Report Description

Digital banking systems are versatile and enable banks to add and expand services much faster as compared to conventional systems. In order to offer banks and their customers the highest levels of cost effectiveness, security, and flexibility, digital banking relies on high-level process automation, web-based services, and APIs. Modern banking systems create real-time data streams and enhance essential analytics to enable a fully digital customer journey. All traditional banking services, procedures, and operations are being digitalized in order to better serve clients through internet channels. Digital banking is serving as a "model banking of the future," paving the way for the adoption of QR codes and UPI payments.  In India, COVID-19 has effectively added a new dimension to the development of digital banking. During that time, digital adoption in India grew rapidly. At the micro level, change was facilitated by the advent of new digital participation from other financial firms. According to a Mastercard global poll, Indians are the most open to adopting new digital payment methods in the Asia Pacific region.

Over the past five years, India's digital payment transactions have increased significantly. Pre-paid payment instruments (PPIs), Immediate Payment Service (IMPS), Bharat Interface for Money-Unified Payments Interface (BHIM-UPI), and the National Electronic Toll Collection (NETC) system are examples of digital payment methods that have experienced significant growth and changed the landscape of the industry. Digital payment transactions totaled USD613.69 million in 2019–20, USD745.50 million in 2020–21, and USD1.19 billion in 2021-22, respectively.

Moreover, the expansion of digital payments can be ascribed to the availability of acceptance infrastructure, which has seen significant growth in the year after the Payments Infrastructure Development Fund became operational (PIDF). While the number of Bharat Quick Response (BQR) codes deployed rose by 39.3% to USD66.71 thousand over the same time, the number of Points of Sale (PoS) terminals increased by 28.6% to USD81.48 thousand. Furthermore, the number of automated teller machines (ATMs) grew from USD3.21 thousand in 2020-21 to USD3.33 thousand in 2021–22.