Gujarat International Finance Tech-City (GIFT City) is a planned business district in Gujarat, which came into being just to facilitate financial services which would have been carried out abroad through offshore subsidiaries/branches of Indian financial institutions, within the geographical territory of India.
It is a new Financial and Technological gateway of India for the World.
An International Financial Services Centre (IFSC) is instituted with an aim to allow overseas financial institutions and subsidiaries/branches of Indian financial institutions to conduct business with India and cater to clients outside the jurisdictions of India.
To set up such a center is a step towards financial globalization. The most successful of these kinds of financial hubs are in Hong Kong, Singapore, Mauritius etc.
Evidently, India is also showing high growth in the investment funds domain, from fund-raising activity to active investments. India is also considered to be a very attractive destination for foreign investments. Therefore, in order to facilitate this growth and moving towards financial globalization, an IFSC is set up in the form of GIFT City at Gandhinagar, Gujarat, India.
The main services an IFSC can provide are following:
- Wealth Management
- Fundraising services for individuals, corporations and governments
- Risk management operations like insurance
- Global tax management\asset management
- Merger and Acquisition activities cross border entities
- Global Liquidity Investment
- Asset Liability Matching
The effective working of these centers is always attributed to favorable regulatory regimes and business environment to financial institutions and investors. As an IFSC, GIFT City is regulated under certain regulations and guidelines by India’s financial sector regulators, i.e., the Reserve Bank of India (RBI), the Insurance Regulatory and Development Authority of India (IRDAI) and the Securities and Exchange Board of India (SEBI).
IFSC Authority is also set up to regulate the nature of the business that will be transacted in GIFT City and to regulate the working of the entities involved in the transactions in GIFT City. However, another prime aspect that needs to be governed is the Intellectual Property Rights (IPR) pertaining to the GIFT City.
The GIFT City will be largely driven by technology and innovations, and protection of the same needs to be ensured in order to maintain the authenticity and goodwill of the entities.
Moving forward, we shall delve further into the intertwining of the one-of-a-kind project- GIFT City, and the role of IPR in the same.
GIFT CITY AND FINTECH
FinTech is the amalgamation of financial services and technology which is competing with traditional financial methods in providing financial services. FinTech redefines how transactions are done. It brings with it new business models which leads to the creation of new opportunities and competitive advantage over the traditional financial methods. This affects, significantly, large financial institutions, technological companies, and insurance companies.
Large financial institutions started realizing that they may lose their customer base without FinTech, as it provides the clients with unified experience in today’s ever-evolving and connected world.
The providing of financial services is changing rapidly as FinTech start-ups are emerging as substitutes of the large traditional financial institutions. Major market players and Government bodies all over the world have been aggressively playing their part for the growth of innovation and technological advancement in the financial service sector.
Apart from providing a platform for world-class financial services to non-residents and residents in a currency other than domestic currency, GIFT City, through competitiveness, will also encourage the financial institutions and service providers to gain advantages over each other through innovation in financial technology. In this way, the emerging technology will influence the roadmap of financial services through FinTech globally.
The GIFT City will attract a fresh wave of investment in FinTech services. Paytm, GPay, RazorPay, Phonepe, MobiKwik etc. are few of the examples of FinTech changing the system of how financial transactions are done. GIFT City will boost to new start-ups and existing financial institutions to move forward with FinTech which will make it easier for their clients and customers to handle financial transactions hassle free.
GIFT City will accelerate investments in FinTech through innovation and digital enhancements.
INTELLECTUAL PROPERTY RIGHTS & FINTECH
IP Law protects the interest of people who invented certain products by providing them due acknowledgment, legal rights, and financial benefit for their creations. The software, hardware, the trade secrets unique to the entity, the branding related to FinTech invention which are essential for competitive technology are protected under the IP Laws.
FinTech is revolutionizing the whole system of financial services, business models etc. The GIFT City which will be a FinTech driven district, wherein the large financial institutions and technology companies will work side by side for providing rich consumer experience to the resident and non-resident customers will need a strong IPR regime to protect the assets of the companies.
In today’s world where everything is digitized and every transaction or communication takes place over cyberspace, it is extremely important to incorporate a robust IPR policy and ensures that all the necessary compliances are in place in order to obtain the required IP protection.
Large financial institutions and new start-ups are now competing and working with each other in order to develop FinTech products and services. These financial institutions should consistently monitor what is being developed in their organization in order to protect their IP. Today, IPRs are as important to financial institution as it has been with high technology companies. Due to the fact that financial service providers have now moved their businesses to technology platform, the opportunities to protect their IP through patents, copyrights, trademarks, trade secrets etc. have also grown.
PATENT & FINTECH
If your innovation is based on totally new technology, then a patent is the ultimate option for protecting the IP under the Patents Act, 1970. It provides a protection to the patent holder from the other businesses from developing, using and selling already patented technologies. This allows the business to maintain market share and protect the investments that have been made into research and development processes.
In the field of FinTech, where growth is at a very fast pace, obtaining early protection through patent is very important. Early innovators who have protected their inventions have secured their market positions and had benefited from it substantially by excluding their competitors.
Patent Pools and Cross Licensing – As the financial institutions acquire more and more patents, it would not be a surprise that some of them may cross-license each other, where each institution needs its system to be working with the systems of other institutions smoothly.
COPYRIGHT & FINTECH
FinTech companies put much innovativeness into developing the most productive software or a product that should be copyrighted under the Copyright Act, 1957. It protects the program’s code, visual interface, audio and video guides, application programming interface etc.
It is very significant for a FinTech company if the product’s design offers efficiency and ease of use. If the work is not protected within the correct time frame, then the competitors may take undue advantage by copying the creator’s work.
TRADEMARKS & FINTECH
A strong trademark allows a FinTech company to set their product to stand out against the products of other competitors. FinTech companies should invest in protecting their reputation and goodwill through trademarks under the Trademarks Act, 1999. A strong name/brand/logo enables the company to differentiate their product from that of their competitor’s.
IP forms the foundation and value of a business and is also recognized as the most important asset of an organization. It creates a base for market dominance and continuing profitability of leading companies.
With the functioning of GIFT City, the FinTech companies involved in the city will compete with each other in both the national and international arenas. It will give a boost to innovativeness and huge investment into the research and developments of FinTech products will flow.
This exponential growth will attract several competitors to the market and the FinTech companies that want to expand and increase their clientele have to manage and protect their Intellectual properties.
GIFT City is the first of its kind of IFSC in India. It will have many financial service providers and technology companies working side by side and competing with each other to provide satisfactory customer experience. There will be cut throat competition between the financial institutions at both national and international levels for providing extraordinary services to their customers both residents and non-residents.
Today, as FinTech is the most efficient and effective way of substituting traditional financial systems and providing the customers with the ultimate user experience, it is very important for the FinTech companies to regularly bring new innovations on the table and to protect the same. If they don’t, then they may lose their market base to their competitors.
Operating in GIFT City will provide the FinTech companies the encouragement to innovate their systems and competing with each other to provide the customers with a great experience through technology.
Large financial institutions spend a huge amount of money in investment in research and development and come up with new and interesting innovations. Each and every day there is something new in the market. IP increases the competitiveness of the companies and provides both economic and social advantages over their competitors. So, it is very necessary for FinTech companies to protect their IP within an appropriate time period before other companies infringe in any manner with appropriate professional legal assistance.
– Team AMLEGALS assisted by Mr.Rishab Lodha (Intern)
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