Technological interventions and digital transformation have remained at the forefront of several priority policy discourses for the past several years. The role of Information and Communications Technology (ICT) has been debated to be beneficial to the major sectors of the economy and have a positive impact on the ease of living and in conducting businesses. The technological boom has also resulted in the massive decline of the digital divide between rural and urban India. The Common Service Centers in the country, especially in the rural and semi-urban parts of the country have been pivotal in bringing e-commerce and government services to the people at the grassroots level, thus bridging the gap between development and access to resources in rural and urban India. Through Direct Benefit Transfers, or DBT, more than INR 23 lakh crores have been distributed to beneficiaries since 2014. Furthermore, the use of digital platforms has enabled citizens to access public services without visiting government offices or approaching middlemen. For instance, collecting birth certificates, payment of bills, collection of rations, claiming admission, accessing exam results, getting certificates or availing banking facilities have been rendered hassle-free, time saving and seamless. These have further penetrated in the financial services sector and changed the policy, regulatory and consumption landscape in this sector. With an increasing share of internet penetrations, an Unified Payment Interface (UPI) and at-home financial services and assistance through net banking has led to increased access to banking systems and enhanced availing of services.These digital solutions have scale.

Furthermore, a completely new and altered financial services ecosystem has resulted from the growth of FinTech businesses and innovations over the past five years. The need for innovation and reinvention is being fueled by a variety of issues, including shifting customer expectations, fierce competition, complicated regulations, the need to streamline processes, and others. Systems may now easily and effortlessly interface with new applications and platforms owing to an enhanced era of open banking. Strong networked digital ecosystems are fast replacing physical banks and paper-based institutions.

Particularly for financial transactions and payments, India’s Unified Payment Interface (UPI) has been appreciated by the World Bank and others. The country completed 1.3 lakh UPI transactions every minute in just May 2022. India's digital product, UPI, is the centre of attention, regardless of whether developed nations or those unable to invest in such technology are interested. The MSME sector was the most impacted due to such transactions as illustrate by more than 87.3 per cent of the 41.4 lakh transactions conducted across the MSME ministry digitally.

Consumers have benefited greatly from the digitisation of payments as well as the revolution in investing on the demand front. Between April 2020 and January 2021, retail investors opened around 10.7 million Demat accounts. This has made it possible for the Indian stock markets to reach $ 3 trillion in 2021, which will be an extraordinary achievement. The digital revolution of trading institutions like the NSE is another factor in the achievement of this milestone. With more than 181,000 terminals spread out over India, NSE NEAT (National Exchange for Automated Trading) enables dealers to execute several trades quickly.

The development of fintech platforms like Sharekhan, which make it simple for regular investors to purchase and sell equities, has also had an impact on the Indian stock market. Between FY 2014 and FY 2022, the number of Sharekhan's monthly active users nearly tripled, from 275,000 to 764,000. Equirus, a financial organisation, has seen a similar shift due to the availability of apps like Equirus Wealth that make it easy for individual investors to invest in mutual funds. Along with that, Equirus Portfolio management services (PMS) also uses computerised trading, and this, along with the firm guidance of seasoned professionals, has helped the Equirus Long Horizon fund to generate a return of 19.48 per cent.

Most financial organisations prioritise the adaptation of their banking operations to the digital age, but actual achievement varies widely among them. Banks and credit unions must not retreat deeper in the face of an unsteady economy, but rather strengthen their commitment to plans that will provide fruitful outcomes promptly and widely. At the micro level, banks have given streamlining operations and processes, established a competitive edge, and boosted top-line growth major priority.

The digital transformation journey can be challenging. It requires a need to pivot from conventional norms and procedures to enabling new interventions to create impact, in addition to ensuring upskilling of the employers and transitioning the way of conducting businesses. Learning to connect the dots between digital initiatives, strategy, and business enablement remains imperative.

This blog has been co-authored by Ishita Sirsikar and Srijata Deb.