To compete with the deep-pocketed internet corporations, banks will need to build up technology, hire more people, and focus on the client rather than the sales. At a discussion held by India’s International Financial Services Centres Authority and Bloomberg on Friday, Kotak, the founder, and CEO of Kotak Mahindra Bank stated.
According to Uday Kotak, Indian bankers risk losing a big portion of their traditional business to global internet companies as Google Pay and Walmart-backed PhonePe gain dominance of the country’s retail digital payments network.
Also Read: RBI Instigated NPCI and NUE Rivalry
“Over the last three years, bankers have been short-sighted,” he remarked. “Their common reaction was, ‘Oh, there’s no money in payments.
Following China’s technology sector restrictions, India is developing as one of the most attractive digital services destinations in the world for investors and firms. According to analytics firm Tracxn, Indian FinTech’s earned around $7.6 billion in venture capital funding this year through early November, about four times that of China.
While the network connects over 260 banks and 21 third-party apps, Google Pay and PhonePe account for over 85% of payment traffic, resulting in the largest proportion of user data. Meta Platforms Inc. and Amazon are among the IT giants entering India’s lucrative financial services sector, offering everything from loans and insurance to deposits, which are traditionally the domain of traditional banks.
It’s not just them, either. Hundreds of fintech companies are springing up in India to take advantage of the $350 billion digital lending market that is expected to grow by 2023.
Regulators must keep an eye on this kind of monopoly and control over data, as well as fierce competition among hundreds of rapidly rising FinTech’s to acquire information from users, for any potential financial and systemic dangers, according to Kotak.
As per the Bloomberg Billionaires Index, Kotak is the world’s richest banker, with a net worth of $16 billion.
“We need to make sure we don’t have systemic and stability concerns in the name of data competitive service,” he said. -Bloomberg