NPCI's Dilip Asbe bats for responsible innovation from fintechs; UPI yet to reach tipping point, he says

India's fintech ecosystem is perched on the cusp of extraordinary growth—10x in payments, 1,000x in insurance, 10,000x in credit—over the next five years. These are real estimates from the National Payments Corporation of India (NPCI), the umbrella organisation running retail payments in the country.

At the centre of this fintech boom is UPI, which hit a record Rs 18.4 lakh crore worth of transactions in January this year. But it is still far from reaching its "actual tipping point", and will see "well-rounded growth" on both the merchant and consumer side, reckons NPCI CEO Dilip Asbe.

In conversation with YourStory Founder and CEO Shradha Sharma at TechSparks Mumbai 2024, Asbe urged Indian fintechs to "build tirelessly for the next 5-10 years".

"India is a 1.4-billion population country. Then there are 30 million people travelling abroad every year. Fintechs will need to think how to service this market. There's solid scope to build," he stated.

NPCI, along with the RBI and India's foreign missions, is working towards growing cross-border payments using our homegrown digital payment infrastructure. The goal is to make payments easier for Indians travelling abroad as well as to connect the diaspora by enabling account-to-account transfers on a real-time basis, Asbe revealed.

"The government is looking at building UPI in other countries too, using the digital payment highways India has built. Our PM has said that the public good of India can be the public good of the world. NPCI and NPCI International are trying to execute this vision," he said.

India not an '80:20 market'

UPI, meanwhile, already reaches 300 million consumers and has the potential to grow 2-3x, according to Asbe. "It will happen 15 years down the line, but can we do it in 5 years? We need solid capital for that. A large amount of investments need to be made for the network effects," he explained.

India's biggest opportunity, however, lies in the fact that it is not an "80-20 market", which means 20% of the population does not account for 80% of the volume and value of digital payments. "We don't see the 80-20 rule in UPI data. India is a much more diverse and well-spread out market," Asbe asserted.

While UPI continues to enjoy a spectacular run across demographics, with even newer products like UPI Lite and Credit on UPI growing steadily, there have been a few bumps in the larger fintech ecosystem lately, as the banking regulator ramps up its scrutiny on certain players.

The question founders are asking is: Will regulatory action from RBI hamper fintech innovation and squeeze the supply of capital into the space?

Asbe believes "responsible innovation" is the way to go for fintechs, and also acknowledges that it is "innovation that has gotten India to where it is today".

Underscoring the need for collaboration and co-operation between the regulator and fintechs, he said, "Today there is a regulatory sandbox as well as a fintech division of RBI. There is a channel which has opened up for innovation, and there are many ways to move into that. There are many niche areas [in fintech] to build on. It is important to not try to do everything."

In the wake of RBI's recent crackdown on Paytm that has taken the financial services industry by storm, Asbe shared, "Every founder goes through ups and downs. But every founder has immense grit and deals with challenges appropriately, and then comes back to life. I'm sure the same thing will happen with Vijay [Shekhar Sharma] as well."

He also added, "Fintechs look at NPCI as their own entity. And there is an innovation culture that has existed in NPCI since Day Zero."