Just Being A Digital Wallet Is Not Viable Says India's Top Banker

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The future of digital wallets is uncertain.


With the evolution of the united payments interface, India's leading HDFC Bank's Aditya Puri, is critical of the future of digital wallets like Paytm and their promise of offering interest rates to consumers on savings post the launch of payment banks.

11 payment banks were given in-principle licences by the Reserve Bank of India under the leadership of then-governor Raghuram Rajan. Paytm is expected to launch its Paytm Bank next week.

Sharply criticising the Paytm model, the Managing Director of country's second-biggest private lender, said any model that is based on not making money is not viable in the long run.

Puri told Entrepreneur that just being a wallet is not going to be viable, and that wallets will have to create a bigger universe."Wallets require users to transfer money from a bank. Now when banks have wallets, why would users use external wallets," asks Puri.

Speaking at the NASSCOM Summit in Mumbai, Puri criticized Patym for running on investors' money while posting huge loss year on year.

This is not the first time the model of upcoming digital companies heavily dependent on capital from investors has come in the limelight.

Earlier this year, top Indian-American Venture Capitalist Kanwal Rekhi criticised India's biggest e-commerce company Flipkart's model and called the company foolish for having wasted billions of dollars of investors paying crores in salaries and selling products below costs.

Paytm is promising to offer exciting interest rates on savings via its payment bank, something that Puri has strongly questioned.

Do wallets give interest rates on saving accounts like banks do? We will see how Paytm will offer the interest on savings after launching the bank," said Puri cautioning consumers.

For the last fiscal year, Paytm has posted a loss of INR 1,600 crore. It is now aiming at 500 million consumers for its payment banks including its current number of 189 million users.

"Is this wallet any better than the cash back. I don't have a INR 1600 cr loss. You eliminate the loss then we will talk," Puri said.

The possibility of banks reducing interest rates on lending is doing the rounds with surplus amount of money deposited post demonetisation. Post Narendra Modi's noe ban, banks have received INR 12 lakh crore out of INR 13 lakh crore into the system.

Speaking on interest rates, Puri said money in the system will lead to better interest rate. We are going to serve better to the financially excluded.

Aditya Puri also gave his insight on the growing concerns of threat to jobs due to artificial intelligence among professionals.

Puri agreed that machine learning, robotics and artificial intelligence will takeover a fair number of jobs.

"With technology some jobs will go and new jobs will be created. Now, we think micro finance is great business. So I guess we are creating lots of new business and exploring new geographies that will creating new employment but retaining remains an issue."

(Edited by Aashika Jain)