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India, the world economy’s ‘new beacon of hope,’ is witnessing a significant shift in the banking and financial sector and consumer investment patterns, driven by emerging technologies and the adoption of new digital payment methods. “The financial landscape in India is undergoing a structural transformation, driven by factors like innovations in technology, financial deepening, and changing savings and investment patterns. Each of these shifts has a bearing on how financial entities carry out their business and adapt to the emerging risks,” Shaktikanta Das, Governor of the Reserve Bank of India (RBI), said in an event in July. “New and emerging technologies have reshaped the financial services industry by bringing in innovative solutions and personalised products. The demand-side factors such as rising customer expectations for digital services and the supply-side factors relating to regulatory support and emergence of fintechs have converged to deliver a frictionless customer experience,” Das pointed out. The RBI has also been actively fostering innovation by envisaging mechanisms like the United Payment Interface (UPI), regulatory sandbox, and co-lending models, among others. With the synergies provided by mobile phone penetration, internet availability, reoriented payment systems, and the multitude of customer data points, lending institutions, as well as financial markets, have been able to leverage upon such mechanisms to amplify their reach to the target segments and also carry forward the agenda of a more inclusive financial sector. “Overall, there has been a transformation in the banking and financial landscape in the last decade driven by technological innovations, changing consumer preferences and emergence of alternative business models,” Das stated. “While these have fostered competition and collaboration, they also have implications for consumer trust and regulatory oversight. Such structural changes also create opportunities as well as challenges. Financial institutions like banks, NBFCs and others need to carefully assess the impact of…

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Filed under: News - @ July 31, 2024 2:22 pm