By Apoorva Mandhani
India has been dubbed as a great market for fintech innovation, with the Government gradually removing the industrys barriers to entry. The establishment of Payment banks by erstwhile RBI Governor and technocrat, Mr. Raghuram Rajan, and the grant of 11 new payment bank licenses to companies from a variety of sectors, including telecoms and postal services, bolsters the countrys commitment to embrace transformation. Further, the centres radical move to eliminate large-denomination currency from its financial system has driven changes in the way consumers pay for purchases and has a ripple effect of increasing the portion of the population that uses financial services.
Research firm RedSeer Consulting reported that mobile wallet transactions in India totaled $3.6 billion in the first quarter of 2017, up 60% from the previous quarter. Indias smartphone users are more likely than those in other countries, to use mobile wallets. In such a scenario, it has also become necessary for banks to experiment and innovate like start-ups, in order to thrive in the digital age. NITI Aayog CEO Mr. Amitabh Kant has warned about the demise of physical banks in the next few years, only to be replaced by low-cost internet-based transactions and business efficiency due to technological advances. An understanding of such circumstances has encouraged traditional financial institutions and independent fintech players to join forces to leverage each others strengths rather than operate independently as competitors.
Current players: Digital wallets, Payment banks, and Digital only Banks
Payment bank is basically a bank, without credit or loan facilities. Hence, while a payment bank can issue ATM/Debit cards, and chequebooks, it cannot issue credit cards. These are, however, allowed to make arrangements with commercial and small finance banks for offering loans to their customers, with prior permission from the Reserve Bank of India. Further, customers holding a bank account in a payment bank can keep deposits up to Rs. 100,000. These upper limits are not applicable to traditional banks like digibank by DBS, which is Indias first mobile-only bank that is paperless, branchless and involves no signatures. Moreover, digibank has leveraged the opportunity created by UIDAI (Aadhaar) to enable Aadhar based KYC, eliminating the need for branches, and making it convenient to open a bank account.
Being a traditional bank allows DBS to offer a wider variety of benefits and services which are incomparable with services offered by payment banks like PayTM, Airtel payment bank or India Post.
PayTM Payment bank v/s Airtel Payment bank v/s Kotak 811 v/s digibank
| Feature | digibank | PayTM Payment bank | Airtel Payment bank | Kotak 811 |
| Interest rate | 7% | 4% | 7.25% | 6% |
| KYC | eKYC with Aadhaar and biometric information | eKYC with Aadhaar and biometric information | –
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| Online Fund Transfer | Free | Free | Free within Airtel; 0.5% of the amount (with a cap of Rs. 50) transferred to other Banks | Free |
| Minimum Balance | No minimum balance | No minimum balance | No minimum balance | No minimum balance |
| Maximum Balance | No limit | Rs. 100,000 | Rs. 100,000 | Rs. 100,000 |
| Debit Card + Fee | Visa Debit Card, with PayWave | Virtual + RuPay Debit Card
Annual subscription of Rs. 100 + Delivery |
Virtual MasterCard | Free virtual Visa Debit Card; physical Debit Card at annual subscription of Rs. 299 |
| ATM Transaction charges | All transactions are free. Users can also withdraw money abroad since it offers a Visa card. | Non-metros: 5 free transactions per month, after which Rs. 5 per transaction
Metros: 3 free transactions per month, after which Rs. 20 per transaction |
No debit cards. Users can withdraw from Airtel stores by paying 0.65% of the amount | All transactions are free at Kotak Bank ATMs.
3 free transactions at other bank ATMs, after which Rs. 20 per transaction |
Further, digibank beats Kotak 811 in its optimum utilization of the available technologies. digibank is now UPI enabled and it has the best UPI interface in the same mobile app, unlike other banks. digibank allows customers to converse with an artificial intelligence-powered assistant created in partnership with Kasisto, a fintech spin-off from the Institute that created Siri. Further, its Debit Card can be enabled or disabled instantly from the App. Also, the budget optimizer can budget, track expenses, analyze purchasing patterns and provide actionable advice by understanding the customers behavior and preferences.
digibank by DBS is emerging as a clear choice when compared with its competitors and is an extremely worthy beginning in this context.
Featured Image Courtesy: DBS