Banks Voice Concern Over Data Flow To India’s FinTech Firms

India FinTech banking data

Data is everywhere, and amid headlines trumpeting collaboration between FinTech and traditional FIs, there are indeed some possible stumbling blocks about who has access to what when it comes to consumers.

To that end, reported the Economic Times, a number of the U.K.’s High Street banks have been banding together to oppose FinTech efforts in India to collect customer data.

The publication reported that a conference call that included roughly eight private lenders sought to “draw the Reserve Bank of India’s attention” to the risks tied to customer data flow that would accrue to tech-driven upstarts. The banks include Axis, Citi, Standard Chartered, Yes Bank, RBL and IndusInd, and per reports, the banks have stated that FinTech access to that data might hurt data security efforts.

As one unnamed source told the ET, FinTechs are able to gather more info than are the banks. “Information obtained by a bank from a credit bureau is typically customer-specific. But FinTech companies receive information on customers spread across banks — their names, credit history, card numbers, cell numbers, PAN, address etc. They can trade on this information to move customers from one bank to another. Also, as of today, there are no security guidelines for data storage by FinTechs,” the source told the publication. Such issues have already been informally discussed with the RBI by at least one bank, said the site.

This is not to say that traditional FIs are truly trepidatious about linking up with FinTechs. The site Ozy notes that Nutmeg and Revolut are in the midst of taking at least some of their strategy beyond U.K. borders and bringing their respective online wealth management and money transfer services to Asia. Nutmeg is working with its largest shareholder, the financial services firm Convoy, based in Hong Kong, to expand into Asia.  Nutmeg CEO Martin Stead told Ozy that “Asian markets have a large and growing population that is currently under-served and over-charged by the traditional players, and where there is no established wealth tech player either. This year we have formed partnerships and developed our technology in readiness for launch into our first Asian markets next year.”

Elsewhere in Asia, South Korea, has seen the minting of its fourth unicorn startup as Viva Republica, which operates the payment app Toss, has raised $80 million, sparking a $1.2 billion valuation. The funding, which comes from a consortium of investors led by Kleiner Perkins and Ribbit Capital, with participation by PayPal and Qualcomm, Goodwater Capital and Bessemer Venture Partners.

TechCrunch has reported that Toss users can access and manage a variety of credit and investment products that also include products from banks. The company has said it has more than 10 million registered users, which shakes out to about one-fifth of the country’s population. The annualized transaction run rate stands at about $18 billion, the company has said. TechCrunch has noted that FinTech efforts such as Viva Republica seek to match banks and consumers, with an eye for Viva Republica to evolve from peer-to-peer service to banking gateway.

A bit closer to home, Cross River, based in the states (New Jersey, to be exact) said it raised $100 million, through a number of investors and chiefly through KKR, which contributed $75 million in return for an equity stake. The company last raised $28 million in 2016, and seeks to give FinTechs access to banking solutions tied to a single platform. Cross River Bank has in the past announced collaborations with Affirm and TransferWise, among others.


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