As the Reserve Bank of India (RBI) barred Paytm from taking on new customers for its Payments Bank, a new report on Thursday said that fintech platforms’ dominance in digital payments may not result in a significant data advantage over banks.

According to Moody’s Investors Service, the introduction of the Unified Payment Interface (UPI) in 2017, which allows funds to be transferred instantaneously, has been a key catalyst to the development of digital payments due to the ease of use of apps running on the system.

“However, their dominance may not lead to significant advantages over banks, because the UPI’s open architecture means that a large user base does not necessarily make a particular service provider more competitive than others on the system,” said Srikanth Vadlamani, Moody’s Vice President and Senior Credit Officer.

Also, banks which are playing a crucial role in facilitating UPI payments, have access to transactions on the network.

“Because of this, fintechs’ dominance in digital payments may not result in a significant data advantage over banks,” the report mentioned.

Large Banks, on the other hand, have significantly improved their digital capabilities for key retail services.

Private sector banks and industry leader State Bank of India have significantly improved their own digital products in other areas, with customers adopting them widely.

“This will help these banks fend off competition from fintechs outside the payment segment. On the other hand, public sector banks other than SBI have relatively weak digital offerings and will be negatively impacted from the heightened competitive intensity,” the report noted.

Fintechs will continue to try to expand into other financial services, particularly personal loans and loans to small merchants.

“However, at the same time, the overall market may also expand as technology creates more opportunities, allowing banks to counter pressure on margins with business growth,” the Moody’s report said.

Overall, fintech payment companies in India have led the rapid growth of digital payments in the country, but their dominance may not translate to competitive advantages to expand into other financial services.

In addition, India’s major banks have significantly beefed up their digital product offerings and canAwithstand the competition from fintechs, according to the report.