Global FinTech Fest 2023 and Digital Finance innovations

Global Fintech Fest 2023, the biggest thought leadership event for FinTech, just concluded last week. And while we saw a huge flurry of events at GFF 2023, and a great number of FinTech product launches, the ones by NPCI probably received the most attention. So, this edition of the FinTech Chroniclers, delves into these products, who they are for, and who is it going to benefit us??

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September 5th , 6th and 7th were exhilarating to say the least, for those of? us in Fintech. It was one platform, hosting policymakers, regulators, bankers, industry leaders, academicians, and fintech specialists from around the world met for three days.

Let's take sneak peak into all that happened in those three days, shall we?

Largest thought leadership platform: Global Fintech Fest 2023

Nirmala Sitharaman, India's Minister of Finance and Corporate Affairs, inaugurated the event. Her opening remarks praised the Global Fintech Fest for being “a very powerful network of experts, both financial and also technological.”

Others who spoke at the conference were Reserve Bank of India Governor Shaktikanta Das and Dr. Bhagwat Kishanrao Karad, Minister of State for Finance, India. SEBI Chair Madhabi Puri Buch, IRDAI Chair Debasish Panda, IFSCA Chair K Rajaraman, and State Bank of India Chairman Dinesh Kumar Khara.

GFF 2023 was globally noteworthy. Maha Prasad Adhikari, Governor, Nepal Rastra Bank; Soraya M Hakuziyaremye, Vice-Chairperson and Deputy Governor, National Bank of Rwanda; Aleksi Grym, Head of Fintech, Bank of Finland; Eduardo Enrique Torres Llosa Villacorta, General Manager, Central Bank of Peru; Khaled Al Basias, Director Financial Sector Development, Saudi Central Bank; Doris Dietze, German Federal Ministry of Finance Division Head.

Global Fintech Landscape

Globally, Fintech has been on a rise for the last 5 years. In fact, Fintech probably crossed all estimates that were made for the industry by 2020!

I am yet to go through the 102 reports which were released during the event, but I will share what experts were touting as the market size of Fintech.?

In 2022, the worldwide fintech market was worth about US$194.1 billion. Between 2023 and 2028, the market is expected to expand at a CAGR of 16.8 percent, eventually reaching a value of $492.81 billion. The increasing use of fintech by the younger generation and the advent of different supportive government initiatives are driving the market. The growth of the e-commerce sector, the spread of the coronavirus pandemic, and the resulting need for remote financial management have all contributed to the expansion of this market.

The key areas of fintech are banking, payments, trading, taxation, and insurance, among others.

And India happens to be the crowning jewel on global fintech, with over 14% of global capital flowing into it, making the second most funded, after China. And we have to thank our regualtors and policy makers for the same. So let's hear from them.

Finance Minister's speech

In her keynote, Union Finance Minister Nirmala Sitharaman encouraged banking institutions to take action to lower the astounding amount of unclaimed money. She stressed that consumers nominate heirs to handle this issue.

"I want the banking system, financial ecosystem, mutual funds, and stock markets to consider the future while handling people' finances. Customers should list their heirs' names and addresses "FM said. Over Rs 35,000 crore in unclaimed deposits in the banking system alone contribute to an overall unclaimed money problem of over Rs 1 lakh crore. Sitharaman underlined the significance of a responsible financial ecosystem, warning that even one entity's neglect might cause a trust gap and financial crisis. Last month, the RBI launched the UDGAM (Unclaimed Deposits - Gateway to Access information) central web tool to help recover these funds.

[Sorry, couldn't get any pictures]

RBI governor asks for FinTech self regulatory body

RBI Governor Shaktikanta Das launched this facility to make searching for and claiming unclaimed deposits across banks easier for the public. The UDGAM portal provides information on unclaimed deposits from seven banks: State Bank of India (SBI), Punjab National Bank, Central Bank of India, Dhanlaxmi Bank, South Indian Bank, DBS Bank India, and Citibank for non-individual accounts.

In his speech, he said, "Innovation is the bedrock of the fintech industry."?

He emphasised the importance of customer-centricity, governance, and self-regulation for the long-term health and viability of the fintech ecosystem.

The governor utilised the GFF as a platform to advocate for and encourage fintech firms to organise their own SRO- Self Regulatory Organisation, in addition to providing the Reserve Bank of India's support. And hopes to see one set up, as early as the GFF 2024!

"It (SRO) will make it easier for fintechs to make their needs known to regulators. The Reserve Bank also benefits because it is relieved of responsibility for all aspects of regulation."

Deputy Governor of RBI

The need for self-regulation in the fintech industry was also brought up by T Rabi Sankar, the deputy governor of the Reserve Bank of India, on Tuesday. It appears that the central bank has reversed its previous stance on the necessity of regulating fintech firms.

In the past year, the RBI has taken a hard stance against several parts of the fintech industry that relied on illegal means of growth. The RBI has voiced worry over data privacy, aggressive data collection practises, and going above and above in terms of building products.

Rabi Sankar added , "They (fintech companies) need to evolve industry best practises, privacy and data protection norms in sync with the laws of the land, set standards to avoid mis-selling, promote ethical business practises, transparency of pricing, etc,"

Both the governor and his deputy, reinforced that this isn't a barrier to growth, arguing instead that the regulator must occasionally step in to safeguard customers and guarantee consumer centricity in governance.

Fintech Product Launches and other GFF 2023 stats

Global Fintech Festival 2023, which was held at Jio Convention Center, Mumbai, included exhibitions through isle A-W, investment presentations, master classes, product launches, award ceremonies and workshops in addition to debates. The organisers reported 900 speakers from 30+ countries, regulatory dignitaries from 100+ countries, 300+ exhibitors, 300+ investors, 100+ product launches, 80+ whitepapers, 22 thought leadership reports, 3 hackathons (SEBI, NABARD, and SBI), and 65,000 delegates from 100+ countries.?

The Ministry of Electronics and Information Technology (MietY), Department of Economic Affairs (DEA), Ministry of Finance, Reserve Bank of India (RBI), and International Financial Services Centres Authority (IFSCA) supported the grand event, which was organised by Payment Council of India (PCI), Fintech Convergence Council (FCC), and National Payments Corporation of India(NPCI).

There were at least a 100 product launches during the three day event, and I honestly couldn't catch all of them. So I thought I'd just cover the major ones by NPCI.

An overview of Product launches by NPCI

Brief History of NPCI

The Reserve Bank of India (RBI) and Indian Banks' Association (IBA) established the National Payments Corporation of India (NPCI) under the Payment and Settlement Systems Act, 2007, to build a strong payment and settlement infrastructure in India.

NPCI was incorporated as a "Not for Profit" Company under Section 25 of the Companies Act 1956 (now Section 8 of the Companies Act 2013) to provide infrastructure to the Indian banking system for physical and electronic payment and settlement systems due to its utility. The Company innovates retail payment methods using technology to improve efficiency and expand reach.

State Bank of India, Punjab National Bank, Canara Bank, Bank of Baroda, Union Bank, Bank of India, ICICI Bank Limited, HDFC Bank Limited, Citibank N. A., and HSBC are the primary promoters. To incorporate more banks from all industries, the stake was expanded to 56 in 2016.?

And since then, UPI , or Unified Payment Interface, the flagship product of NPCI, has crossed 10 billion transactions in August 2023!

?But there is no stopping NPCI, with over 6 product launches.

UPI Lite X

UPI Lite X was launched by? Shaktikanta Das. The system will allow merchants and customers to transfer payments even when offline.

So how does UPI lite X work?

UPI light X requires close proximity between sender and receiver devices. UPI lite X transfers money between sender and receiver on-device wallets using NFC. The only catch? Payments are made between on-device wallets, not bank accounts.

UPI tap to pay

UPI Tap & Pay, which uses NFC technology to facilitate payments, was released alongside Lite X by NPCI.

New varieties of competing point-of-sale (PoS) devices from Pine Labs and Paytm, which enable retailers to accept NFC-based merchants, were released earlier this week, further expanding acceptance of the use case.

UPI ATM

This new product was in association with Hitachi Payments.

What is UPI ATM? Withdraw cash without using a card at the UPI-ATM, which is a white-label ATM. Participants can get cash from their bank without using a debit card or ATM. Financial institutions do not own and operate white label ATMs.

How Does It Function?

Following the customer's selection of the ATM's 'UPI cash withdrawal' option, the machine will request them to enter the desired withdrawal amount. After this, the ATM screen will show a unique dynamic QR code.

Customers can use any UPI app to scan the QR code and authorise the purchase with a PIN entered into the mobile app. Following verification, the ATM will release the funds.

Exactly what benefits does UPI-ATM offer?

It's a cardless payment system that can be used with other systems.

The maximum amount that can be withdrawn at one time is Rs 10,000. Included in the daily UPI limit and subject to the issuer bank's limit for UPI-ATM transactions.

With the UPI app, you can withdraw money from several accounts without carrying numerous cards.

What sets the UPI-ATM apart from contactless card-based cash withdrawals?

The UPI-ATM is as convenient as the card-free ATM withdrawals offered by some financial institutions.

According to Sumil Vikamsey, managing director of cash business at Hitachi Payment Services, a subsidiary of Hitachi, cardless cash withdrawals are based on mobile and OTP, while the UPI-ATM is based on QR codes for cash withdrawals.

The NPCI has stated that the deployment of the UPI-ATM will be a major step forward in banking services since it will incorporate the safety and ease of use of UPI into conventional ATMs.

Credit line on UPI

Then there was the announcement that UPI now would also enable payments through pre-sanctioned credit lines given by banks. The Reserve Bank recommended adding pre-sanctioned bank credit line transfers to the Unified Payments Interface on April 6, 2023.

The conditions of credit lines would be determined by banks in accordance with policies established by their boards of directors. Credit limits, grace periods, interest rates, etc., may all be part of the stipulations.

This can lower prices and help create unique Indian products.

Conversational Payments : Bharat Billpay Connect & Hello UPI!

In an ambitious move to bring the power of AI to UPI was the next launch of Conversational payments.?

NTT DATA Payment Services India's Chief Financial Officer (CFO) Rahul Jain said this during the launch that "Conversational Payments" would revolutionise the way people make purchases. He imagines a revolutionary system in which artificial intelligence (AI), perhaps in the form of chatbots, promotes real-time dialogues between users and payment providers, resulting in rapid and secure transactions.

While right now the languages supported are Hindi and English, the aim is that every Indian should just be able to use Voice on their IOT (internet of things) devices and initiate payments.?

Imagine, talking to your smart phone in your kitchen, asking it to book a new gas cylinder?

Or using Alexa, to pay your electricity bill.?

The AI is smart enough to be able to identify and respond to the voices of everyone in your house. So, is it really safe?

Well, you will still need to input the PIN of your UPI account in order for the trasnaction to go through, so that security measure is still in place.

CBDC UPI QR interoperability

And how can I even forget about CBDC. In fact, a friend even made a funny comment on it (more on RBI's take on crypto currency in upcoming edition)

But, you could experience CBDC right from when you entered the venue. There were options every where, below the QR, to "Experience CBDC". Which was the other product, CBDC interoperatbility with UPI QRs.

State Bank of India, Bank of Baroda, Kotak Mahindra Bank, Yes Bank, Axis Bank, HDFC Bank, and IDFC First Bank are just few of the financial institutions that have implemented UPI interoperability on our digital currency platform.

Because UPI QR and CBDC QR are now compatible with one another, customers and businesses can conduct transactions without having to move between different payment rails.

A customer using digital rupees will be able to pay by simply scanning UPI QR codes at participating retailers. Even shop owners can take digital rupee payments without having to carry a separate QR code on hand.

And all the food stalls had this enabled already at GFF 2023.

Fintech Startup product launches?

But the regulators were not the only ones who had interesting things to launch on top of our digital public infrastructures.

Thomas Cook & NPCI launch Rupay Forex Card

Thomas Cook (India), a provider of travel and foreign exchange services, introduced a RuPay prepaid forex card for Indians visiting the United Arab Emirates.

Thomas Cook (India) Managing Director and Chief Executive Officer Mahesh Iyer said, "This unique Made in India initiative will go live with UAE as the pilot destination, followed by a phase wise global rollout."

Thomas Cook travel vouchers worth Rs 13,900, access to lounges at India's international airports, free ATM withdrawals, free replacement if lost, free insurance, and more are just some of the perks that will be available with the Thomas Cook RuPay card.

Apart from the regulators, the rewards partner for this card is Cards91.

As normal travel demand resumes, this could be a step forward for Indian consumers to experience world-class amenities while traveling to other countries..

Razorpay and NPCI launch UPI QR for subscription

Full-stack payments and business banking platform Razorpay released UPI Autopay on QR? to reduce the complexities of growing and running subscription-based businesses, an industry first. Razorpay SVP and Head of Payments Product Khilan Haria stated that ‘Razorpay UPI Autopay on QR’ was a natural next step.

Razorpay UPI Autopay on QR will be crucial to their expansion in metropolitan and Tier 1 locations, where subscription-based firms like OTT platforms and insurance providers have already established themselves. This will simplify payments for these businesses and their consumers to help them reach more people, increase sales, and improve the customer journey.?

And that is all for this, rather long, edition. I still feel giddy like I Just got off the rollercoaster. And yet I know there is so much more to cover. So until next week then!