/dq/media/media_files/2025/01/14/el3HtXr6sI5XbABFtezI.png)
The Indian fintech industry is a hotbed of innovation, propelling millions into the fold of formal credit and revolutionising the way financial services are delivered. Yet, this meteoric rise comes with its share of turbulence.
Fintech companies today find themselves walking a precarious tightrope — striving to achieve explosive growth while navigating an intricate and evolving regulatory landscape. In this delicate dance, the Reserve Bank of India (RBI) has emerged as an incredible choreographer, ensuring the rhythm of innovation doesn’t falter but also doesn’t spiral into chaos. Its interventions have been swift, strategic, and often disruptive.
Consider the November 2023 decision to increase the risk weightage on unsecured lending from 100% to 125%. What seemed like an incremental adjustment sent ripples across the ecosystem. The results prove it: the growth in unsecured personal loans halved, dipping from 30% (June 2022 – 2023) to 16% (June 2023 – 2024).
This is only one of the many RBI interventions to promote sustainable financial practices. CKYC is one such initiative that became operational in July 2016 to bring the KYC processes of all financial players under a single window. Account Aggregator is another initiative that ensures that customer consent is at the front and centre of financial data sharing.
The central bank’s oversight, clearly, extends beyond credit risks to a broader regulatory framework that addresses diverse aspects of the financial ecosystem.
Operational risks: The next frontier
If credit risk was yesterday’s battle, operational risks are tomorrow’s. The rapid digitalisation of financial services—while groundbreaking—introduces vulnerabilities that could have a cascading effect throughout the system. Failures in governance & compliance, technology integration, or algorithmic biases could pose as much systemic risk as traditional financial crises.
The RBI is acutely aware of this emerging threat. Hence the frequent revisions of master directions, particularly in risk management — from mandating early warning systems & red flagging of accounts to promoting transparency-first technology frameworks. For financial institutions, this means embedding resilience into their DNA, not as an afterthought but as a foundational principle.
For fintechs like ours, this evolving landscape is both a challenge and an opportunity — though we see it primarily as an opportunity. We are designing solutions that go beyond meeting regulatory expectations to also empower businesses to thrive.
Modern rules engines should empower risk teams to design dynamic journeys (for e.g. shorter, faster loan application journeys for premium customers), integrate diverse, extensive alternative data sources for underwriting, and adopt forward-thinking practices like risk-based pricing.
Imagine a system that doesn’t just excel at fraud detection, identity decisioning (including employee verification), and underwriting but also transforms into an advanced early warning system for delinquency monitoring and AML compliance.
Now, picture this: an early warning system, traditionally designed for risk mitigation, evolving into a dual-purpose growth engine. While it continues to generate alerts for delinquency monitoring and AML compliance, it can also be set to trigger alerts for targeted upselling/cross- selling. By seamlessly integrating these actionable insights with CRMs, it empowers teams to both mitigate risk and tap into opportunities, proactively.
The result? Lending processes that are agile, personalised, and inherently aligned with the principles of responsible growth.
After all, it’s not just about staying compliant—it’s about staying ahead. Every feature we build reflects a commitment to the dual mandate of growth and resilience. By aligning our technology with the RBI’s evolving regulatory vision, we’re ensuring that fintechs don’t just survive this era of scrutiny but emerge stronger, more innovative, and more reliable.
By Rajat Deshpande, CEO & Co-Founder of FinBox