After Google Pay, Amazon debuts as platform for taking deposits

On the heels of Google Pay offering its platform for booking fixed deposits, Amazon Pay on Wednesday also tied up for a similar arrangement with a wealth management platform.

Kuvera.in said it would provide “its services, products and technology know how to create an exclusive experience for Amazon Pay’s users to facilitate investments into mutual funds, fixed deposits, and more over time”.

On its website, Kuvera listed three deposit buckets by Bajaj Finance. The site mentioned deposits for 12-23 months, 24-35 months, and 36-60 months, offering interest rates of 5.75 per cent, 6.20 per cent, and 6.60 per cent, respectively.

The minimum deposit size for each is Rs 25,000.

In a statement issued by Kuvera, Amazon Pay Director Vikas Bansal said the deposit offer would help its customers meet their “large need” of growing wealth and investment. The partnership will democratise Kuvera’s investing and wealth management in India, said Gaurav Rastogi, founder and chief executive officer of the platform.

However, the association may make the banking regulator even more jittery, now that it has two tech giants to tackle in the deposit mobilisation space.

Sources say the Reserve Bank of India (RBI) is uncomfortable with the idea that tech giants can get linked with retail deposits, a tightly regulated and sensitive area for the banking regulator.

Last week, technology provider Setu enabled a similar facility for Google Pay users to open fixed deposits with Equitas Small Finance Bank. The RBI is yet undecided about its stance, but is watching the alliance to gauge its implications for the banking system.

“These tie-ups are not a big deal per se. The transactions are going through a secured banking channel, which is well regulated. But the institutions that have announced the tie-ups are not very strong financially, and they will probably garner huge deposits using the big-tech firms,” said a senior financial expert.

“Even if the tech platforms charge a service fee for the facility, that will contravene the existing norms on deposit commissions being prohibited. Besides, many people may think they are depositing money with Google or Amazon,” he said, adding that he was aware of the RBI’s unease with these alliances, for they give rise to the possibility of a “backdoor entry of tech giants in core fields of banking”.

However, if the services limit only to the distribution and sourcing part, “there should be nothing to worry”, said the expert.

Tapping into any kind of distribution channel is not illegal and experts say Google and Amazon can boost the financial inclusion drive way beyond what the banks could do. But the RBI has been wary of allowing tech giants in the banking space.

In its Financial Stability Report (FSR), the RBI categorised the growing presence of big-tech firms in financial services as a challenge to banks.

“Big techs present at least three unique challenges,” the half-yearly FSR, released on July 1, had said.

“First, they straddle many different (non-financial) lines of business with sometimes opaque overarching governance structures. Second, they have the potential to become dominant players in financial services. Third, big techs are generally able to overcome limits to scale in financial services provision by exploiting network effects.”

People familiar with the RBI’s thinking say the regulator is pleased with the role the big-tech firms are playing in the payments space, but is concerned that using these firms for garnering deposits may take the tech platforms in a commanding position of banks in the long run.

If all banks congregate on these platforms to tap into the network for various products, the big-tech firms can end up dictating terms for the lenders in the future and can render useless the banks’ own sourcing channels and applications that are monitored closely.