State-run banks don’t want you to use mobile wallets from non-banking players

Many Indian banks, including ICICI and SBI, are ready to take on a battle with non-bank companies offering mobile wallets. For this, they are armed with their readymade payment systems, a wide merchant network and an on tap customer base, with which they want to reclaim what was their territory just a couple of years ago.

In the past one year, large lenders like ICICI Bank, SBI, Axis Bank and HDFC Bank have launched new payment instruments so that they can prevent their customers from moving money to these newly emerging non-bank companies.

These apps include SBI's Buddy, ICICI's Pockets, HDFC Bank's PayZapp and Axis' Lime, which are in the market to challenge Paytm, MobiKwik and Citrus Pay.

"It is an evolving space and the shift is towards digital transactions. None of us know the pace of the shift. Everyone is trying to experiment with the space," Axis Bank Chief Executive Shikha Sharma told ET.

While on one side, wallets have spent millions of rupees to brand themselves and establish their presence in the market, banks are using their existing brand value to attract customers.

"Investments in this business for us is in terms of deployment of resources as platform has been provided by our technology partner," said Manju Agarwal, SBI’s Deputy MD for corporate strategy and new businesses.

Parag Rao, who heads cards and merchant acquiring at HDFC Bank, told ET that he has been leveraging the bank's merchant and customer base so that customers can be offered attractive discounts for users of PayZapp.

"We want to facilitate all forms of transactions that the customer uses. In the physical world, the user can use the credit card and the debit card while in the mobile world he can use wallets," Rao said.

Data from RBI show that the number of outstanding debt and credit cards have increased more than three times in the past six years. However, paying in cash is still people’s preferable option.

"Banks are excellent settlement engines, but when it comes to user experience, we have been able to train 123 million people over the last five years to make digital transactions without glitches. People trust us with their money," said Nitin Mishra, head of products at Paytm, India's largest wallet company.