NOTICE: As the entire financial services industry is changing rapidly, financial regulators should be equally nimble.


Banking is one of the oldest and trust-based business activities that has existed over the centuries. India has had its form of a bank for many centuries, as our scriptures testify. Insurance as a sector was mentioned in the writings of Manu (
Manusmrithi), Yajnavalkya (
Dharmasastra) and Kautilya (
Arthasastra). The writings describe the pooling of resources that could be redistributed in the event of calamities such as fires, floods, epidemics and famine. Ancient Indian history has also preserved the concept of insurance in the form of maritime commercial loans and carrier contracts. The Indian financial sector has resisted socio-economic changes, ideological battles, political upheavals. Fortunately, the need for a more secure and prudential aspect of financing remains strong.

India now

Over the past 3 decades, we have seen various forms of technology adoption in the Indian financial sector. Currently, India’s population includes Millennials and Gen Z consumers and whether they are in urban, semi-urban or rural centers, their daily lives revolve around their smartphones and devices. Like the whole financial services”>financial services industry (including banks, non-bank financial corporations (NBFCs), digital lenders, insurance, asset and wealth management, pension funds, fintechs) are rapidly changing with new offerings to serve this clientele, just as agile and more proactive, should be the financial regulators.

What could be the year to come?

  1. Financial regulators are reportedly pushing for a stronger balance sheet for the entities they oversee. This could mean increased regulatory oversight of weaker entities, an increase in stress test scorecards, extensive merger and acquisition (M&A) activity, and the need for financial players to raise additional capital.
  2. Consumer protection is crucial. But the ability to balance this principle with the speed of digital innovation will require a much faster adoption, by financial regulators, of their own digital capabilities and tools. Additionally, in cases where consumer greed is the issue, blaming industry players could be avoided.
  3. Financial regulators will provide ideas to make product communication simple. This can reduce the heartburn that comes with financiers showing off their complicated jargon and obscure, repetitive paperwork.
  4. Any financial regulator using a unified data format (say to a standard like XBRL) can enable faster and preemptive understanding of systemic issues. If they can trust that the data has not Compromised with, in the transition from transactional to reporting, they can focus on the data itself, for faster decisions.
  5. Regulators have always had to get used to more recent waves of technological change and refine their regulations in line with market mechanisms. Some of our financial regulators are well ahead in understanding digital finance compared to their peers. Hopefully the rest will catch up with the learning curve soon as well.
  6. Our financial services regime is licensing. By reassessing each of these licenses for utility, impact, and consumer needs, it may bury some of the legacy baggage we carry meaningless.
  7. Lateral hiring of private sector talent in regulatory policy making, policy operations and regulatory oversight space could be a new addition to bring additional knowledge and increased engagement in the market.
  8. Regulators will become tougher on breaches. After all, financial business is built on consumer confidence.
  9. Security aspects related to cybersecurity and digital will gain prominence in the regulatory agenda.
  10. The increase in sandbox models, especially around cashless transactions and digital finance, will accelerate the need to shape regulatory narratives.
  11. Get ready for TechFin as global giants deepen their grip on technology, consumer engagement in payments, lending, banking and insurance.
  12. Prepare regulations for Web 3.0. This would force financial regulators to establish a framework on what this could mean for “the future of finance”.
  13. With India’s economic growth and the importance of being a large consumer market and investment destination, our regulators will have a say in the global financial scene. In this regard, we hope to see a protectionist effect for national actors.
  14. For investors and financial entities alike, environmental, social and governance (ESG) issues are gaining more attention. Financial regulators will bring detailed scrutiny to this space, as India moves towards its own net zero goals in line with the United Nations Sustainable Development Goals (SDGs).

The author is a CEO coach and business advisor.


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