How fintech startups can scale to new heights with compliance
In recent years, fintech has emerged as one of the fastest growing segments in India, with several startups innovating in payments, credit and credit scoring, stock trading, cryptocurrencies, etc.
In fact, the Indian fintech market was valued at Rs 2.3 lakh crore in 2020 and is expected to grow at a CAGR of 24.56 percent to reach Rs 8.35 lakh crore by 2026, according to ResearchAndMarkets data.
With technology innovation, proliferation of smartphones, and the internet powering this growth, the creation and implementation of robust regulatory compliance has become paramount.
At YourStory's TechSparks 2021, six fintech innovators, entrepreneurs, and investors came together to unravel how startups can scale to newer heights with compliance.
Nitya Sharma, Co-founder and CEO, Simpl; Ashish Singhal, Founder and CEO, CoinSwitchKuber; Lizzie Chapman Co-founder and CEO, ZestMoney; Karthik Prabhakar, Partner, Chiratae Ventures; Adhil Shetty, Co-founder and CEO, Bankbazaar.com; and Sanket Deodhar, Vice President - TATA Group & Unicorns Business, SAP India; joined a roundtable discussion on addressing compliance in the fintech space.
Nitya Sharma, Co-founder and CEO,, said, "Compliance in fintech has become increasingly frictionless and low cost. The exciting thing about technology and the Internet is you can go fast, maybe faster than compliance can keep up, but it's important to never be on the wrong side of the law. Further, companies must also interact with regulators frequently and make the best use of the infrastructure available."
Ashish Singhal, Founder and CEO,, added, "In some cases, complying with laws may hurt a business. But it's a judicious call one has to take to be on the right side of regulations, no matter the impact on business. Ensuring user protection and partner confidence are especially key in the world of crypto."
The other panellists echoed Nitya and Ashish's sentiment as they all pitched in favour of active collaboration between fintechs, banks and other incumbents, and regulators.
Compliance as an advantage
For some fintech entrepreneurs, compliance has turned into a competitive advantage. When fintechs can convince customers that their money is safe, it can help differentiate the startup from others in the market and catalyse its growth.
Lizzie Chapman, Co-founder and CEO,, said this was a phenomenon she experienced at
ZestMoney, which offers users a Buy Now, Pay Later approach to making purchases.
"Whenever money is involved, it can get emotional. Banks will always be primary owners of customer deposits, so we took regulatory compliance very seriously and spent a lot of time studying regulatory guidelines from around the world to gain a competitive advantage," she said.
Lizzie and the other panellists also explained how the COVID-19 pandemic accelerated adoption of digital financial products in India.
Adhil Shetty, Co-founder and CEO,, said, "We've learnt from the COVID-19 pandemic that customers now want to access financial products in a completely contactless manner. Thus, video KYC has become a rapidly evolving area of compliance."
According to Adil, regulators have been largely open-minded, with the RBI listening to industry associations on what's needed to enable further financial inclusion in India and innovation in fintech, all while complying with the law of the land.
Undoubtedly, investors tend to prefer looking at startups that look at these two areas, i.e, how they can reach underserved populations in India, and stay on the right side of the law.
For Karthik Prabhakar, Partner, Chiratae Ventures, this approach holds good beyond fintech
"From an investor's perspective, compliance is something we look for in early stage startups. In general, compliance is important irrespective of sector. However, it should not become an overbearing aspect," he said.
"Apart from the standard parameters, we also look at how a startup is tapping into the untouched segment of the population and how it is building a product that an incumbent can't build easily," he added.
Besides startups, investors, and regulators, a key element of innovation in fintech is the set of infrastructure providers, such as SAP India, that provide tech stacks to help businesses run in a compliant manner.
Sanket Deodhar, Vice President - TATA Group & Unicorns Business, SAP India, explained:
"SAP is a tech partner for many unicorns, and we provide tech stacks to enable businesses to adhere to the law of the land. We've enabled transitions from tech and policy standpoints, such as data localisation, to make help businesses run in a compliant manner when they choose SAP."
He added, "Going forward, we see innovation continuing in payments, and rising focus in face recognition and voice-based commerce, and we're a big part in enabling companies make the transition towards these new areas."
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