The Indian Banking industry is transforming at a rapid pace. For long the main competition for the banks were only from the similar entities and the RBI (Reserve Bank of India) makes sure that least number entered to compete with them. But as it happens, technological innovation and delay in waking up to the developments in the industry have always allowed a new set of companies to enter the market as the financial intermediates.
On an average 1.6 crore credit and debit cards are issued in a year in the country. And this number for the mobile wallets is nearly 1.4 crore. It is like comparing oranges and apples. But if you missed apples, at least you can get oranges. It implies that if the customers don't get the required services from their banks then they would definitely opt for the mobile wallets. "The growth in this space is so dramatic that everybody, banks included, are going to participate in it (e-wallets),'' says Jairam Sridharan, president and head, retail lending and payments at Axis Bank, adding banks can't ignore this space. "We don't know whether this is a passing phase or whether it will continue. The jury is still out on whether this is going to part of the payments infrastructure, in the long run," he said. E-wallets may become a principle choice for ruling out the traditional payment methods for taxi fares, domestic help, local merchants, etc.
The boom in the mobile wallet transactions is due to the mobile penetration, mobile commerce and an introduction of the cheaper internet. Due to the increasing demand for the mWallets and the loan growth at a decade low banks have no other choice other than chasing then loan customers that were before enviable for them.
ICICI Bank has created a payment gateway and a new mobile app named as "iMobile". HDFC has its "PayZapp" mobile app that is like a replica of Paytm or Flipkart. SBI has its own digital tool called as "SBI Rewardz" and Axis Bank is also in the race with its "PingPay", advertised by Deepika Padukone.
Indian Banking Sector is already facing challenges in terms of bad loans to recover the loan amount back. Now mobile wallets are gaining high popularity in the banking domain. There is a fog of doubts that is it really a good idea, or banks are just blindly launching such apps to compete with the rivals.
"According to me, banks launching e-wallets is a really bad idea because technically when a bank already holds my account it already has a wallet. They are trying to circumvent the second-factor authentication by putting up a wallet. If you think of it calmly what does a wallet do? A wallet holds money, as do bank accounts. But they are enamored by the world of wallets," says Amrish Rau, MD and CEO of Citrus Payment. The objective of the bank accounts is savings, and that of the eWallets is transactions.
So, we can say that this is a new era for Banking Industry. Mobile Wallet, e-transactions, SMS Banking, are some corners of this domain. The race has been started. India is going to face many such transformations in the coming time.