the bank for international settlements ( bis ) and several central banks have also set up such hubs to stay ahead of the curve in technology absorption. 19. while doing all these, we need to be watchful of the risks associated with certain technological innovations. that being said, while we are working on introducing a digital version of the fiat currency, the reserve bank is also assessing the financial stability implications of introducing such a central bank digital currency ( cbdc ). as the underlying technology is still developing, we are exploring ways for a clear, safe and legally certain settlement finality, which is most crucial for a secure and efficient payment system. it also needs to be appreciated that there are not many practical instances of operationalisation of cbdc across the world ; this calls for utmost precaution so that we can produce a safe and robust model. 20. enhancing cyber resilience is another important aspect when it comes to digital innovations. as we are expanding our operating hours and allowing for increased access and increased interoperability, there are persisting threats of cyber - attacks to our systems. experience shows that even the most efficient and protected systems can get compromised which could expose stakeholders to disproportionate risks. the reserve bank is constantly creating awareness of such incidents and encouraging banks and non - banks to establish and maintain capabilities to avert such attacks. one must also know how to ring - fence such attacks when they occur and swiftly repair and restore the systems to normalcy. cyber crisis proofing of systems by undertaking periodic tests as well as drills is essential. 4 / 5 bis central bankers'speeches 21. with increased digitisation and development of fintech, the traditional ways of credit evaluation are expected to be replaced by new - age credit evaluation methods that focus on a slew of non - financial and reliable transactional data. many fintech firms have already adopted such an approach but it is expected that in times to come, this may become more mainstream than remaining a niche. this will further facilitate the cause of financial inclusion. at the same time, however, it throws up a host of new challenges in terms of concerns of data privacy, consent, and security. ethical behaviour of stakeholders in the payments value chain is important to surmount these concerns. ability of financial sector entities to respond to these challenges may become a key factor in the determination of their competitive advantage. concluding observations 22. in the dynamic world of financial services, and more so after the pandemic, fintech is

expected to challenge the financial sector with innovations and its exponential growth. harnessing fintech for customer services will effectively control costs and expand the banking and non - banking businesses. the increased use of digital payments brought about by covid - 19 could fuel a rise in digital lending in the current decade as companies accumulate consumer data and enhance credit analytics. this in turn presents new and complex trade - offs between financial stability, competition and data protection ; thereby, warranting new regulatory frameworks and novel ways of monitoring. it is imperative for the financial sector regulators to monitor global developments and formulate policy responses to the risks and the opportunities. 23. going forward, banks need to address the financing needs of new sunrise sectors without undermining the traditional sectors of the economy. this conclave gives us an opportunity to look back on what has been accomplished and deliberate on what still needs to be done. i wish to reiterate that we at the reserve bank are fully committed to use all our policy tools to secure a robust recovery of the economy from the debilitating effects of the pandemic. the reserve bank remains devoted to build an enabling environment to develop the financial sector and create necessary preconditions for growth while preserving financial stability. 1 central repository of information on large credits 2 www. researchandmarkets. com / reports / 5024695 / fintech - market - in - india - 2020 5 / 5 bis central bankers'speeches