Recent reports suggested that the Adani Group is planning to enter the "regulated payment" sector. However, these rumors were proven false when Paytm, the listed payment company, and its founder Vijay Shekhar Sharma were compelled to clarify on stock exchanges that there are no discussions about a potential share sale to the Adani Group.

Adani is not the only one entering the payment sector late. Reliance Industries, led by Mukesh Ambani, already entered the market in 2023 through Jio Financial Services. With their vast resources, extensive business networks, and deep understanding of Indian consumers, these companies have the capability to introduce innovative financial products and services. Their entry will intensify competition and push existing players to improve their offerings and customer service.

Nevertheless, success in this field is not guaranteed for either Adani or Ambani. They must navigate regulatory challenges, build trust with cautious consumers new to financial transactions, and differentiate themselves in a market already dominated by established players like Google Pay, PhonePe, and Paytm. Their ultimate impact will depend on how seamlessly they integrate these services into their broad business ecosystems and deliver superior value to customers.

Moreover, although digital payments have become an indispensable part of India’s evolving society, significant customer acquisition costs, low margins, and overall profitability challenges mean it remains a loss-making business. India prohibits charging customers fees for these services, which compresses potential revenue streams further. As a result, B2B companies in the digital payments space tend to be more profitable than their B2C counterparts, leveraging scalable business models and institutional partnerships to generate income.

Consumption, content, capital, clarity

Both Adani and Reliance operate extensive businesses that engage directly with consumer spending habits. Their strategic positioning across traditional and new-age sectors positions them as key players in India’s growing embedded finance landscape, enabling them to establish a duopoly that could reshape the country’s financial services industry.

Reliance Retail—the retail arm of Reliance Industries—is one of the largest chains in the country, spanning groceries, electronics, and fashion. In contrast, while the Adani Group is primarily B2B-focused, it also interacts directly with consumers through its airports and CNG stations, as well as through Adani Wilmar, a fast-moving consumer goods joint venture that is a major player in Indian kitchens.

Reliance Jio, which revolutionized India’s telecommunications sector, is part of Reliance’s stable with the country’s largest subscriber base. Meanwhile, Jio Financial Services recently launched its latest offering, the ‘JioFinance’ app. Currently in beta, the app provides convenient money management solutions at users’ fingertips for customers familiar with financial technology at all levels.

Key features of the JioFinance app include digital banking, UPI transactions, bill settlements, insurance advisory, and consolidated views of accounts and savings. It offers instant digital account opening and bank management, enhancing user experience and convenience. Future plans include expanding to cover diverse financial needs, from mutual funds and loans to a broader array of loan solutions.

Jio Financial Services aims to simplify the entire spectrum of financial services on a single platform, serving users across all demographics. In short, Jio Financial Services aspires to become the go-to platform for the financial needs of all Indians. Leveraging Jio’s telephony services and its robust data insights about Indian consumers, the company is well-positioned to offer personalized and customized financial solutions tailored to individual preferences and requirements.

Adani’s presence in energy and utilities—including electricity and gas distribution—creates more opportunities for consumer engagement. Integrating financial services with utility bill payments or offering energy-efficient financial options deepens customer relationships.

After Bain Capital acquired shares in Adani Housing and Adani Finance, the Adani Group exited the NBFC sector last year. The group has yet to succeed in establishing itself in financial services. However, Adani is keen to diversify rapidly into fast-growing sectors like e-commerce and payments.

This move aligns with the group’s interest in expanding its presence in high-growth areas. By entering homes directly through its power distribution and FMCG businesses, Adani can leverage this digital intersection to broaden its business canvas.

Recently, Adani launched co-branded credit cards in partnership with established firms like ICICI Bank. These collaborations provide access to established payment networks and enhance the credibility of Adani’s financial offerings. Through the Adani One super app, launched in 2022, Adani aims to unify digital services. This integration facilitates seamless access to payment services alongside other digital offerings, improving user experience and driving greater engagement.

Adani’s acquisitions in the travel retail sector, including Flemingo Travel Retail and Cleartrip, focus on strengthening travel services. As an online travel aggregator, Cleartrip’s integration adds value to Adani’s digital ecosystem by attracting users with comprehensive travel booking services. The recently launched co-branded cards are also travel-focused, aiming to leverage this presence and various Adani-owned airports across the country.

Furthermore, Adani’s ventures into green hydrogen, energy, and data centers, along with Ambani’s diverse interests, provide additional consumer touchpoints.

Considering these large companies, their competitive streaks, and parallel initiatives, they have the potential to transform the financial services sector by offering consumers unprecedented convenience and choice in managing their finances.

Moreover, the deep pockets of these conglomerates allow them to attract top talent and provide lucrative incentives to build fundamentally innovative businesses.

Just as Reliance brought global expertise and knowledge to its retail ventures, Jio’s collaboration with BlackRock will enable them to leverage similar global partnerships. While this intense competition benefits consumers through better services and lower costs, it also raises concerns about market concentration and fairness among competitors and regulators.

Current State of the Country

India’s vast population, growing economic base, and rising middle class present irresistible opportunities for global companies seeking growth and development. Comprising about one-sixth of the world’s population, India offers a large consumer base for goods and services across numerous sectors.

In this landscape, Ambani’s Reliance and Adani’s alliance stand out as business partnership gatekeepers with the largest financial resources, most coveted perspectives, and access to the biggest consumer base. Their strong presence across multiple industries—from retail to telecommunications to energy—positions them as key players shaping India’s economic trajectory.

As India continues its journey to become a global economic powerhouse, the influence and reach of Ambani and Adani are expected to grow further. Their extensive resources, strategic vision, superior project management and execution capabilities, and deep understanding of the Indian market make them formidable competitors for both domestic and international companies.

Adani and Ambani possess not only the financial strength but also the capability to challenge and disrupt the dominance of American-owned firms in India’s payment sector. Their broad resources enable them to leverage payment businesses and B2B services to expand globally. Success in financial services is not purchased with money alone, but their substantial financial backing combined with policy influence can attract top talent and expertise, increasing their chances of success.

Walmart’s PhonePe and Google Pay currently dominate India’s mobile payment market, jointly processing 86% of all transactions on the UPI network, which handles over 12 billion transactions monthly. Despite concerns from competitors and government bodies about the growing market share of Google and Walmart, regulators have not intervened so far.

Adani and Ambani’s entry into the payment space poses a strong challenge to this duopoly and might even create a new duopoly of their own. With their financial expertise and potential policy influence, they are poised not only to compete but also to innovate, potentially reshaping the landscape of India’s mobile payment market.

Redefining Banking in the 21st Century

Although the Adani Group has already launched their super app, Reliance has yet to do so. However, Reliance’s loyalty program, known as Reliance One, has already been integrated across the company’s various consumer platforms, fueling speculation that Reliance’s super app offering is not far off.

Creating a successful super app for all—or at least most—Indians is an unprecedented achievement. The diversity and highly fragmented nature of the Indian market create a complex challenge, making it more prudent to build a well-integrated financial ecosystem instead.

By focusing on integrating financial services into existing platforms, companies can leverage their current consumer trust and technological capabilities to create a super app with fewer obstacles. This approach offers a more practical path to achieving significant digital transactions and financial inclusion.

More than a century ago, banks served as the primary one-stop centers for all financial needs—from deposits and loans to investments and insurance. However, technological advances and changes in distribution channels have fragmented these services, leading to the rise of specialized financial institutions. Today, digital finance is poised to usher in a new era of banking through embedded finance within a consumer-driven economy.

By directly integrating financial services into platforms where consumers are already active—whether shopping, socializing, or using various online services—embedded finance delivers seamless, contextual, and highly personalized financial experiences. This approach not only better meets consumers’ financial needs but also harnesses the vast data and reach of digital ecosystems, indicating that the future of banking lies in these integrated digital solutions rather than traditional standalone financial institutions.

In the 21st century, the appeal of a universal banking license has traditionally been to allow institutions to offer a wide range of financial services under one roof. Instead, corporate entities may view control over digital ecosystems, data, and consumer behavior as the new frontier for services like banking. The rationale behind this shift is the belief that digital platforms can deliver financial services more efficiently and accessibly than conventional banking structures.

Controlling a digital pipeline enables corporations to leverage their existing consumer base and vast data to tailor financial offerings to consumer needs. Using sophisticated data analytics, companies can understand consumer behavior in real-time, predict financial requirements, and offer personalized products. This capability enhances the customer experience and increases retention and loyalty, which are crucial for long-term success in financial services.

For corporate entities, this digital-first approach represents a strategic advantage. By embedding financial services within their extensive ecosystems, companies can create frictionless experiences that integrate loans, mutual funds, and insurance into their existing customer touchpoints. For example, an e-commerce giant could offer financing options at checkout, or a telecom company might provide micro-loans and insurance products through its mobile platforms. These embedded finance solutions reduce customer friction and provide more foundational services compared to establishing a traditional bank.

Moreover, the regulatory environment is more favorable for non-banking entities entering financial services through partnerships and fintech innovations. Corporate entities can offer loans, mutual funds, and insurance products via third-party relationships, avoiding the need for a universal banking license unless they capture a significant market share in these segments.

Additionally, obtaining specialized licenses for specific financial services is often more practical and straightforward than securing a universal banking license, which involves stringent regulatory oversight and capital requirements.

For instance, companies like Jio and Adani can leverage their extensive digital and physical infrastructure to build comprehensive financial ecosystems. Jio can seamlessly integrate mobile banking, payments, and financial products into its vast telecommunications network, offering customers unparalleled convenience. Similarly, Adani’s diverse business interests and digital ventures enable it to provide a wide array of financial services tailored to the needs of its varied customer base, from industrial clients to everyday consumers.

While integrating financial services into digital ecosystems offers convenience and innovation, a critical caution must be considered. If digital dominance becomes concentrated in the hands of a few powerful tech companies, as seen in the current landscape, it raises fundamental questions about the ability of financial regulators to effectively oversee and govern these influential entities. The extensive data access and influence these companies wield can circumvent traditional regulatory frameworks, making oversight and enforcement challenging.

Furthermore, as these entities prioritize profits and market dominance over consumer protection and financial stability, the risks of monopolistic practices, data privacy concerns, and systemic vulnerabilities increase. Therefore, regulators must proactively develop and implement robust and agile regulatory frameworks to ensure these digital giants operate within secure and equitable boundaries, safeguarding consumer interests while maintaining the integrity and stability of the financial system.