The Indian FinTech landscape has seen exponential growth over the years, with the number of FinTech startups in India crossing 3,000 as of April 2023. The industry has been supported by a favourable regulatory environment, a large customer base with high digital adoption rates, and increased investments in the sector.
India has also been an active player in the global FinTech space, collaborating with other countries to promote innovation and growth. In 2018, India and Singapore signed an MoU to collaborate on FinTech innovation, including exploring potential joint projects in areas such as digital payments, blockchain technology, and big data.
The latest MoU signed between the Reserve Bank of India (RBI) and the Central Bank of the United Arab Emirates (CBUAE) on 15th March 2023, aims to promote collaboration in emerging areas of FinTech, particularly in the field of central bank digital currencies (CBDCs). The central banks will explore interoperability between their respective CBDCs and conduct joint experimentation, including proof-of-concept (PoC) and pilot(s) of a bilateral CBDC bridge. This bridge is expected to reduce transaction costs and increase efficiency in cross-border transactions of remittances and trade between India and the United Arab Emirates (UAE).
The collaboration between RBI and CBUAE also includes provisions for technical collaboration and knowledge sharing on financial products and services, including emerging trends, regulations, and policies. The joint experimentation on CBDCs is expected to strengthen economic ties between India and the UAE, promoting cross-border trade and remittances, enhancing financial inclusion, and reducing dependence on cash.
Both India and the UAE bring expertise in the FinTech startup space to this collaboration. India's FinTech startups have been at the forefront of digital innovation, particularly in the areas of payments, lending, and wealth management. The UAE, on the other hand, has been actively promoting FinTech innovation, with the Dubai International Financial Centre (DIFC) serving as a hub for FinTech startups in the Middle East.
This partnership is expected to benefit India's FinTech startups, providing them with new opportunities to innovate and expand their offerings. With the development of CBDCs, FinTech startups can leverage the technology to build new financial products and services, catering to the evolving needs of consumers. Additionally, the collaboration with the UAE is expected to provide Indian startups with access to the Gulf Cooperation Council (GCC) market, a region with a high potential for FinTech growth.
In conclusion, the partnership between the RBI and the CBUAE is a significant step towards promoting innovation and collaboration in the FinTech space. The joint experimentation on CBDCs is expected to benefit both India and the UAE, strengthening economic ties and enhancing financial inclusion. The collaboration is also expected to provide new opportunities for Indian FinTech startups to innovate and expand their offerings, catering to the evolving needs of consumers. As the FinTech industry continues to grow, partnerships and collaborations such as this will be essential for driving innovation and growth in the sector.
