With UPI strengthening its position as India’s dominant digital payment rail, banks are finding themselves increasingly sidelined, bearing infrastructure costs, while fintechs like Google Pay (GPay) and PhonePe are monetising user engagement. Zeta, a Softbank and Mastercard-backed unicorn fintech startup, offers a strategic roadmap to reverse this imbalance and help banks reclaim relevance in the fast-evolving payments ecosystem in a report.
“Today, customers transact 25-30 times a month on GPay and PhonePe apps. That mindshare banks have lost,” said Mehul Mistry, global head – strategy & products at Zeta.
Reimagining UPI for Banks
Zeta’s eBook — Reimagining UPI for Banks — outlines 10 high-impact innovations — from smart UPI wallets and add-on UPI IDs to contextual credit-on-tap and merchant cash flow-based lending. These ideas aim to transform UPI from a utility into a growth engine, enabling banks to drive engagement, monetise usage, and deepen trust. “Banks have the trust, the capital and the rails, but they have lacked the product imagination,” said Mistry, adding that the eBook is about helping banks move from passive infrastructure providers to active experience owners.
“We realised that a customer using a RuPay credit card linked to UPI was transacting nearly three times (17-18) more than a traditional card user (5-6). That was a turning point,” said Mistry. “It showed us that if banks integrate UPI natively into their mobile apps with rewards, controls and onboarding, they can win back engagement.” He stated that banks are missing out on the behavioural data generated by UPI transactions. “Banks treat UPI as a switch. But there’s rich behavioural data that can drive product innovation and cross-sell opportunities,” he said.
Top four private banks
Zeta is already in discussions with the country’s top four private banks, including HDFC Bank and is powering HDFC’s PayZapp platform.
The broader message of the study is clear — UPI is no longer just a backend utility, it’s a front-end opportunity to deepen customer relationships, drive product adoption and restore banks to the centre of digital financial engagement. “The next wave of UPI innovation will be led not by who owns the rails, but by who owns the experience,” Mistry added.