Is the Paytm crisis leading to higher ad spends in banking and fintech categories?

While Paytm looks to tide through its rough times, has the crisis become an opportune moment for increased ad spends in the banking and fintech category? 

After RBI's action against Paytm Payments Bank on January 31, 2024, several banking and fintech companies, including Paytm, have brought out ads harping on the concept of trust, an essential attribute in all financial products.

RBI barred Paytm Payments Bank on January 31, 2024, from taking any deposits, credit transactions or top-ups in customer accounts. It also stopped it from providing any other banking services, such as UPI facility and fund transfers, after March 15. It further mentioned that the Nodal Accounts of One97 Communications and Paytm Payments Services Ltd. are to be terminated at the earliest.

In February, there was a flurry of banking services and fintech companies bringing out ads in print editions claiming themselves to be the safest or most trustworthy digital payment solution.

• On February 5, slice, a fintech company, released a front-page ad announcing the launch of its UPI-first account. 

• On February 12, SBI brought out a full-page ad highlighting 'Trust', 'Security', and 'Safety' as the reason 'why 49+ crore customers prefer our next-gen banking solution'. UPI Payments was listed amongst its products and services in the ad. 

• On February 20, Yes Bank featured on the front-page promoting its 'Yes Pay Next'- its single app for every payment, including UPI. 

• On February 23, BHIM also had a full-page ad stressing its safety, simplicity and seamlessness. It concluded itself to be a 'trusted digital payment app'.  

Amidst this flood of advertising, Paytm itself brought out a front-page ad on February 19. However, its purpose was a little different. It was attempting to quell any rumours that its Paytm Soundbox and QR code will not be working anymore. "India's every Paytm QR and Soundbox will keep working. Today. Tomorrow. Always.", the copy read.

In response, Pine Labs, an Indian company providing financing and retail transaction technology, took a jab at the ad. It introduced a paid ad campaign on X (formerly Twitter), skillfully allowing readers to draw their own conclusions. The ad cleverly states, ‘The front page can be bought. Trust cannot.’ It further claims itself as a platform trusted by 1 million businesses because it takes compliance very seriously.

Whatever, the outcome of the Paytm crisis would eventually be, it is clear that for now, the media companies are reaping huge dividends from this.