Financial technology startups in India are welcoming a contest to find financial technology solutions announced by the Reserve Bank of India (RBI), according to Business Standard, an Indian newspaper. The purpose of the competition is to develop technologies that reduce transaction costs, prevent financial fraud and develop India’s e-commerce infrastructure.

The bank’s Institute for Development and Research in Banking Technology (DRBT), which is organizing the contest, invites groups, individuals and startups to participate.

The contest will reward participants with a small cash prize and citations. It will also provide a chance to present ideas to industry representatives. A panel of financial experts will evaluate the entries.

RBI Sends The Right Message

Srikanth Nadhamuni, chairman of a mobile payment firm called Novopay that uses paperless authentication, welcomed the contest, noting it sends the proper message from the central bank and regulator. The event shows they are interested in fintech innovation and that they want financial services solutions.

The government’s focus on bringing the unbanked into the nation’s banking system using mobile phones and Aadhaar, an identification program for authenticating transactions, is transforming the country’s banking system. Banks have signed up 196 million people with no balance accounts under the Jan Dhan Yojana, a national mission for financial inclusion.

A ‘WhatsApp Moment’ Arrives

Nandan Nilekani, former UIDAI (Unique Identfication Authority of India) chairman and Infosys co-founder, said a “WhatsApp moment” us under way in the banking sector on account of government policies and the extensive use of mobile. The central bank has issued new licenses to 11 payment banks and 10 small banks to use technology.

RBI is keeping the competition open to entrepreneurs that develop fintech solutions for banks, payment service providers, end users and other financial sector participants. RBI acknowledged in a statement the role innovations play in creating a payment system that is inclusive, secure, interoperable and affordable.

Fincare, a company that recently received a small bank license, applauds the RBI’s  initiative, according to Rajeev Yadav, group CEO. RBI is taking actions by differentiated bank licenses and other measures, he said, which indicate it is helping financial innovation with a clear line of sight.

Also read: Indian Reserve Bank Governor: Bitcoin is fascinating

Fintech Opportunity Abounds

Sanjay Swarny, a partner in AngelPrime, a venture firm, said there is a lot of innovation opportunity in the financial and banking space at a business model level and a technology level. He said it is clear that everyone in India recognizes that only technology can help scale these services.

The move will encourage smaller firms to disrupt the fintech space, said Nadhamuni of Novopay. He said the move encourages small companies to participate in the fintech space. In many cases, large companies and big banks innovate, but an event such as this contest encourages the participation of small firms.

Featured image from Shutterstock.

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