MUMBAI: Indian banks had been behind the curve in tapping payments technology, said Kotak Mahindra Bank Managing Director Uday Kotak on Friday. Speaking at Kotak at Infinity Forum, organised by the International Financial Services Centres Authority (IFSCA) and Bloomberg, today Mr Kotak urged the country’s bankers to wake up before large parts of the traditional financial markets moved out from them.

Indian bankers had been short-sighted on the payments business in the last couple of years as they saw no money in payments, said the Kotak Bank chief. As a result, the banks had allowed the growth of Unified Payments Interface (UPI) payments monopolised by two players, Google Pay and PhonePe, which have got 85 per cent of market share, he said. 

“Therefore, it’s a wake-up call for Indian banking. Wake up, you will see large parts of the traditional financial markets move out,” Mr Kotak warned. 

“We have to keep in mind that consumer tech companies have revenue models outside of finance. For instance, that is the case with the advertising model or the e-commerce model. Banks, by law, under Section 6 of the Banking Regulation Act cannot get into non-financial business as defined,” he pointed out. 

Therefore, there were serious issues about how you were going to draw the lines, and simultaneously, there was an issue about financial stability, he added. 

He was reading an article which said that when you put a regulated entity into competition with a fintech or a consumer tech, the standard approach of the consumer tech is to play fast and loose on regulation and gain market share at great speed,” he pointed out.