Data more valuable than capital, treat it as ‘fiduciary responsibility’: RBI chief to fintechs

Reserve Bank of India (RBI) Governor Sanjay Malhotra on Thursday urged the fintech ecosystem to treat data as a “fiduciary responsibility” to build trust instead of considering it just as a business asset. He also cautioned fintech companies against building businesses by exploiting regulatory gaps, saying that the strategy of “scaling first and seeking clarity or forgiveness later” was not right.

“I would urge all of you (fintechs) to treat data as a fiduciary responsibility, not as a business asset. Every fintech in this room holds something which is much more valuable than capital, and that is the data, financial as well as non-financial, of very real people like you and me,” Malhotra said while addressing representatives from the fintech sector at the Global Fintech Fest in Mumbai.

Malhotra further said that using data as a mere monetisable asset first, instead of treating it as a responsibility, erodes the trust of consumers, which is then difficult to earn back. His caution for the fintech industry comes at a time when many fintech players are reportedly relying heavily on data to push new products to customers.

On a similar note, Malhotra also urged fintech players to stop building businesses whose scale is dependent on exploiting the gaps that remain in the regulatory system. “The account aggregator framework was built precisely to formalise this principle — consent-based, purpose-limited data sharing, so that no single entity, including the aggregator itself, can see or exploit the underlying data,” he said.

While fintechs are outside the central bank’s regulatory purview so that regulations do not become a burden on early-stage innovation, Malhotra also urged such fintech players to be responsible in their operations. “As a firm’s payment volumes, lending book, or user base grows to a point where its disruption could meaningfully affect the financial system, that firm acquires a responsibility that goes beyond its balance sheet or its shareholders.

I would describe this as the obligation to be not just ‘too big to fail’ but ‘too significant to be careless’," said Malhotra.