot more work has to be done in ensuring that the ordinary citizen is able to invest effortlessly in the capital markets. This is a challenge that lies before us,” he said.
Observing that Insuretech presents a great opportunity in terms of enabling penetration in the insurance sector, he said pension space is another big area for fintech developers.
Life insurance penetration is about 2.76 per cent, non-life insurance at 0.93 per cent, compared to the global average of about 6.5 per cent, he said.
Speaking on the occasion, State Bank of India (SBI) chairman Rajnish Kumar said many countries are working and are in advanced stages of moving to the open banking system, and India has also taken many steps in that direction.
All the banks are looking for partnership with fintech firms in several areas, he said.
With regard to challenges, Kumar said that up to certain scale solutions are good but when volume increases there are some issues.
“It’s not a problem which is insurmountable and with some understanding with some support of the legacy partner, this issue can also be resolved,” he said.