MC Exclusive | Fintech data, compliance-readiness high on FACE agenda as self-regulatory body

Speaking to Moneycontrol exclusively in her first interaction after FACE received the SRO license, Saxena said that the need for information will improve trust in FinTechs and enable relationships between regulated entities and FinTechs, leading to the industry's growth.

The Fintech Association for Consumer Empowerment (FACE), the self-regulatory organisation or the SRO for the fintech space, plans to bring in more data and compliance measures, Sugandh Saxena, the chief executive of FACE, said.

Speaking to Moneycontrol exclusively in her first interaction after FACE received the SRO licence, Saxena said that the need for information will improve trust in fintechs and enable relationships between regulated entities and fintechs, driving growth for the industry.

Excerpts from the interaction:

As you've become the first SRO for the fintech space, what are the top items on the FACE agenda?

As the SRO-FT, we would look at expanding the membership base. Other than numbers, we are also looking at expanding the base on the domain that they operate and also scale-based and stage-based. So, the idea is to cover the full spectrum of fintechs which are there and so, one is the onboarding part of it and also how do we integrate them into the ecosystem, right, as in phase ecosystem. We would be drawing a lot of experience and expertise from our existing members and also build our team's capacities and hire more people to do that. And part of this process is the infrastructure and the tech infrastructure.

We would also be focusing on financial sustainability of the organisation and would be looking at different revenues streams, membership drives and so on. The framework set by the regulator is quite clear in terms of what are the expectations, development, information about the sector, ensuring compliance culture is there and so on. So, then we would start executing around those things.

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How will the management of FACE look like now? Are we going to see some changes at the top?

In our structure, the Board is the key decision-making authority, with one-third independent directors setting, guiding and overseeing the agenda as per the charter of association and SRO-FT framework. An independent team is responsible for execution and day-to-day management. As the membership expands, there will be multiple avenues to be involved with FACE initiatives through committees, working groups and task forces.

The fintech space in the recent past has been under severe regulatory actions and measures. How will FACE work to bridge the gap between the regulator and the players?

Fintechs and regulated entities share a symbiotic relationship in digital financial services. Compliant and reliable solutions by fintechs are critical to trust between the two. We closely follow the regulatory developments and signals and ensure that members are aligned. Our focus would be to understand the regulatory expectations, communicate them clearly to our members and provide them support so that fintech products, processes, solutions and offerings are compliant-ready.

If we specifically look at the banking sector and the fintech industry, both have been developing together at a very fast pace in the last few years. How would FACE look at managing all the aspects here?

We will look at bridging the gap in terms of information and compliance expectations so that both parties engage with each other more effectively. Noncompliance by either is detrimental and brings huge reputational and business risks. Furthermore, the FinTech industry is young and dynamic, and transparency is critical to developing trust in the regulated entities and more stakeholders, including regulators.

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As the SRO, what are some key things that you would look at on the regulation side?

The fintech universe is large and expanding daily as new entrants keep coming. We will have a very special focus on engaging with newer and smaller companies so they can benefit from SRO work for compliance and knowledge while they focus on products and partnerships.

Additionally, we will conduct concerted interventions around customer education and risks. This is important to ensure that customers have agency and make the right choices.

Also, are there some demands from the fintech entities that they would want to make to the regulator through FACE?

Given our interactions with the members, compliance is the central theme for the industry, and the community wants to stay on top of it.

The industry regularly engages with the regulator to present evolving market and customer dynamics and risks. Recognition of SRO-FT will provide a more trustworthy and effective conduit to those conversations.