Indian bankers may lose large parts of traditional business to Google Pay, Phonepe: Uday Kotak
To match the competition, Indian banks need to adopt a customer-centric instead of a sales-centric approach, said Uday Kotak, who is the founder and chief executive of Kotak Mahindra Bank.
December 03, 2021 / 07:09 PM IST
Amid surging popularity of online payment systems, India's top banker Uday Kotak said lenders based in the country may end up losing large portions of their traditional business to digital wallet platforms such as Google Pay and Walmart-backed Phonepe, Bloomberg reported on December 3.
Google Pay and Phonepe, which are dominating the country's retail digital payments sector, are either owned or backed by deep-pocketed tech giants, Kotak pointed out while speaking at a forum organised by Bloomberg and India’s International Financial Services Centres Authority.
To match the competition, Indian banks need to adopt a customer-centric instead of a sales-centric approach, said Kotak, who is the founder and chief executive officer of Kotak Mahindra Bank. The lenders are required to hire more talent and significantly scale up their technologies, he added.
"Bankers were short-sighted over the last three years...Their standard response was ‘oh, there is no money in payments," Bloomberg quoted Kotak as saying.
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Notably, the digital payments sector in India has been growing at an exponential rate, with the penetration of technology in the deep interiors of the country.
“The UPI market share has been increasing constantly and it stood at 80 percent over the first seven months of FY22 as against a mere 9 percent growth in FY18 (73 percent in FY21), while the share of debit and credit cards stood at 8-10 percent,” a recent report from Motilal Oswal Financial Services (MOFSL) said.
According to Kotak, the regulators need to be alert over the use of data by the scores of fintech companies entering the Indian market. It must be closely watched to prevent potential "systemic and stability challenges."