Simplifying FinTech and FinTech Laws: Trends and Regulatory Challenges related to FinTech in India

In the second quarter of 2019, Indian mobile payment leader PayTM surpassed China in the number of deals. Such a feat has been achieved while India is still an evolving fintech market in comparison to the developed fintech market like China. Red-tapism and the immense number of laws are the reasons of slow down for the FinTech market in India, but strict regulations are inevitable when it comes to a financial or technological company. The Steering Committee on FinTech related issues constituted by the Ministry of Finance, Department of Economic Affairs, submitted in September 2019 its report indicating various trends and challenges related to FinTech in India. This post discusses the same in brief. This post is the second one in the series of ‘Simplifying FinTech and FinTech Laws’.

Suggestion by the Steering Committee on Issues related to FinTech
Suggestions by the Steering Committee on Issues related to FinTech. Source: Economic Times

Trends related to Fintech in India

The FinTech sector in India is thriving and growing expansively, enabled by a large consumer base, innovatively boosted startups and balanced regulatory policies in the form of ‘Digital India’ programme. The Indian Fintech industry has grown by 282% in the last decade and has reached the valuation of USD 450 million in 2015. Currently, there are more than 400 fintech companies that are working in India and the investments are to be fueled with 170% by 2020. The Indian fintech market is expected to grow by USD 2.4 million by 2020 from the present USD 1.2 billion, as per NASSCOM report. The transactional value of Indian fintech sector is evaluated to be USD 33 billion in approx in 2016 and is further forecasted to reach the point of USD 73 billion by 2020.

Figures based on banks people per bank
Source: Bloomberg

FinTech facilities in India

The primary facilities offered by companies operating in the space of fintech are:

Pre-paid Payment Instruments

Also known as PPIs, this instrument enables the user to engage in the purchase of products that include products relating to financial services as well. To be able to purchase the products, a value entered into the e-wallets in the PPIs so as to make purchases against that value. There are 3 types of PPIs: Closed, semi-closed and open systems. Depending on the type, one may also have the facility to withdraw cash from the PPIs. Other than the banks, they can only be issued by institutions authorized to function in the arena of e-wallets or pre-paid card services.

UPI Payments

Managed by the National Payments Corporation of India, the UPI (Unified Payment Interface) provides a platform for quicker real time-based transactions, facilitating ease for the smartphone users to enter into multiple transactions with a lower cost than what the traditional method demands. Constituting a major part of the consumer behaviour in the market, the UPIs enable universality to the transactions they wish to enter in and engage in the greater number with the traders.

Digital Transactions

In the traditional financial market, it was only the banks that could lend money. However, with the convergence of technology and financial market, loans nowadays are even dispersed by non-banking financial companies, also known as NBFCs. The NBFCs with their interactive and user-friendly applications have attracted wide userbase in the digital arena to enter into credit purchasing, loan system after verification.

Lending Platforms

These lending platforms offered are Peer to Peer based. Such platforms bring together willing lenders and borrowers to enter into regulated transactions. As per the guidelines issued by RBI in this regard, the lending platforms can only be offered by the registered non- banking companies in India.

Online Sale and Purchase

The recent trends amongst many have also been that of online sale and purchase. To facilitate the same there requires to be a system whereby an entity collects payments form the purchases and send it across to the sellers. The entities involved in this function are known as payment aggregators or intermediaries. These entities electronically consolidate the payments done and transfer the same to the sellers.

Banking Services

Once begun as a measure to penetrate into the grassroots level of society the banking system and provide ease to the customers, digital banking services by the payment banks have now become a feature of the payment banks. The RBI has allowed payment banks to offer basic services involved in smooth banking by the customers online. This includes facilities such as accepting deposits (though RBI has placed a limit on it), view transactions, transfer funds, etc. However, this arena remains strictly regulated for not all facilities remain digitally available such as issuing credit cards.

FinTech Investments by US Banks
Source: Bloomberg

Regulatory Challenges to Fin-Tech in India

While in India, digital finance firms are thriving as the government is continuing to issue pro-startup regulations and policies, the central regulatory body for Fintech i.e. the Reserve Bank of India, still suffers due to a traditionally rooted and established infrastructure which cannot be easily replaced with the updated regulatory framework that matches the advancements of technology.
Indian market is already recognized as the conservative and restrictive market and henceforth makes it difficult for Fintech firms to further instil the confidence in adopting the Fintech services in the absence of any concrete regulatory framework.
The commendable steps have been taken by the Indian government and regulatory institutions in a prompt manner, however, policies and regulations have to match the pace with which technological advancements in the finance sector taking place. This is much needed to ensure secure a transparent growth of Fintech in India.

Regulatory Uncertainty in the Fintech Sector

The foremost challenge that the regulator for the fintech sector has to dealt with by it the lack of regulations. Moreover, if there are regulations then to consolidate them is another major challenge. There is a requirement to “to support the formulation of policies that foster the benefits of fintech and mitigate potential risks”. Henceforth, a regulator or policy-maker has to work in the directions of “the modification and adaptation of regulatory frameworks to contain risks of arbitrage, while recognizing that regulation should remain proportionate to the risks.”

Digital On-boarding and Financial Inclusion

The two significant challenges that one can see as the huge mountainous tasks in the Indian context are: firstly, making the fintech platforms accessible to every Indian and secondly, analyzing the risks that are potentially present in trying out a scheme to provide digital onboarding. The Supreme Court recently decided upon the constitutionality of the Aadhaar, the ambitious government project to provide a unified identity. Aadhaar has been held constitutional but Section 57 of the Aadhaar Act was struck off. Section 57 provided the mandatory verification and linking procedure for consumers to avail a company’s service. The judgment is having serious implications on the government’s efforts to provide frictionless onboarding of consumers.

“The judgement impacted the delivery of financial services across verticals including bank account opening, loans, mutual funds and insurance. Though the judgement allows voluntary use of Aadhaar by consumers, there are multiple interpretations of it and the Unique Identification Authority of India (UIDAI) has resorted to safer approaches to avoid any more legal battles and stopped services to private entities altogether.”

Low Credit for Startups

Investors in the market are now hesitant to invest in fintech startups. The investors are baulking as there have been quite a number of bad loan incidents. The big setback to the fintech industry as well as the financial sector came into the form of IL&FS breakdown. The company defaulted against the inter-corporate deposits and commercial papers or borrowings. The incident has affected the whole fintech industry as the crisis included lending businesses that were key to a number of NBFCs as a funding source.

e-NACH crisis

The Apex Court’s judgment brought down to stoppage, another popular mode of financing which is also the foremost mode of debit for lenders, MFs and insurance, as in pulling money from customer’s account. This is yet another judgment that has slowed down the advancement and has promoted the traditional manner of physical registrations.

Data Protection

Both the traditional banking system and the fintech services gather a large number of data records from various of their clients, which contains a profile of behavioural and financial information. Though the utility of such data is positive when it is used for a specific purpose of improving the services, it leads to giving way to a heap of privacy issues as well, especially when the financial service provider engages a third party’s technology services.

The judiciary recognized the risk of data privacy to the banking sector’s consumer in the case of Punjab National Bank v Rupa Mahajan Pahwa, “in which Punjab National Bank had issued a duplicate passbook of a joint savings bank account, held between the petitioner and her husband, to an unauthorized person”.

Other Challenges to the Fintech system in India

In terms of regulatory standards, India lacks in providing a comprehensive cybersecurity framework to reduce the cyber-crime issues. The competition law has also, in some sort of stages, have failed to control the domination of certain advance fintech NBFCs.

Recommended Readings:

Simplifying FinTech and FinTech Laws: Understanding the ‘Financial Technology’

Note from Author: This post is the first one in the series of ‘Simplifying FinTech and FinTech Laws’. The evolution of finance started almost a century decades ago when the world saw the establishment of Fedwire in the US in 1918. The actual FinTech application was the first mobile payment in 1997 to buy a Coca-Cola from the vending machine. In India, as well, the FinTech has completed almost one and a half-decade, but still, there seems to be little awareness about what the term ‘FinTech’ actually means and what law governs it. The fact that people are not aware of what ‘FinTech’ is and what daily financing applications constitute it is the inspiration of the series of posts. The author is hopeful that these posts will help in simplifying the understanding of FinTech and related laws.

An individual can realize that something has changed when, in the current scenario, he sees that everyone around him is transacting amounts with a click on their mobile phones. Since the time civilization has seen the increasing use of the mobile payment apps like PaytTM, Google Pay etc., financial technology (hereinafter referred to as “fin-tech”) companies, the financial services industry has been turned on its head. Whether you are doing online shopping or just buying groceries from your local grocers, fintech is surrounding us from all sides in 2019.

Financial technology, basically, means the technology that seeks to assist, improve and automate the facilitation, processing and delivery of transactional and financial services. At the core, fintech is being utilized to facilitate corporations, businessmen and customers process their financial operations by operating through curated software and algorithms as used on computers and significantly on computers, eliminating the manual intermediation in the financial industry. Broadly, as stated, the ‘fin-tech’ term can be applied to the number of technological innovations in the processes of transaction business, such as the invention of digital money to double-entry bookkeeping.

Since the digital boom and the incoming of the recent smartphone generation, financial technology has grown exponentially and expansively, in both the manner. Therefore, the fintechs are attracting the attention of various sectors especially customers of banking facilities and investment funds, which have the impression of fintech as the future of the financial services industry. The offline retailers and telcos are also considerably looking fintech as a better alternative to traditional financial services, as financial technology provides them with the speedier and decentralized mode of handling transactions. The extensively large number of activities are raising a flurry of questions regarding the emerging financial topography.

Some several major fin-tech products and services are currently being utilized in the market, some of them are Peer to Peer lending platforms, crowdfunding platforms, distributed ledger technology, Big Data, Mobile Banking Services etc. These fintech options are in operation to facilitate the services of international finance, bringing together the large lenders and borrowers, “seekers and providers” of data and information, providing the centralized or decentralized mode of transactions.

Traditional financing institutions have understood the need to upgrade their services. In pursuance of this, financial institutions are modifying the services by adding the technological innovation, by the way of both retaining the services technology companies or by themselves investing in technological research and development (“R&D”). However, there still exist wide disparities in the practices of traditional banking facilities in India.

Definition of FinTech

As per the Report of the RBI’s Working Group on FinTech and Digital Banking, ‘FinTech’ is an umbrella term which is defined as “technological innovation having a bearing on financial services”.

Further, according to the Financial Stability Board (FSB), of the BIS, “FinTech is technologically enabled financial innovation that could result in new business models, applications, processes, or products with an associated material effect on financial markets and institutions and the provision of financial services”.

These definitions focus on encompassing the broader categories of innovations in the financial sector as facilitated by technologies, irrespective of the kind, business scale and regulatory status of the technologically innovative firm. The width of the FSB’s definition can be gauged while “assessing and anticipating” the expansive development of the financial system, and “the associated risks and opportunities”. Therefore, the key take away from the definition is that FinTech refers to “the integration of technology into offerings by financial services companies in order to improve their use and delivery to consumers”.

FinTech developments or innovations have the potential to facilitate a range of beneficial services, specifically efficient processing and cost-minimizing. Technological advancements are also substantially transforming how people have access to financial services. The investments in the Fintech sector is largely increasing through venture capital funds. The same is estimated at around USD 20 billion.

FinTech products and services

There is no defined scope of FinTech innovations, products and services. The broad nature of the technological advancements in the area of financial services includes some of the most prominent fintech innovations that have produced quite a significant effect on financial markets. Mobile and web-based payments are being used in Payments, Clearing and Settlement as an advancement. Similarly, crowdfunding and peer to peer lending have made deposits, lending, and capital raising more advanced than before. E-trading has made Investment management better. It is worth noting that, Data Analytics and Risk Management in delivering financial services are flexible now as the automation of the process is being carried out by using Big Data and Artificial Intelligence.

Infographic: TrendsFintech2019
Thanks to

Payments, Clearing and Settlement

Fintech products and services in this category are the innovations that focus on the expediency and efficiency of the ‘payments, clearing and settlement’. The innovation in terms of improving the speed of transaction, minimizing the cost and flexing the mode of financial transaction, will bring positive changes to the whole financial services system.

Internet-based payment apps

In general terms, payments services work such that there is a user who gets an account opened in a bank and receive “a payment instrument” (Credit Card, Debit Card, etc.), which is, in consequence, is” linked to the account from the issuing bank to pay merchants online or offline”. Bank merchants are intermediaries that request payment and are obliged to reciprocally share the information of payment with the bank i.e. the financial institution. Banks receive funds while facilitating the transactions for various other financial institutions. Today, all the series of aforementioned processes are being assisted by the Internet. In such transactions, the payments are directly made to the service provider through the fintech services and “integrated payment agency”.

There are two kinds of internet-based payment services, such that the services that are based on mobile applications which merely assist the existing payment infrastructure. For eg. Apple Pay, mPay, GPay etc. which operate over the “existing card payment infrastructure” providing the consumer of services with an ability to use their mobile as their credit cards or debit cards. Then there are other mobile applications or internet websites that provide payment facilities through the “new payment infrastructure”, for eg. “Mobile phone money services such as M-Pesa in Kenya and IMPS in India”.

Digital Currency

A digital form of currencies, basically “digital representations of value”, is “value stored electronically in a device such as a chip card or a hard drive in a personal computer”. Innovative technology in combination with the proliferation of AI and automation, internet availability, and upgrading consumer choices, has expanded the scope of the need for alternative forms of hard currencies or traditional instruments of payment. Digital currency can be defined, in a broad sense only, as something that represents value such that firstly it is an electronic or digital form of money or “government-issued flat currency”. Then subsequently it also covers the virtual currency- an electronic form of the currency that is not a legal tender. These currencies are the tokens or tenders which are developed, controlled and created by certain private developers, with the value being trusted and appreciated in a specific community.

Distributed ledger technology

Distributed ledger technology (“DLT”) is the innovation that provides a wholly secure and safe transaction record, which connects various users in a network duly updated and verified. Each and every transaction is accessible to all the users and hence allow users to have the track record of a transaction, eliminating the chances of fraud and centralization in the transaction. These transactions following the DLT are, in actual sense, peer-to-peer transactions, offering advantages of efficiency and security. As per the World Bank’s report,

“Distributed Ledger Technology refers to a novel and fast-evolving approach to recording and sharing data across multiple data stores (or ledgers). This technology allows for transactions and data to be recorded, shared, and synchronized across a distributed network of different network participants.”

Blockchain technology

Blockchain technology is a form of distributed ledger technology which is constituted of transactions (e.g. cryptographed tokens or securities) stored in units of blocks. Blockchain system works on the model of a distributed ledger to record time-stamped digital transactions that are irreversible and may not be unilaterally altered. The process of recording transactions over the ledger is called mining. A blockchain network has as many nodes as much there are participants in the network. The recorded transaction is broadcasted to all the participating nodes and requires consensus over the authenticity of the transaction from each and every node that is part of the distributed ledger. As per the report of the steering committee on fintech related issues:

“Blockchain is a type of DLT which enables a community of users to record transactions in a distributed (without a central repository) and a decentralized (without a central authority) manner. The transaction records are visible to all the participants of the blockchain network, while being immutable at the same time. Blockchains rely heavily on cryptographic primitives”

Deposits, lending and capital raising avenues

As the currency flow has transformed around us, other kinds of the transaction are also transforming to become expedient and flexible and disintermediating the financial transactions. Alternative finance is becoming a prominent mode of capital raising and financing. As the Medium and Small Scale Enterprises are mushrooming across India, the inability to access adequate finance still exists in our lives as one of the major reasons for the constraint to the growth of SMEs. There is lack of access to the adequate sums as the traditional banks don’t provide finance till the time they satisfy their creditworthiness requirements which require strong collaterals, good asset size and perfect credit history on part of the SMEs and businesses.

The new avenues of financing which exempt the lending from being vitiated by the financial intermediation, are data-driven and facilitated by technology. Popular alternative financing avenues are Crowdfunding and Peer to Peer lending.


Crowdfunding is an innovative technology portal which allows its users to connect such that forming the relationship constituting three parties: the entrepreneur or SME firm seeking funds, the contributors looking for investing the project or cause, and the moderator organization that facilitates the engagement between the contributors and initiators. The moderators make it flexible for the contributors to acquire data about the several initiatives at a platform that are seeking the funding opportunities for the development and production of their products and services. Foremost and prominent business models of crowdfunding are rewards-based crowdfunding, donation-based crowdfunding, and equity-based crowdfunding.

“Crowdsourced funding is a means of raising money for a creative project (for instance, music, film, book publication), a benevolent or public-interest cause (for instance, a community based social or co-operative initiative) or a business venture, through small financial contributions from persons who may number in the hundreds or thousands. Those contributions are sought through an online crowd-funding platform, while the offer may also be promoted through social media.”

Peer-to-Peer Lending

Peer-to-Peer (“P2P”) Lending platforms allow individual businesses and, especially, SMEs to finance and borrow amongst themselves. As the credit goes to the updated and developed IT infrastructure, P2P portals provide the options of interest rates lower than the traditional banking institutions. Further, the thin line of distinction between banks and P2P platform providers is that the P2P fintechs are basically “matchmakers”, as the P2P platforms facilitate the networking between lenders and borrowers and in exchange of such a function they charge a fee. As the P2P lenders provide services on a fee based mechanism, they basically doesn’t have to meet the mandatory “capital adequacy requirements”.

In the case of P2P platforms, one cannot expect investor protection through compensation against default as one expects under deposit guarantee schemes in traditional bank deposits. The rising trend of application of P2P platforms in order to secure finance can be gauged from the fact that most of the jurisdictions like Germany and Italy, have already classified P2P portals as banks (as they undertake the task of credit intermediation) and are being regulated as banks.

“P2P lending is a form of crowd-funding used to raise loans which are paid back with interest. It can be defined as the use of an online platform that matches lenders with borrowers in order to provide unsecured loans. The borrower can either be an individual or a legal person requiring a loan. The interest rate may be set by the platform or by mutual agreement between the borrower and the lender.”

All these aforementioned technological innovations potentially can bring many opportunities and challenges. Fintech has the capability to substantially improve the efficiency and diversity of the financial market. The load concentration in traditional banking for minor payments will get minimized and may lead to expedient delivery of services to consumers. As technology advances, it finds a way to make a service or product more user-friendly. Similarly, as Fintech advancing, it is providing an incentive for traditional financing institutions to be competitive and focused on their customers.


Recommended Readings:

  1. Anne Sraders, ‘What Is Fintech? Uses and Examples in 2019’, The Street, at (last accessed on 15/10/2019).
  2. Julia Kagan, ‘Financial Technology – Fintech’, Investopedia, at (last accessed on 15/10/2019).
  3. ‘Emerging technologies disrupting the financial sector’, PwC & ASSOCHAM, at (last accessed on 12/10/2019).
  4. Report of the Working Group on FinTech and Digital Banking, Reserve Bank of India, at (last accessed on 12/10/2019).
  5. Monitoring of Fintech, FSB, at . (last accessed on 12/10/2019).
  6. The Pulse of Fintech, KPMG, at (last accessed on 12/10/2019).
  7. Final Report- The Future of Financial Services, World Economic Forum, at (last accessed on 12/10/2019)
  8. Jungho Kang, Mobile payment in Fintech environment: trends, security challenges and service, Human-centric Computing and Information Sciences 8:32, at (last accessed on 12/10/2019)
  9. J W Biggs, Introduction to Digital Currency, Bookdown, at (last accessed on 12/10/2019).
  10. Fintech Note No.1: Distributed Ledger Technology (DLT) and Blockchain, World Bank Group, at
  11.  Judd Bagley, What is Blockchain Technology? A Step-by-Step Guide For Beginners, BlockGeeks, available at (2016).
  12. Discussion Paper, Crwod-sourced Equity Funding, Corporations and Markets Advisory Committee, Australian Government, at (last accessed on 12/10/2019).
  13. Consultation paper on Crowdfunding in India, SEBI, at (last accessed on 12/10/2019).
  14. K.S.Ashik & Akshay V, Crowdfunding in Indian Context, JCIL Vol.3 Iss. 8, at (last accessed on 12/10/2019).
  15. Consultation paper on Crowdfunding in India, SEBI, at (last accessed on 12/10/2019).
  16. Eleanor Kirby & Shane Worner, Crowdfunding: An Infant Industry Growing Fast, IOSCO Research Department, at (last accessed on 12/10/2019).
  17. Consultation paper on Peer to Peer Lending, Reserve Bank of India, at (last accessed on 12/10/2019).

Balancing the Regulation and the Innovation: GDPR and AI

Artificial Intelligence (AI) sector is promising an altogether new generation of technological advancement being highly disruptive and productive for the Industry 4.0. AI is a constellation of technologies performing different cognitive functions- data analysis to language learning that assists a machine to understand thoughts, experiences and senses. The major functioning of A.I is to analyse the data and provide responses in accordance to the collected intelligence, basically AI provides a sui generis ability to analyse the big data applications in its various dimensions. Therefore, AI is most about the computer-generated behaviours which is considered intelligent in human beings. The concept of AI has existed for some time now, and contemporarily it is a reason of rapidly increasing computational power in industry (a phenomenon known as Moore’s law) [i] leading to the point where AI market will surpass $100 billion by 2025.[ii] AI is significant as it will transform the medium of interaction between humans and technology resulting in overall societal advantages such as inventiveness, innovation and confidence.

With all the advancement that AI will bring in the industry, it brings a lot of concern for regulators across the different jurisdictions. One of the major concerns with the application of AI is its character of feasting on large amount of data and hence its impact on data-privacy. This is making the regulators hesitant in order to allow AI start-ups to initiate any kind of large-scale activities based on AI technology. AI start-ups are soon going to hit a major impediment as the European Union’s General Data Protection Regulation (GDPR) is in effect now. The GDPR, adopted in April 2016, is being considered as the intention of European Union (EU) to form a strengthened, integrated and unified data-privacy mechanism within the EU. It aims primarily to provide the EU citizens an instrument of more control over their personal data and its protection. It provides a framework in which individuals will have liberty to ask questions that how the companies or institutions are processing and storing their personal data. The challenge of full accountability to consumer as strictly put mentioned by the GDPR makes the collection of data by more difficult impacting the AI start-ups which are absolutely dependant on varieties of personal data for machine-learning initiatives.

When it comes to knowing the specific limits that GDPR will put on AI start-ups and services then it can be explained in two-fold impacts. Firstly, processing of data has direct legal effects on the customer, such as credit applications, e-recruiting, or workplace monitoring, the GDPR will completely limit the usefulness of AI or these purposes as the Article 22 and Recital 71[iii] strictly provides for the requirement of explicit consent for each and every unit of data that is used making the functioning of the market slower. Secondly, the algorithms that the AI developers use for the application evolve themselves making it later not at all understandable, and this data combination becomes very complex to regulate.[iv]

The way out for AI start-ups seems to be in the organisational procedures that can standardise the obtaining of consent for the governance of the data within a well-structured data management framework. To be in compliance with the GDPR while processing the huge amount of data it is required that AI developers provide a fixed policy of filing an automated appeal to consumers. Illustrating this it is required that if a consumer is denied the service by any AI application, developers should provide a chance to know the reason to that consumer i.e. an appeal. It is worth mentioning that it is humans that have created, modified and implemented AI technology and they also have the potential to make it compliant and moderate according to the reasonable considerations of regulators. GDPR is not an evil for AI applications but it is just a regulatory initiative with which if AI technology develops, it will get more confidence of the potential consumers.

[i] ICO, Big Data, Artificial Intelligence, Machine Learning and Data Protection, Information Commissioner’s Office,

[ii] Todd Wright and Mary Beth, The GDPR: An Artificial Intelligence Killer?, Datanami,

[iii] David Roe, Understanding GDPR and Its impact on the Development of AI, CMS wire,

[iv] David Meyer, AI Has a Big Privacy Problem and Europe’s New Data Protection Law Is About to Expose It, Fortune,

Understanding the ‘Technology of Regulation’: Regulating the Scientific Advancements

Regulations are most often considered as adversaries of technological changes. The position of technology is to stimulate the growth of the enterprises, markets, and industries, while the periodical regulations as issued by the government, represents the limits that are imposed on this growth. This is the general conception of regulations that is no doubt everyone has regarding the regulation of technology since the 1970s when the debate started which was focused on controlling the nation-states expedition of nuclear energy, supersonic transport, and food additives. Today, the debate continues as the fears of technologies such as dark web, genetically modified foods etc. calling for regulations as precautionary measures. And to an extent, the conflict is unavoidable.

The dynamics that are induced by the technology revolution are credited with half or more productivity growth. The process of ‘creative destruction’ by entrepreneurs who devise new ways of producing goods and services is potentially a far more potent source of progress that is short-term price competition, as pointed out by Schumpeter. However, regulation can retard all of Schumpeter’s three stages of technological change: invention, innovation, and diffusion.

Every negative in the whole story is just not about the regulations. An anxiety amounts when there is talk about driverless cars, artificial intelligence, and social media, regulation is the only way to relax the stress of uncertainties that these technological changes will bring in lives of humans. These are not the views of legislators only, but also from the people who are driving these technologies and people who are driven by these technologies.

Is there a way to balance regulation and technology? The way seems to be accepting the change in the technology of regulation. Regulations are being imposed in traditional ways only such that considered to be of one type and of effecting in one way only. However, there is a way to explore more in this regard, just as there are many different types of technologies, there are many different types of regulations. Different technology instruments, such as technical requirements, performance standards, taxes, allowances, and information disclosure, can have very different effects on technological change and other important consequences.

One of the main reasons that the present regulatory technology is not rendering desired results is that the state regulators are not dedicating the time, energy, or funding to the regulations in the way the technology is developed. The key to bringing in the same creativity and inspiration into the regulations, such that the incentivized-approach must be followed, is to allow the private regulators to build the regulatory systems of the digital age.

The drivers of this shift are often ultimately regulated companies themselves- looking to define a reasonably reliable playing field on which they and their competitors meet. Private regulators are already regulating to a certain extent by having autonomy over the governance of choosing their terms and conditions of the ‘agreement’ which is the main source of the entire corporate control. Another compelling reason for bringing up the private regulators in the game is that the private entities are closer to what is happening, at increasingly high speed, on the ground, and in the cloud is not going to go away till the time they are responsible for developing new technologies.

It is very important to create a supervised cohort of private regulators. This gets the best of both worlds: the regulations that follow the incentivized approach and being accountable to the government and the understanding of these regulations to the market players in very clear terms. The question of arbitrariness because of these regulators cannot creep in as the licenses to regulate will always be in the hands of the government. Further, they have to keep their regulatory clients happy by developing easier, less costly and more flexible ways of implementing regulatory controls.

The sooner we adopt the new technology of regulation and move beyond the idea that conventional regulation can handle the challenges of our powerful new technologies, the better. The idea to regulate the innovative and disruptive technologies is a useless idea unless we figure out how to harness the power of markets, and new approaches to government accountability, to that task.

(This blog series will explore and cover all the areas of regulations that are present and required for adjusting the balance with certain scientific advancements. Suggestions and Improvements are invited from readers)