Shah was speaking at The Economic Times CEO Roundtable in Mumbai, as part of a panel that included top industry leaders such as Tata Sons chairman N Chandrasekaran, Kotak Mahindra Bank founder Uday Kotak, Arundhati Bhattacharya, CEO, Salesforce India, Prabha Narasimhan, CEO of Colgate-Palmolive India, Rishad Premji, chairman of Wipro, Romal Shetty, CEO, Deloitte South Asia, Lakshmi Venu, joint MD of Sundaram Clayton, and Nithin Kamath, cofounder and CEO of Zerodha.
“When we try to regulate something that can fundamentally evolve so fast, it’s always going to be a challenge…but the good news is that there is innovation happening at a fast pace. We have a regulator that is innovating much faster than most fintechs are innovating. I think we are in an interesting market where it seems that everybody is looking to outcompete and innovate,” said Shah.
Shah’s comments come at a time when the Reserve Bank of India (RBI) has been upping the ante in regulating fintechs in the country.
Last year, the central bank went on to release formal guidelines for the digital lending industry, further regulating the sector.
It also spelled out limits around default loss guarantee (FLDG), by June this year, providing necessary clarity to fintechs.
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The regulator is working on guidelines to also regulate web aggregators of loan products, as it looks to bring all players in the regulatory ambit. Over the past few years, the central bank has also been at work to give in-principle licences to payment aggregators, as it looks to govern various aspects of the financial technology industry.
Shah also added that from a regulatory perspective, companies that operate with multiple regulators are bound to have challenges.
“From a regulatory perspective, companies that operate with multiple regulators have a challenge because regulators seem to be operating from the department they have but internet companies operate from a perspective of what users prefer to do,” Shah said.
He added that for “internet companies revenue and profit pools seem to follow wherever users seem to be spending their time” with lines of which industry they operate in, getting blurry.
“In the digital world, the lines get very blurred, and it’s a function of who is in what business … When it comes to internet companies, revenue and profit pools seem to follow wherever users seem to be spending their time, and whatever labels we give them like fintech, ecommerce, short videos…now with AI coming in, lines are getting very blurry.,” Shah said.
Before founding Cred in 2018, Shah had also cofounded digital payments company Freecharge, which was then sold to Snapdeal in 2015.
Shah-led Cred also has evolved from being a platform for paying credit card bills into offering – unified payments interface (UPI) payments, commerce through Store, and credit, among other offerings.
“Even as a fintech founder, we all feel we are two years behind on innovation, and I think it’s changing quickly. But to predict which company will be in what business will be very hard when it comes to tech unless we create strong regulatory reasons to keep them in those boundaries but that will stop innovation,” Shah added.
