I hate it when journos don’t do their research before posting about stuff they barely understand. The following ‘report’ is a prime example:


“The ongoing push by the Reserve Bank to revolutionise banking through the Unified Payments Interface (UPI) will leave mobile wallets redundant, as mobile banking has jumped over threefold in February from the year-ago period, according to a report.”


UPI was just about launched! If mobile banking has jumped threefold in February, that is due to some other acrobatic skills, not UPI. There is just no correlation between the first part of the sentence and the second!


“If the UPI adoption continues… will be redundant”


UPI ‘adoption’ has not yet started to the extent that we must worry about what happens when it ‘continues’.

The article then goes on to state a few facts trying to make the report look legitimate like saying RBI wants to see less cash (which regulator does not?) or that UPI does not need a specific bank account (yes, that’s why its called unified, duh!)

The last couple of years has seen a flurry of wallet launches by most banks in India. Do you think that this would have happened by itself? Let me explain. Assume for an instance that there was no Mobikwik, no PayTM and none of the high decibel ‘my millions are bigger than yours’ comparisons and media campaigns. Would the banks, the incumbents, have ever done anything except for putting out bad apps and sites with sucky user experience?

Let’s rewind a bit more and think about why exactly did the ‘wallets’ rise? It’s easy to forget and miss the detail. The wallets came into being simply and simply because the incumbent banks cared zilch about customers and their needs. The wallets simply tried to fill up the void that the banks kept leaving.

Take for instance, mobile recharge. Was it a big secret that most Indians had pre-paid telephone connections? What prevented the banks from giving a great interface to their customers for recharging their phones? What prevented the banks from putting up designers to put up a decent mobile recharge experience? If they had done this, Mobikiwk and PayTM would simply not have existed; atleast not in the form they are. The initial hook use case for these two wallet companies in particular was simply mobile recharge.

Also interesting is the twist someone like Freecharge was able to give to the same transaction, it enabled giving away of alternate value in terms of product discounts against the mobile recharges done. Simply clever implementation of a great customer insight. Would a bank left to itself have pulled off a freecharge equivalent? Nope. The banks had everything going for them, high licensing gates, millions of captive customers, no lack of capital and decades of lead. But conditioned by their very nature and history as people who only took money from x and gave it to y and earned on the leverage, they were and are simply too large and too out-of-focus to their customers needs.

When Eko was an active BC (Business Correspondent) to some of these banks and tried to design innovative product propositions for customers in the underbanked segment, we encountered significant resistance from the banks. Sure, there were some battles that we could win, but there were far more that we had lost because the banks lacked the sensitivity and openness to change and innovation. Today we are a PPI license practitioner and are slowly trying to implement a few really innovative customer propositions. There would have been no need for financial inclusion initiatives, if the banks had themselves woken up to the opportunity and addressed it with innovation and technology over the last 60 years, India has been living with banking.

So what do the incumbents do? Exactly what threatened monkeys do. They first try to copy and create clones of wallet apps out there. (Now one important point that goes against a few wallet companies themselves is their own lack of imagination in coming up with me too products), but the banks too following suite is taking the bad game a bit too far!

All said and done, a few banks are really good at what they do. There is no denying that fact. The bigger truth is that everyone cannot be expected to do everything. That is the reason why we partner and build on each other’s strengths.

I have reasons to believe that the UPI framework was designed with a grand vision by technologists who for a change, attempted to put the customer at the center. The moot point behind UPI, in my opinion, is customer empowerment. At the very least, it is a manifestation of seamless interoperability in the banking industry for the mobile first world. It is sad and disappointing when journos and rumour mongers miss this central theme and think that UPI was created by banks just to kill wallets! What a short-term and shallow perspective on a vision that is otherwise so grand!

Sure, the UPI is run by NPCI which is for all intents and purposes an independent organization powered by the banks. Non banking entities also get access to the network, albeit limited and through sponsor banks. It is but natural for an organization thus structured to favour the banks more while launching their products. For instance, the initial set of partners who can act as issuers on the UPI are only banks. It has been expressed by representatives of NPCI that in due course the doors will be opened up to other licensed issuers such as the PPI (Pre-Paid Instruments a.ka. wallet) players as well. On a different note, I believe it is high time that NPCI accepts non-bank financial service entities also to its formal membership and decision making bodies.

Nevertheless, UPI was designed so that even small time startups and innovators could plug in to the larger network of customers so that they could do what banks themselves couldn't and perhaps shouldn't. The idea is to enable a set of partnerships that multiples the value for the entire network of customers. NPCI would do well to ensure that this vision is not lost. If this vision is lost than all what is left is perhaps a glorified version of IMPS. But the promise of UPI is a lot more. It is an essential building block of the India Stack, on which presumably a new digital India will be made. It needs the participation of as many entities as possible, including startups and wallet players and avoiding needless rhetoric of the type that I started this post with.

Let customers be the kings and queens. Its the entire user experience that decides whether a wallet, bank led or otherwise, survives or not. The APIs/ UPI for a mobile app is just about like the drive-shaft in a car. I don’t think people buy their cars because of their drive-shafts. Its not the APIs or the banks or the wallets that will drive adoption. What will drive adoptions is how well the entire product has been designed around customer needs. And that, I believe, is the non-myopic view on UPI.

obsessively compulsively creative. getting better every day.

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