Regulating the financial sector – a challenge for the sector, but must for consumer confidence

Banks, NBFCs, asset management companies and insurance providers have, for long, dominated the narrative when it comes to the financial sector in India. However, as the BSE Sensitive Index, or Sensex, touched the magical 50000-point mark, there was one sector that suddenly found itself in the limelight. The Indian Broking Industry.

Discussing its health and future at the ET India Inc Boardroom, panelists were clear the future will belong to, and be led by, technology and innovations. Nithin Kamath, the founder and CEO of India’s largest brokerage Zerodha said, “One cannot build a business without technology.” Other panelists agreed, with Samriddhi Chowdhary, Vice President & Co-Head, Financial Sector Ratings, ICRA, adding the focus on technology will only go up as brokers focus on offering better services to clients.

Other panelists included Vijay Chandok, MD and CEO of ICICI Securities, and Shrini Viswanath, Co-Founder and CTO, Upstox.

ET India Inc Boardroom brought together industry leaders, policy makers and economists to discuss and deliberate key sectors of the economy. Over the five-day conclave, experts uncovered trends and challenges in the BFSI, Retail, Manufacturing and MSMEs sectors, as well as the economy as a whole.

The speakers deliberated on the need for India to have a strong advisory ecosystem going forward, how their role as brokers would evolve in the future and consolidation in the broking industry.

Not shying away from the tough questions, the panel also deliberated on whether there is over regulation in the country. All panelists unanimously said that while new overregulation can stifle innovation, regulation did bring some challenges but worked out in the medium term. Most importantly, they said, strong regulation helped with customer confidence.

If the brokers stressed on regulation for consumer confidence, those in the payments space said being accessible and being present everywhere was their mantra for gaining the consumer’s vote.

Sajith Sivanandan, MD & Business Head – Google Pay & Next Billion User Initiative, Google India and T.R. Ramachandran, Group Country Manager – India & South Asia, VISA, said digital payments have to be seamless to be able to substitute cash, and here, just as in broking, technology played a huge role.

While new-age businesses have a strong role to play in the economy, the role of traditional entities cannot be ignored, and if the future of the financial sector is in discussion, one cannot leave out the role that Public Sector Banks play in boosting the economy, especially Atmanirbhar Bharat.

Stalwarts from the baking industry – CH S.S. Mallikarjuna Rao MD & CEO, Punjab National Bank, K Ramachandran, Executive Director, Indian Bank, and Sanjiv Chadha MD & CEO, Bank of Baroda – spoke on lending to corporates, the role data analytics can play in enhancing the banks’ loan books, how small enterprises will be the growth drivers going forward and co-lending with NBFCs.

All three panellists emphasised the need for banks to invest in digital technology to bring down costs, and drive better delivery. “The structure of the economy is changing, and we must have the capability to deliver. We need to get used to digital technology and use analytics to ensure delivery is seamless,” said Sanjiv.

There is another aspect of the economy that everyone took for granted but is turning their attention to. The humble POS machine, and now SoftPOS. There are about 5 million POS machines in India, and to take this number to 50 million is what industry experts are talking about.

In a chat with Neelesh Gupta, Incharge RuPay PoS Acceptance, NPCI, Panelists Mohit Bedi, Senior Vice President, Axis Bank, Sanjeev Kumar, CTO, Pine Labs, Tata Venkat Venugopal, General Manager, Union Bank of India and Vishal Maru, SVP, Worldline Global spoke about the various initiatives that will need to be taken to get to the 50 million number.

Cost of POS terminals and connectivity are the challenges for their adoption, but SoftPOS can overcome some of it as it offers easier adaptability and the same device can offer other features as well, said Mohit. To this, Sanjeev added SoftPOS needs to have various attestation levels as the device used is a smartphone, and there is a lot more coding required to make the device more secure. “The burden on software has been increased, but that’s a good thing for security,” he said.

Upgrades for SoftPOS are easier, and do not involve either high capex, or investment on a device, said Vishal.

If digital payments are the way forward, the panelists said, then SoftPOS with its many advantages is the way to make it happen.

Watch all sessions of Day 5 (Banking & Finance) of ET India Inc Boardroom






[Source – Economic Times]

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