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@GaneshGuruvayur:

TY for your kind words. Personally, I don't expose my bank account or my debit card to any payment transaction, online or offline. I fund mobile wallets like PayTM and PayZapp strictly via my credit card. But there are only 27.3M credit cards in India. So my behavior is not representative. Now, let's take the holders of 739.3M bank accounts / debit cards. They have no choice but to expose their bank accounts / debit cards to payment transactions. Had an A2A payment method like UPI preceded a PayTM-like mobile wallet, these people might not have had any compelling need to store value on mobile wallets and PayTM might have been dead on arrival. However, PayTM preceded UPI, has amassed 150M users, and is funded heavily enough to take losses for a few more years. It won't go away so easily, if ever: Notwithstanding the superior features of UPI, I'd never underestimate inertia, resistance to change & incumbent advantage that PayTM enjoys. 

One more way of looking at it is via PayPal. Scores of A2A payment methods have been launched since PayPal came into existence nearly 20 years ago. If, as you say, "the need to store value outside of ones' bank accounts" had gone away, PayPal would be dead by now. But 20 years later, A2A payment methods haven't killed off PayPal.

That said, there's a twist in the tale: It's not necessary to load value into PayTM (or PayPal), as I've mentioned in my point #5.

As a consumer, there's no way I'll want to be left holding the can if there's a breach. If Fintechs want banking data, they should be prepared to underwrite any losses from data breach. 

@HariSubramanian: Your statement "However, when it comes to matters such as liquidity, such issues of judgement don't exist and so they take on the responsibility to settle transactions." sort of proves my point because regulators take on responsibility to settle transactions ONLY if they run the AML shared service, not if the banks do it as at present!

Why are Digital Channel / UX Strategy and Marketing mutually exclusive? Big Banks do digital about 80% as well as Neobanks. But Neobanks don't do Products even 50% as well as Big Banks. For example, I'm tired of waiting for my bank to issue a Credit Card but I can't find a single Neobank that offers a Credit Card. You may hate your bank but you may not have a choice. As Chris Skinner says in his blog post , The Catch-22 of banking, "despite the launch of half a dozen new banks in the last few years, the largest lenders still have 77% of the market. They had 69% market share in 1999."

I've read about a shared service setup for sanctions screening so that each and every bank doesn't need to do it. So centralization of sanctions screening is not a crazy idea per se. But I don't see any financial regulator taking responsibility for actually running this shared service. It's not a matter of technology - regulators love to be judges and are unlikely to do anything that might put them on the witness stand. I say this based on the history of how regulators charged with the responsibility of credit rating securities got rid of the monkey on their shoulders by outsourcing the task - and the responsibility - to CRAs.

7% Unbanked means 93% Banked. That's a high enough figure. I can't think of many other industries that cover 93% of the addressable market. And I'm not even sure if the 7% of the Unbanked belong to the addressable market. I read somewhere that USA has nearly 5% illegal immigrants. I strongly suspect that the Venn Diagram of the Unbanked and Illegal Immigrants would have a high degree of overlap.

On a side note, can you give any examples in support of your contention that "FinTech has a social side"?

@GeorgeRavich + 1. History is also replete with examples of banks waiting and watching fintechs that gain traction and then acquiring them. I can think of eCount and Revolution Money in the good old days and of Simple and a couple of other robo advisor fintechs in recent times. End of the day, whether in the digital or any other technology-driven transformative era, existing customers, revenues and trust provide a much longer "runway" for legacy banks than the one provided by VC capital for a few, select fintech startups.

@HiteshThakkar + 1. LOL "it's dangerous to keep money with such setup.":)

@SandeepTodi:

TY for your comment.

Between banks and fintechs, there have been 50 different ways to make digital payments in India for over a year e.g. NEFT, RTGS, UPI, e-wallets. Not sure what better planning needed to be done for going cashless.

In HBR's What Is Disruptive Innovation?, Clayton M. Christensen, the founder of the disruptive innovation theory, writes that UBER is NOT an example of disruption.

Letting that pass: Amazon / Google may be creating jobs, building offices, etc. But they've also destroyed jobs and shuttered premises at mom-and-pop stores and traditional publishing industry. How do we know that their net contribution to GDP has been positive?

Assuming there's some way to prove that their net contribution to GDP has been positive, it can be argued that the same method can be used to prove that AirBnB and Uber's net contributions to GDP have also been positive. For example, AirBnB makes outstation stay cheap, it can be argued that so many people who didn't travel on vacation earlier because of high cost of hotels are now undertaking the travel because AirBnB has made stay affordable, which makes AirBnB GDP-accretive. As I'd highlighted in http://lnr.li/PVpK1, a similar argument can be made in favor of UBER as well.

Now, all that was only in terms of revenues, which is a measure of worth of a company in the traditional economy. Valuation / market cap is a major measure of a company's worth in the new digital economy. Whether we like the new metric or not, AirBnB and UBER have done extremely well on the valuation measure - arguably even better than Amazon and Google.