Amazon and a Singaporean banking platform are fighting for space in India’s fintech market, but there are some concerns over data protection
by Bethan Rees
Amazon.com is expanding its financial services offering in India, including insurance and gold, as of July and August respectively. This is to expand its customer base and attract more subscribers to its Prime programme, according to Sankalp Phartiyal and Nupur Anand in a Reuters article. Amazon is ramping up its offering due to the competitive nature of the fintech market in India, where "their deep-pocketed foreign backers struggle for profitability in a predominantly cash-based economy where 190 million adults do not have bank accounts", the authors write.
In 2016, Amazon launched its digital wallet and has since introduced a credit card and signed up to a state-backed payments network. It also processes payments for movie and flight tickets. There are more than 100 million registered Amazon users in India, and the company aspires to make Amazon Pay the country's preferred payment method, according to Mahendra Nerurkar, head of Amazon Pay in India. It has so far signed up four million merchants.
The writers reference data from PwC and Indian lobby group the Associated Chambers of Commerce and Industry of India, which says that India's digital payment market is set to more than double in value between 2019 and 2023, to US$135bn. Phartiyal and Anand paraphrase sector "watchers" who say that, because profit margins in digital payment businesses are generally thin, Amazon might have to rely on services such as lending and insurance.
Reuters article
Singapore's Atlantis
Another company fighting for space in India's fintech market is Singaporean firm Atlantis, which is launching Neo-Bank, an app-based banking platform targeting millennials and the Generation Z demographic, according to Finextra.
Focusing on India's 10 million-plus youth population, Atlantis claims to have a waitlist of 5,000 users and is expecting to onboard 3,000 people within its first three months, reports Finextra. It'll offer a range of personal finance tools, investment options and a savings account.
Chief operating officer of Neo-Bank Vineet Jain is quoted. "With the technology ecosystem evolving fast, young consumers have been looking for a platform that is more than a place where they can park their savings. Neo-Bank understands their relationship with money and will help them manage their finances hassle-free," he says.
Finextra article
India's data protection laws
The Indian government is concerned about data security of Chinese apps and is looking at stronger data protection laws, according to an article by Prathamesh Mulye for Quartz India. It has built an Indian internet firewall, but start-ups could still be vulnerable, experts warn.
"India does not have stringent laws to monitor data collected by homegrown fintech companies, many of whom are heavily funded by foreign players," Mulye writes, and this includes Chinese investors. The worry comes as Indian fintech firms are "huge data mines" and "collect and crunch users' data" for the firms to offer payment services and sell products. "They end up amassing information like users' money transfer records, and what they purchase and browse. This also helps fintech firms in assessing the creditworthiness of a user," Mulye reports.
Probir Roy Chowdhury, a partner at Mumbai-based law firm J Sagar Associates, is quoted, saying that if foreign investors hold a substantial stake in a company, it could mean they will ask for customer data collected directly or through affiliates. However, Harish HV, managing partner at ECube Investment Advisors, says this isn't very likely. "Technically, a shareholder can ask for the data from a start-up. But, usually, such demands are not made as only financial statements and overview operational data is provided to investors," he explains.
To address these concerns, the Indian government is in the process of creating a new Personal Data Protection Law. Mulye concludes: "As Chinese money helps Indian fintech firms not only weather the Covid-19 slump but also scale up, it's more important than ever that the Modi government implement a data policy as soon as possible."
Quartz India article
Will India see a bill that mirrors Europe's General Data Protection Regulation? According to law firm Linklaters' website, the bill is to be issued during 2020, so time will tell.