Fintech firms may not easily extend payments dominance to other financial services: Moody's

Fintech companies’ dominance in payments may not carry over to other financial services as “the Unified Payments Interface (UPI)ʼs open architecture means that a large user base does not necessarily make a particular service provider more competitive than others on the system,” said Srikanth Vadlamani, Moodyʼs vice president and senior credit officer, in a report.

Moreover, large private sector banks and India's largest lender State Bank of India (SBI) have ramped up digital product offerings in other areas, which will help them fend off competition from fintechs outside the payment segment, according to Moody's.

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However, public sector banks other than SBI have weak digital offerings and will be impacted by rising competition. The banks' margins will come under pressure as many fintech firms will continue to venture into other financial services such as personal loans and loans to small merchants.