NEW DELHI :
The party was just getting started for India’s fintech firms, and the central bank has taken the bowl away.
Fintech firms betting on co-branded credit cards fear that latest Reserve Bank of India (RBI) rules on credit card issuance will cut off their access to customer transaction data. The rules limit the role of a co-branding partner entity to marketing and customer acquisition.
“The USP of fintechs was getting that data, analyzing it, and customizing solutions for customers. While enforcing this (stopping data access) is another challenge, if you stop that data flow, this is going to hit fintechs badly,” said Shilpa Mankar Ahluwalia, partner, Shardul Amarchand Mangaldas.
“Currently, the technology on which most of these cards run are of these partners and not banks. The value proposition is that you want to be faster, flexible, be disruptive, and bring innovation. But if you are depending on the banking system, then how can you bring innovation? This is too harsh on fintechs,” said a payments industry veteran on condition of anonymity, adding this will ensure continued dependency on banks.
A senior banker said on condition of anonymity RBI may lean on banks to ensure that the data rules are followed. “The level of questions by RBI to banks is highly detailed now.”
Two fintech executives said the policy will also spell trouble for API…
