The Digital Banking Revolution in India: How Retail Customers and Banks Are Interacting in the Digital Era

Abstract

The digital banking revolution has driven a revolutionary transformation in India's banking sector. This change, which modifies the nature of interactions with financial institutions, is the consequence of several factors coming together, including growing smartphone usage, extensive coverage of mobile networks, incorporation of cutting-edge digital technologies, and proactive government initiatives. The study employed a descriptive research design to examine the digital banking revolution in India and comprehend the interactions between retail customers and banks. The development of digital banking in India was covered by secondary data that was obtained from financial reports, industry publications, government publications, and scholarly journals. Potential biases in chosen data, differences in data collection techniques, and the intrinsic lack of control in secondary data analysis were among the limitations. The paper traces the history of digital banking in India, starting with ATMs in the 1980s and ending with the revolutionary Unified Payments Interface (UPI) in 2016. Analysis is done on the variables influencing the growth of digital banking, including rising smartphone adoption, wider mobile network coverage, and government initiatives. An in-depth analysis of two government initiatives, e-KYC and UPI, demonstrates their revolutionary potential to advance financial inclusion, streamline account opening procedures, cut expenses, and broaden financial accessibility. The integration of e-KYC and UPI has significantly altered the digital banking environment in India, promoting uptake, enhancing financial literacy, and quickening economic expansion. These initiatives have the potential to significantly influence how banking and financial services are shaped going forward, especially as India moves closer to becoming a digital economy.