The unified payments interface (UPI) is not only a payments product, according to Federal Bank independent director and former NPCI MD and CEO AP Hota. He said that the UPI has created adjacent financial services. He added that the traditional banking system is generating only 5-7 per cent of the transactions.
Hota said, “UPI has triggered all the adjacent financial services. The traditional banking system has taken a backseat as they are generating hardly 5 per cent to 7 per cent of transactions.” He was speaking at a panel discussion during the BT Banking & Economy Summit 2023.
Going ahead, he stated that the e-commerce sector got a tremendous boost due to the real-time payments system. He noted, “UPI has made life easier. Without fintechs, it would not have happened.” During the course of this session, he also said that India has the best retail payments system.
He said, “India has the best retail payments system. Everyone agrees, some with a little reluctance.” Despite pointing out UPI’s high points, Hota pointed out that a lot of work still needs to be done in the realms of inclusion and raising awareness against digital banking frauds.
The former NPCI boss pointed out that this is where a mutual partnership between banks and fintechs can play a role. During the course of the same discussion S Krishnan, TamilNad Mercantile Bank MD and CEO also weighed in and said, “Educating customers, assuring them digital transactions are safe is important. Good tie-up with fintechs has to be there to ensure last mile connectivity.”
While his fellow panelists were optimistic about the partnership between banks and fintechs, KPMG India Head for Financial Services Advisory Sanjay Doshi said trust is key when it comes to the fintech sector.
Doshi noted, “Service is important but trust is key when it comes to fintech.” He also highlighted that while data is the biggest asset that an individual or an institution can have in today’s times, how this data has been leveraged and managed creates a big challenge around trust.
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