play the role of someone who encourages development of this sector. one way of looking at fintech innovation is in terms of three variables – time, access and data. many innovations, in essence, enable saving time, that is, transactions to be done with speed, e. g., fast payment systems. the second element of innovation is about access, that is they take services to people who are not exposed to financial services, promoting inclusion in both senses – equity as well as formalisation of economic activity. the third element of innovation is data – using available data to create new processes and generating further data that 1 / 3 bis - central bankers'speeches can incentivise further innovation – think of cash - flow based lending, or using tax data for credit assessment. increased penetration of internet, processing speed and data availability has given a huge boost to financial innovation in the last decade or so. these three elements are driving innovation in the fintech space. while these innovations are paradigmatic changes, financial products remain exactly what they are. there are still deposits, there is still credit or lending, and there are still investments, personal investments, personal finances, and so forth. these financial products have been in existence for a very long time. what has changed is the delivery of these products – channels of delivery, speed of delivery and price of these products. we often hear that these changes are disruptive. when we talk of disruption, we are not talking of new products but basically talking of disruption of existing institutions and processes. conceptually therefore, a fintech entity providing characteristic banking services like loans or payments is pretty much doing a banking activity – it just looks different. such entities may not require a banking license but they need to be regulated similar to how such activities are regulated for a bank. financial services are among the most regulated industries, if not the most regulated. for good reasons as well – they are key to growth and development, they involve the use of public money and they are the conduit through which financial integrity is enforced. fintech firms should therefore be subject to similar regulatory oversight. regulation might lag in responding to the speed and complexity of changing processes. eventually, however, regulatory gaps will get filled and uniformity in regulation will be ensured. fintech firms would therefore be more stable as a long term business proposition if business strategies include regulatory compliance as a basic requirement. innovation should not be about exploiting regulatory arbitrage. the usual complaint one hears, for example

t rabi sankar : reserve bank of india and fintech - the road ahead keynote address by mr t rabi sankar, deputy governor of the reserve bank of india, at the moneycontrol india startup conclave, bengaluru, 7 july 2023. * * * good morning to all i am delighted to be present here at the india start - up conclave. all of you represent the best of the indian entrepreneurial spirit and it is my privilege to be addressing this gathering. india is one of the fastest growing large economies today, our population is young and adequately skilled, the policy environment is supportive of private enterprise, our capital markets are capable of funding good business ideas, the india stack - the envy of the world - all these factors have allowed many start - ups to bloom thereby creating a robust indian start - up ecosystem. fintech entities comprise a large part of this start - up ecosystem. the emergence of fintechs fintechs are transforming financial services across sectors, including credit, payment systems, wealth management, investment advice, insurance, financial inclusion, and even financial sector supervision. the covid - 19 pandemic has given a strong boost to digitisation - the fusion of technology and finance played a crucial role by facilitating smooth loan disbursals, robust 24x7 payment systems, uninterrupted access to financial services, and direct benefit transfers. new and innovative technologies brought by fintechs are helping in driving down cost, refocussing products and services and improving customer reach and experience. the ongoing developments, innovations, and emergence of new technologies will significantly shape the trends in the financial world of tomorrow. as a principal regulator of the financial system and with a mandate for ensuring financial stability, the rbi is closely watching the fast evolving world of fintechs. in fact, to provide necessary support to the nascent sector, more than a year ago, we had set up a fintech department to give dedicated focus to this sector and to foster innovation. i will take the opportunity today to share with you, how, we in the reserve bank, view the changes in the financial services space, caused by absorption of new and innovative technologies and the resulting issues like regulatory level playing field, consumer protection, innovation, and central bank digital currencies ( cbdcs ). regulation and fintech we believe that the fintech sector will play a crucial role in achieving objectives of greater financial inclusion, cost and time efficiency and so we