The document discusses the rapid changes in the banking landscape in India, particularly the rise of Unified Payments Interface (UPI) and its implications for mobile wallets, with many wallet players feeling threatened by UPI's convenience and accessibility. It also mentions the Murugappa group's decision to withdraw from the payments bank space due to concerns over financial viability and the changing landscape of financial inclusion. As UPI becomes more prevalent, it is expected to consolidate payment methods and potentially marginalize certain wallet services unless they adapt strategically.

1. Trends in Banking
(Part-VIII)

2. Total No. of Jan Dhan Accounts opened 2015-16
182 Million

3. 117 Million+
Indians use
“SMART Phones”
100 Million+
Indians are active
on Facebook
50% of the total internet
population will be
constituted by rural
residents by 2018
160 Million RuPay
users are conducting 20
Million transactions per
day
Approx.70-80% of Indians
will use their mobiles to
access Internet-enabled
services by 2018
Some Facts on Banking & Technology

4. E-Wallets face a big
challenger in Unified
Payments

7. Transaction on Mobile
Phones
(YoY Growth)

8. NPCI has launched UPI that
is set to make transferring
money as simple as sending
text messages-some fear
that mobile wallets may
become obsolete
The fear stems from the fact that
only banks are allowed to be part of
UPI. The wallet players have been
left out of its ambit. NPCI currently
operates the Immediate Payment
Services(IMPS)that allows people to
make online txns & transfer funds
from one bank to another 24*7.UPI
will allow its customers to do the
same on a SMARTPHONE
Unlike IMPS or other similar payment
systems where one needs to add One-Time-
password or the IFSC Code of the bank,
UPI txns will be linked to a unique identity
generated by the user himself which will
act as his virtual address for all online txns.
The address could even be the users mobile
number or Aadhaar number. This means
people can make online payments with far
greater ease than they can today
At the same time, using UPI could also
make it easier to directly transact with a
seller for a buyer. Wallet payments
services allow people to make payments
only to those who have also subscribed to
the same wallet services
Ex: A consumer can pay for say, a taxi
ride using his e-wallet only if the driver is
also using the system but UPI does not
have such barriers & one can send
money to any account
As UPI gears for its launch, e-wallet players are worried that they won’t be able to keep-
up with its sweeping reach & the ease of use of its technology

9. The existing bank-led wallet offer their products to only those who have an account with them.UPI is
open to account holders of all banks. This significantly increases the pool of customers UPI can tap
into, compared to banks which have a limited universe of customers-as per the research report by
Centrum Wealth
An added feature of UPI is that “it allows users to send reminders to their creditors by raising a
“Debit Request”. While the payment is made only after the user has accepted the request, it is
expected to come in-handy for transaction between e-commerce players & merchants
The convenience
factor which was
being taken care
of by some wallet
players will get
completely
replaced by
introduction of
UPI & hence
some of these
players might find
themselves
irrelevant
Players who are
waiting to enter
the wallet space
will now prefer to
take a wait-and-
watch approach
& see how the
existing players
are able to
weather the storm
of UPI
Some players have started to work as check-out service providers by allowing users to link
their Credit & Debit Cards to their mobile wallets. Such service providers usually earn up
to 1.5% of the transaction value as revenue which is higher than the commission earned if
consumers transact from their digital wallet
Some of the bank
promoted wallet
system such as SBI
Buddy, ICICI
Bank's Pockets &
HDFC Bank’s
Chillr will be
affected
The only Mobile Wallets
that could escape
competition are those
which are engaged in
reaching the unbanked &
helping them with
remittances
Wallet players can help India move a step closer to
becoming a cashless economy if they are also allowed
to join the UPI Platform according to Mr.Naveen
Surya, Chairman-Payment Council of India & MD of
ItzCash, a mobile wallet. He is of opinion that
“wallet players can tie-up with Offline retailers &
merchants & get them to transact via UPI that will
not only eliminate cash but also the need for Point-
Of-Sales terminals. In other words, Digital Wallets
could play an intermediary between a seller & a
customer who wants to transact via UPI”

10. Murugappa Group surrenders its in-
principal approval for payments bank
citing the reasons that the “Payments
Bank is not a viable business model for
the group”

11. The 30,000 Cr Murugappa Group
has surrendered its in-principal
approval for payments bank .The
decision was taken because the basic
concept of payment bank has
changed & they do not make
business sense for the company
The Group finds it no longer
like a Financial Inclusion
..The group requires huge
capital & long gestation
period
The objective of setting-up the payment
bank was to further Financial Inclusion .
Cholamandalam was to use its
subsidiary “Cholamandalam
Distribution Services Limited(CDSL)”
to establish the payment bank
The company was expecting to
invest about Rs.100 Cr in the
business & make a sustainable
business in 2-3 years whereas it
found later that it has to pump in
more money to meet the losses
for at least 6-7 years
The Group believes that companies
which are going into the “payment
bank “ space will be only telecom
companies. The base of Payment
Bank has changed very fast. The
Group have to burn a huge amount of
capital even to stay in the business
Only 4-5 players will enter into the
market

12. Anup George Rebello
Manager
The Catholic Syrian Bank Ltd
(anuprebello.6@gmail.com)
http://www.slideshare.net/anuppresentations