Among the multitude of startup accelerators and coworking spaces that have sprung up in the city, Chennai is set to have its very own government-aided incubator for financial technology startups.
The incubator, dubbed Centre of Excellence for Financial Technology, would be the first of its kind in the country. The facility, which is expected to launch before the end of this year, will be housed within the Software Technology Parks of India (STPI), said Sanjay Tyagi, director, STPI, Ministry of Electronics & Information Technology.
Funds up to ₹20 crore have been earmarked for the facility’s infrastructure and ecosystem by the Centre, while an additional sum of ₹23 crore will be pooled in by the state government and private investors. Startups would receive funding from venture capitalists and private equity funds who would be a part of the governing council of the CoE.
“A total of 500 companies have contributed ₹34,000 crore worth exports from the state of Tamil Nadu-…Chennai and Tamil Nadu have also become a financial services hub for back office work in the country. This prompted us to think on why there shouldn’t be a centre of excellence in fintech in the city,” said Tyagi on the sidelines of a recent conference on cross-border investments in fintech companies, organised by the British Deputy High Commission and The Indus Entrepreneurs (TiE), Chennai Chapter.
Fintech startups doing work in regulatory technology, compliance technology, insurance and payment technology among other areas would be selected and incubated with mentorship and support from TiE, Chennai Chapter, and IIT Madras. Startups will be selected through events like hackathons and pitchfests.
With cloud infrastructure support from Amazon, Google and Microsoft, the CoE will have 100 seats at the time of its launch. The CoE will also be signing a memorandum of understanding (MoU) with the National Payments Corporation of India (NPCI) for guidance and technical assistance, according to Tyagi.
He said banks and insurance firms have also shown interest in the initiative with support on payment gateways, application programming interfaces, security and compliance tools.
“We felt that for any startup, tying up with banks is the biggest hurdle since all banks work in a very regulated environment, making it difficult for them to tie up with a private entrepreneur. So for insurance companies and banks it may be easier to sign MoUs with a government of India unit,” Tyagi added.
UIDAI/Aadhaar and India Stack will also provide support and tools to build and test products in a secured environment.
The setting up of the facility follows the government’s push to incubate fintech startups in the insurance and regulatory spaces. The CoE in Chennai would be one among the seven new CoEs announced by the minister of IT and electronics Ravi Shankar Prasad in February, which include a Centre for Excellence in augmented reality in Bhubaneshwar and for IoT in agriculture in Guwahati, among others.
— With assistance by Anandi Chandrashekhar