National Payments Corporation of India (NPCI) recently announced it’s blockchain initiative, which has sparked a lot of debates in the Indian Fintech industry. Several Founders, Co-Founders, CXO Bankers, CXO Fintech professional & people who participated in the ePanel discussions and requested to remain anonymous
NPCI took up this initiative to build a more efficient, real-time, and safer payments experience for people all over India. Many reports say that India would be amongst the global leaders in blockchain technology, and this initiative takes us miles closer to that prediction. However, many Fintech professionals are agitated with NPCI’s announcement on the same. They see the whole initiative in a negative light, with outcomes such as:
- Fintechs engaged in the same functional field will have to ‘shut shop’
- The product will be readied by NPCI
- The Pricing or Revenue Streams will be structured by NPCI
- All & sundry to avail from NPCI – subject to usual restrictions
- NPCI will do the promotions & marketing
The way we see it is that there is an urgent need for NPCI to come up with a statement to clear doubts and reinforce confidence in the Fintech companies working on Blockchain initiatives in Payments which will help collaboration between Start-ups and NPCI. The question is- are they open to startups? Or do they have parameters for experience and operation years like the government? If one or multiple startups can be a technology provider, it is beneficial. Otherwise, it’s just detrimental for the other startups. Many FIAKS community members believed that NPCI should simply function as a regulator and structure compliance rules. It should leave innovation to the Fintech companies. Some even called it the ‘BSNL of the Fintech Industry’.
However, these concerns coming from Fintech companies are incorrect and misguided. The role of institutions like NPCI is to standardize the process & structure it so that startups’ pain points are drastically reduced. For example, Fintech companies being required to develop different file formats individually for Axis Bank, Kotak Bank, ICICI Bank, HDFC Bank … all other participating members in the bank in the clearing. With the standardization of formats (UPI/IMPS), innovation by a start-up in the payment space will be faster & stabler. We owe the success of digital payments in India to NPCI, who made a breakthrough with the development of Unified Payments Interface (UPI), an instant payment system. According to reports, UPI transactions reached Rs 1.33 lakh crore in March 2019 from Rs 3.1 crore in August 2016.
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