This article was first published on The Times of India | September, 07, 2023
The Unified Payments Interface (UPI) crossed 10.58bn financial transactions in August, grossing over ₹15.76 lakh crore in total value of money transferred. These staggering numbers, the highest ever, reflect how fast the Indian economy is changing with fintech. What is so unique about this success? What led to it? And what does it imply for India and the rest of the world? Digital money transfer systems like UPI change the way people relate to money. They also threaten the way banks, and their systems which control the networks that drive society, have traditionally functioned.
For centuries, banking has been about personal interface. The smartest bankers know this. Which is why they sometimes think
of digital connectivity, which connects people directly and could make traditional banking irrelevant, as “dumb pipes”.
“How can we avoid becoming dumb pipes?” the banker PiyushGupta, CEO [chief executive officer] of DBS, Southeast Asia’s
largest bank, once asked at a conference on money in Singapore.It was a question that, in many ways, articulated the fear traditional banking has of the brave, new digital world. At its root is the emotional truth that, for most people, money is just “the means to an end — buying a house, paying school fees and so on”. In a digitally connected world, once people can use their phones to transact money directly with each other, banks “risk becoming invisible. Just like ‘dumb pipes’ designed and managed by others”. In that sense, bankers are right to fear these “dumb pipes”, for they have upended the system of money in India with UPI as the vehicle.
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This article was first published on The Times of India | September, 07, 2023
