Bank e-wallets may die early death: Tie-ups with niche players more viable
Given the expertise, focus
and core competency of mobile wallet players like Paytm and Mobikwik, it makes
more sense for banks to partner such players than building or pushing own
e-wallet apps
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NEWS : An accelerated digital adoption in India, especially
after the Narendra
Modi government’s November 2016 move to demonetise high-value currency
notes, and the subsequent spike in electronic payments, are credited with
scripting a success story for mobile wallet companies. And, with a loss of
market share in the payments space that ensued, banks also jumped on the
bandwagon and launched their own e-wallets. Now, however, with their wallet
customer base, user interface and innovation not matching well enough with the
numerous offers that niche wallets provide, banks are struggling to compete.
On the post-demonetisation digital
drive, Ritesh Pai, chief of digital office, YES Bank, says: “Some users who
never had an active interface with the banking system also embraced prepaid
wallets and joined the less-cash drive”.
But today, with a number of banks
partnering niche mobile wallet players, there is a fear that banks’ own wallet
products might die an early death. According to analysts, it is more lucrative
for banks to partner existing mobile wallet players than building their own
wallets.
“Technology is changing at a fast
pace. It is beneficial to embrace new digital products quickly by striking
partnerships with fintech firms. So, many banks are going for tie-ups with tech
firms for developing applications,” says Vijay Mani, partner, Deloitte India.
When private lender Axis Bank
acquired Freecharge, it chose to retain the brand and not integrate it into its
existing wallet. “Consumers typically use wallets for high-frequency and
low-ticket transactions. This is a great tool for enhancing engagement with
consumers. At the same time, the Bank is able to extend the relationship with
the consumer beyond initial payments by offering well targeted and segmented
banking products,” explains Sangram Singh, head of retail lending and payments
at Axis Bank.
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