Newly formed payment banks are working on ways to attract customers
To showcase its unique proposition, the newly formed payment banks are working on ways to attract customers. While the use of technology and smartphone banking is the foundation, a lot of additional features are on the anvil. These banks can take deposits and pay interest, but not lending money has made their task clear to offer a higher than basic interest rate to their account holders.
Take for instance, Paytm is looking at ways to offer a higher interest rate to account holders by parking their money in a money market fund that allows users to store cash and earn interest. Such an innovation will change the way conventional banking has been perceived all these years. The inspiration to have a money market fund at the back is none other than the prominent investor in Paytm – Alibaba Group, which has tasted success with similar offerings through its Yu’E Bao fund in China, which made it one of the biggest such funds in the world. If the move lands up being successful, it is wise expect intense competition in the otherwise stodgy banking space, which is already considering porting of bank accounts.