Niche banking, mobile wallet players to up competition: BCG

Says transactions on digital wallets have already surpassed the total number of mobile banking transactions in 2013-14

Banks need to brace themselves for new challenges which awaits them with the new entrants in the banking sector. The BCG-Ficci report points out that 50 per cent of digital banking customers are keen to try out new payments banks when they are launched later this year.

Last week, the Reserve Bank of India (RBI) granted payments bank licences to 11 players. It is also set to give out licences to small finance banks in the next few months. With the entry of new players coming into the market, the competition is set to increase, agree all the players.

The lenders are not only going to face competition from the new banks but also from the mobile wallet players. In fact, the report points out, transactions on digital wallets (promoted by non-banks) have already surpassed the total number of mobile banking transactions in 2013-14.

Bankers agree that in order to warm up to the challenge they need to be more agile and innovative. "For every challenge there will be equal opportunity but you need to be agile to succeed," said Shikha Sharma, managing director & chief executive officer of Axis Bank.

Despite the concerns over the increased competition from banks, RBI Governor Raghuram Rajan had tried to allay these, saying these banks will complement the existing banking system.

The report states that currently there are 61 million online banking customers in the country. This number is set to grow by 23 per cent per annum to reach 173 million by 2020.

As of now, of the total banking population in the country, only 13 per cent use digital banking.