This New MF Consent Rule Is Shaking Fintechs

Introduction

India’s mutual fund ecosystem is undergoing a structural shift.

A new consent framework has changed how investor data is accessed and used.

While the rule is investor-friendly, it has disrupted many fintech business models.

Here’s what actually changed and why fintechs are concerned.

What Is the New MF Consent Rule?

SEBI has tightened norms around investor consent for mutual fund data access.

Key changes include:

Explicit, granular consent required from investors

Consent must clearly mention purpose and duration

Blanket or implied consent is no longer valid

This applies across MF platforms, RTAs, and fintech intermediaries.

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Why SEBI Introduced This Rule

The regulator aims to strengthen investor data protection.

Primary objectives:

Prevent misuse of portfolio and transaction data

Increase transparency in data sharing

Align MF data practices with broader data privacy standards

Investor control is now the core principle.

How Fintech MF Apps Operated Earlier

Most fintech platforms relied on seamless backend access.

Earlier practices included:

Auto-fetching portfolio data via RTAs

One-time generic consent during onboarding

Continuous access without periodic revalidation

This enabled smooth user experience and analytics-driven features.

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What Changed for Fintechs Now

The new framework disrupts this flow.

Immediate impact areas:

Portfolio sync failures without fresh consent

Higher user friction during onboarding

Drop in data availability for insights and nudges

Some apps have already seen engagement decline.

Operational and Revenue Impact

The rule affects both operations and monetization.

Key challenges:

Increased compliance and tech costs

Reduced cross-sell and upsell visibility

Slower user journeys affecting conversions

Data-led growth models are under pressure.

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What It Means for Investors

From an investor lens, the change is largely positive.

Benefits include:

Clear visibility on who accesses their data

Better control over consent duration

Reduced risk of unauthorized data usage

However, convenience may temporarily reduce.

Industry Is Adapting, Not Collapsing

Fintech are recalibrating, not exiting.

Current trends:

Consent-first UX redesigns

Stronger integration with RTAs

Focus on trust-led, long-term engagement

The ecosystem is adjusting to a more regulated future.

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Patience not equal to panic

Conclusion

The new MF consent rule marks a clear shift toward investor data ownership.

Fintechs face short-term disruption but long-term clarity.

The future belongs to platforms that balance compliance, trust, and usability.

FAQ

Q1. What is the MF consent rule?

It mandates explicit, purpose-specific investor consent before accessing mutual fund data.

Q2. Who introduced this rule?

The rule was introduced under SEBI’s regulatory framework for mutual funds.

Q3. Does this affect all MF apps?

Yes. Any platform accessing MF investor data must comply.

Q4. Will investors lose access to their portfolios?

No. Investors may need to re-authorize access, but ownership remains unaffected.

Q5. Is this rule permanent?

Yes. It aligns with long-term data protection and governance standards.

Citations

• Securities and Exchange Board of India (SEBI)

• Association of Mutual Funds in India (AMFI)

• CAMS

• KFin Technologies

• Ministry of Electronics and Information Technology (MeitY)