Fintech payments firms have played a crucial role in the rapid growth of digital payments in India. However, the dominance of these fintech companies may not translate to competitive advantages to expand into other financial services.
The major banks of India have remarkably ramped up their digital product offerings and can efficiently withstand the competition from fintech comapnies. In the same context, Moody’s Investor Service said the dominance of fintech companies may not lead to significant advantages over banks because the open structure of UPI means that a huge user base does not essentially make a specific service provider more competitive as compared to others on the system. Moreover, the banks play a vital role in facilitating UPI payments has access to the transactions network. Owing to this, the fintech firms’ dominance in digital payments may not lead to a significant data advantage over banks.
On the other hand, the large banks have notably enhanced their digital capabilities to enable key retail services.
