With the introduction of new technology and the government’s aim for a cashless economy, digital payments in India have seen a remarkable transition in recent years. The Indian digital payment ecosystem is rapidly expanding, providing millions with ease, security, and financial inclusion. Here are a few trends, statistics, and examples that illustrate the evolving payment landscape. Mobile Payments Revolution The emergence of mobile payments has been one of the most significant transformations in India’s digital payment landscape. Mobile wallets such as Paytm, Google Pay, and PhonePe have become household names. The volume of PPI payments in India in fiscal year 2022 accounted for approximately 6.58 billion which included mobile wallets. The growing use of mobile payments has made transactions more accessible and convenient for both urban and rural communities. Unified Payments Interface (UPI) UPI has emerged as a game changer in India’s digital payment ecosystem. Developed by the National Payments Corporation of India (NPCI), it allows users to transfer money quickly from their bank accounts to any other bank account, 24 hours a day, seven days a week. In June 2023, the UPI payments system processed 9.34 billion transactions worth 14.75 lakh crore. The success of UPI has spurred other countries to investigate similar systems, underscoring India’s pioneering role in digital money. QR Code Payments QR code payments are just another innovation that has changed the way people make payments. QR codes have been used for payment by businesses of various kinds, from street vendors to large organizations. Customers simply scan a QR code, enter the amount, and finish the transaction. According to Ernst & Young, QR code payments will account for 9.4% of all digital payments by 2025. This technology has made digital payments available to people who do not have cell phones or internet connections. Financial Inclusion Digital payments have played a critical role in extending financial services to India’s unbanked and underbanked communities. The Jan Dhan Yojana, a government project, has encouraged financial inclusion by providing bank accounts for millions of people. The Reserve Bank of India’s financial inclusion index (FI) increased from 56.4% to 60.1% in 2022–23 (April–March) due to improvements in usage and quality dimensions, a substantial improvement over prior years. Gig Economy and E-Commerce The rise of e-commerce platforms and the gig economy have contributed to the increase in digital payments. Amazon and Flipkart, as well as ride-sharing services Uber and Ola, have integrated digital payment systems into their apps, making it easier for consumers and gig workers to interact. This pattern is predicted to continue, with the Indian e-commerce business expected to reach $120 billion by 2025. Regulatory Framework India’s government and regulatory organizations have been engaged in building a favourable climate for digital payments. Initiatives such as the “Digital India” campaign, Aadhaar-based e-KYC, and the implementation of the Goods and Services Tax (GST) have streamlined the digital payment ecosystem, making it more secure and transparent. The future of digital payments in India looks bright, with a focus on innovation, convenience, and financial inclusion. As more Indians accept digital payments, the landscape is poised to evolve, generating opportunities for both businesses and consumers. With a population of over a billion people, India’s digital payment revolution has the potential to set a global standard for digital finance.
Tag: digital
India’s Changing Fintech Ecosystem
In recent years, India’s fintech ecosystem has undergone a spectacular transition, revolutionizing how financial services are accessed and delivered. The convergence of technology, shifting customer tastes, and supportive legislative actions have resulted in a dynamic and diverse fintech ecosystem. From payments and loans to wealth management and insurance, the industry’s rapid expansion has not only boosted financial inclusion but also paved the way for creative solutions catering to a wide range of customers. The emergence of fintech in India can be attributed to a number of elements coming together. One of the key motivators has been the phenomenal growth of smartphones and internet connectivity, particularly in rural areas. This digital flow has produced a massive client base with access to digital financial services. Digital payments and Remittances With the launch of the Unified Payments Interface (UPI), India’s digital payments market has undergone a seismic upheaval. UPI has streamlined peer-to-peer transactions, allowing for quick and smooth money transfers. This innovation has not only reduced reliance on cash but has also accelerated the adoption of digital wallets and mobile banking apps. Furthermore, the government’s demonetization campaign in 2016 served as a spark, encouraging more individuals and companies to accept digital payments. Online Lending India’s ancient banking system frequently denied formal credit to a large segment of the population. Fintech platforms filled this void with novel loan strategies. These platforms analyze creditworthiness and distribute loans quickly by leveraging alternative data sources and smart analytics, making lending available to both individuals and small businesses. Investment and Wealth Management Fintech has democratized wealth management by giving consumers platforms to invest in stocks, mutual funds, and other financial instruments. Robo-advisors have gained popularity by providing algorithm-driven investing recommendations suited to individual risk profiles. This trend has made it easier and less expensive for regular investors to participate in the capital markets. Insurtech The insurance industry has also been transformed by fintech. Insurtech businesses use data analytics, artificial intelligence, and IoT devices to customize insurance policies, speed claim processing, and improve customer experience. This has made insurance products more accessible, inexpensive, and responsive to customer needs. Challenges and Opportunities Despite its rapid growth, the Indian fintech ecosystem faces certain challenges. Data security and privacy concerns, regulatory uncertainties, and the need for constant innovation are some of the hurdles that industry players must navigate. Additionally, ensuring financial literacy and digital literacy among the masses remains critical to harnessing the full potential of fintech. However, the possibilities are numerous. The government’s “Digital India” program and initiatives such as the “Jan Dhan Yojana” have paved the way for a financially egalitarian digital environment. Collaborations between established financial institutions and fintech firms can help deliver more comprehensive and efficient services by using each other’s capabilities. Regulatory Outlook India’s regulatory organizations have taken an aggressive stance towards fintech. The Reserve Bank of India (RBI) has implemented policies to encourage innovation while maintaining financial stability. The regulatory framework allows financial firms to test their ideas in a controlled environment, stimulating innovation while limiting risks. Furthermore, the RBI’s rules on digital KYC and data localization indicate the authorities’ commitment to balancing innovation and security. India’s fintech sector has grown from a niche market to a significant force altering the country’s financial environment. The convergence of technology, creativity, and regulatory support has enabled fintech to overcome gaps, increase financial inclusion, and improve the efficiency of financial services. As the ecosystem matures, collaboration, innovation, and regulatory vigilance will be the cornerstones of its continuous growth, ultimately leading to a more inclusive and digitized financial future for India.
Importance of making the Indian Digital Lending Sector more Transparent
Transparency is a fundamental cornerstone of trust in any lending relationship, and it has special significance in the context of small business lending. The expansion of the economy, the creation of new jobs, and innovation are all significantly influenced by small enterprises. Small firms frequently encounter difficulties obtaining capital due to the complexity of the lending environment. Transparency becomes essential in this situation to guarantee honest, moral, and ethical lending practices that benefit both lenders and small enterprises. Only 48% of small firms can currently pay their financial obligations. The need for transparency in the financing process is greater than ever. Additionally, financial institutions must be more fair and open given the destruction the COVID-19 outbreak has caused. Financial resources are constrained, so investments must be better targeted if they are to yield the maximum results. Maintaining financial transparency is crucial for small and medium-sized businesses (SMEs), which are frequently unable to offer bank collateral in order to attract such investment. Good prospects and companies with sound financial reporting procedures will have a greater chance of obtaining credit without having to put up a lot of collateral since banks will have more information on which to base their lending choices. Small Business Lending: The Value of Transparency According to a World Bank assessment, there are $5.2 trillion in unmet financing needs for micro, small, and medium-sized businesses worldwide, which is nearly 1.5 times their present loan market. The idea of transparency in small company lending refers to bank lending where information is published to make sure the borrowers are fully aware of the terms and circumstances of the credit. According to estimates, only 14% of small businesses that applied for loans received all of the funding they wanted. Transparency is therefore more important than ever. It is possible to achieve greater transparency by disclosing important information to the borrower before signing an agreement about loan prices and fees. Additionally, bank transparency requires them to refrain from irresponsible lending by keeping hidden fees and unexpected rate increases hidden from borrowers, which are not disclosed upfront. At the beginning of the agreement, the borrower should be informed of all charges and the possibility of increases. Credibility When small company lending is transparent, a lender-borrower relationship is based on trust. Borrowers might have doubts about the loan, interest rate, or repayment plan if these details are not made transparent. If there is a lack of openness, the borrower can also find it challenging to understand how the lender uses their financial and personal information. Successful Credit Grant Growing firms looking to borrow money from the bank may have a lot of sway if they can consistently and successfully create accurate financial reports. Furthermore, since they give banks the crucial data they need to make loan choices, high-quality, honest financial reports eliminate the requirement for significant collateral. Information Shortage Small business owners are reportedly paying up to 50% in interest without much knowledge, according to a study by the Opportunity Fund and the Federal Reserve. Little companies lose money as a result of this. Small businesses struggle to make informed judgements and evaluate pricing due to a lack of information, such as loan rates. In conclusion, transparency in small business lending is essential for fostering trust, promoting fairness, complying with regulations, and supporting the financial success of both lenders and borrowers. Transparent lending practices create a level playing field, enabling small businesses to thrive and grow sustainably.
What Does the Digital Lending Boom Mean for Indian MSMEs?
The Micro, Small, and Medium-Sized Enterprises (MSMEs) in India will be significantly impacted by the surge in digital lending. MSMEs are essential to the Indian economy and make a substantial contribution to job creation and general economic expansion. Over the past few years, MSMEs’ use of Internet payments has increased by 50–100%. According to a Global Findex Report, In India, only 8% of people borrowed money through official sources. Over the past five years, the Reserve Bank of India (RBI) has made great progress since creating a robust framework to oversee digital lending. India’s Fintechs have been able to thrive due to the solid payment structure governed by the government, which has led to an increase in bank account openings—more than 50% of which are attributable to Fintech. Growth of Digital Lending and its Effect on Indian MSMEs: The MSME sector has improved as a result of the RBI’s support for sandboxes to foster innovation in the MSME sector and NITI Aayog’s promotion of digital banking for Indian companies. Statistics show that one of India’s fastest-growing Fintech industries is digital lending. By 2030, the book size of Indian digital lending firms is anticipated to climb from USD 38.2 billion in 2021 to roughly USD 515 billion, with a 33.5% increase in CAGR. Some effects that digital lending has had on Indian MSMEs include the following: Several digital lending software, including Lending Kart, Cash Suvidha, Namaste Credit, and Flexiloans, have found new markets because of digital lending. The post-pandemic atmosphere has also permitted MSMEs to include online lending platforms in their systems to achieve credit standards. The firms were in desperate need of loans made available by the accessibility of digital financing when the demand for MSMEs in India decreased in the years 2020–21. The Indian MSMEs could then build up their resources and utilize the technology. Local and in-person lenders typically only provide loans to MSMEs with the requirement of collateral, which is a cause of concern for MSMEs, particularly those with lower turnovers. To solve this issue and provide loans without collateral, contemporary start-ups have impacted cutting-edge technology like machine learning and artificial intelligence. Without having to contact banks for loans frequently, loan offers can be sent via digital lending software from anywhere in the world to a large number of vendors. The loan process in the digital age significantly improves the effectiveness of MSMEs’ support systems. According to a number of study surveys, 60–80% of Indian MSMEs now sell their products and accept payments online. All Indian MSMEs now need to use technology, whether it be for bookkeeping, digital transactions, or accounting, and the pandemic has accelerated this demand. According to the annual report of the Ministry of MSME for 2020–21, India is home to about 6.33 crore MSMEs, all of which make significant contributions to the GDP, employment, and economy of the nation. It is therefore plausible to predict that MSMEs will, over time, adopt secured technological software to facilitate financial transactions, which will ultimately spur efficiency and advancement in general.
Fintech and Digital Currencies: Exploring the Potential of Central Bank Digital Currencies
The emergence of financial technology (fintech) in recent years has transformed the way we conduct financial transactions. The rise of digital currencies is one of the most significant developments in the fintech industry. While cryptocurrencies such as Bitcoin have gained popularity, central banks around the world are investigating the possibilities of central bank digital currencies (CBDCs). So, here we explore the potential of CDBCs. Financial Inclusion and Banking Service Access CBDCs have the ability to address the difficulties of financial inclusion by offering universal access to basic financial services. Individuals who do not have traditional bank accounts can use CBDCs to get a digital wallet that is directly linked to the central bank, allowing them to engage in the digital economy and access important financial services. This empowers unbanked and underbanked people while also encouraging economic growth and decreasing disparities. Efficiency and Cost-cutting CBDCs can streamline financial transactions by minimizing middlemen and associated expenses by harnessing the benefits of block chain technology. Real-time settlement and instant peer-to-peer transactions are conceivable, removing the need for third-party payment processors and lowering transaction fees. This increased efficiency can benefit firms, consumers, and governments alike, boosting economic growth and decreasing friction in the financial system. Financial Stability and Regulation CBDCs strengthen central banks’ visibility and control over financial transactions. The use of block chain technology allows for increased monitoring capabilities, which aid in the discovery of illegal acts such as money laundering and fraud. Furthermore, CBDCs can serve as an additional policy tool for managing monetary policy, thereby enhancing financial stability and resilience. Transactions and Remittances Across Borders CBDCs have the potential to make cross-border transactions more efficient, transparent, and cost-effective. CBDCs can efficiently facilitate remittances, which are critical for many developing economies, by decreasing fees and delays associated with traditional money transfer systems. This has the potential to boost economic growth and enhance the livelihoods of individuals and families who rely on remittances. Innovation and the Fintech Ecosystem CBDCs can promote innovation in the fintech environment. CBDCs enable the development of smart contracts and decentralized apps (DApps) by offering a programmable infrastructure, thereby opening up new possibilities for automated financial services and novel financial solutions. This fosters technical developments and a thriving fintech sector. Key Principles of CDBCs Indian Digital Currency Program The Reserve Bank of India (RBI) launched a digital rupee pilot programme in the wholesale sector, on November 1, 2022. Our Indian Digital Currency (IDC) would be used as a cryptocurrency in our country. This digital money would give our country’s economy a boost and help it grow. What is the RBI’s take on CBDC? A redesigned and computerized form of physical currency, similar to sovereign paper currency. Exchangeable at par with present currency and acknowledged as a medium of payment. A lawful tender and a safe deposit of value. Conclusion Central Bank digital currencies have the potential to transform the financial landscape, providing several benefits ranging from financial inclusion and efficiency to improved regulatory supervision. However, CBDC deployment necessitates careful consideration of a number of aspects, including privacy problems, cybersecurity, scalability, and interoperability with existing financial systems. Collaboration between policymakers, financial institutions, and technological specialists is critical as central banks throughout the world continue to explore and trial CBDC projects. To exploit the revolutionary potential of CBDCs while resolving issues and ensuring that digital currencies contribute to a more egalitarian, efficient, and sustainable financial future, an inclusive and transparent strategy is required.
The Rise of Digital Identity Verification in Fintech Credit
Digital identity verification has evolved as an important component of credit evaluation processes in the fast-paced world of financial technology (fintech). Traditional methods of verifying identities for credit applications, such as manual document checks and in-person verification, are time-consuming, error-prone, and out of step with today’s customer expectations. Fintech firms are utilizing cutting-edge technologies and digital solutions to revolutionize identity verification, thereby improving security, efficiency, and customer experience. What is Digital Identity Verification? A digital identification service is a process that allows consumers to securely access their financial and legal information. We can easily communicate and protect our personal and sensitive information by using identity verification services. Advantages of Digital ID in Fintech and Online Banking Exceptional Customer Service Customers benefit from a seamless experience since digital identification verification simplifies and streamlines the credit application procedure. Fintech companies may verify identities in seconds by leveraging technology like face recognition, biometrics, and artificial intelligence (AI), eliminating the need for clients to provide physical documents or visit a physical location. This frictionless experience improves client happiness and increases credit application conversion rates. Improved Security and Fraud Prevention Digital identity verification improves security and reduces the danger of identity theft and fraud. Fintech companies can use advanced technologies to validate identification documents, identify tampering or forgery attempts, and undertake liveness checks to guarantee the person presenting the identity is physically present. These strong security measures safeguard both customers and lenders, lowering the likelihood of fraudulent activity in the credit ecosystem. Access to Previously Untapped Markets Credit availability to traditionally underserved populations, such as the unbanked and underbanked, could be expanded with digital identity verification. Traditional credit assessments frequently rely on traditional credit bureau data, which excludes people who do not have a formal credit history. Fintech organizations can assess creditworthiness based on characteristics such as payment history, income, and transaction patterns by leveraging alternative data sources and advanced analytics. This inclusion helps underserved people obtain credit and establish financial profiles, thereby promoting financial inclusion and economic empowerment. Regulatory Compliance Fintech firms operate in a highly regulated environment, and adhering to Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements is critical. Digital identity verification systems assist in satisfying these compliance standards by automating identity checks, certifying document authenticity, and completing risk assessments. These digital solutions ensure that fintech organizations meet regulatory requirements, lowering compliance risks and increasing operational efficiency. Scalability and Cost effectiveness Manual identity verification techniques are time-consuming, labour-intensive, and not scalable. To handle increasing numbers of credit applications, fintech organizations require nimble and efficient solutions. By automating the verification process and eliminating the need for manual involvement, digital identity verification provides scalability and cost effectiveness. Because of this scalability, fintech firms can manage a larger volume of credit applications while keeping expenses under control. Steps to Create a Trusted Digital Identity: – Digital identity verification is altering the financial credit market by providing a transformational approach to identity verification. Fintech firms are improving consumer experiences, tightening security measures, expanding loan access, maintaining regulatory compliance, and improving operational efficiency by employing sophisticated technologies. The rise of digital identity verification is changing the way credit applications are processed, decreasing friction, increasing security, and promoting financial inclusion. As the fintech sector evolves, digital identity verification will remain a critical component in offering seamless and secure credit experiences for individuals and organizations alike.
Are MSMEs receptive to digitalization?
Digitalization has technically taken every domain by storm however, the area of interest for us is the MSME (micro, small, and medium enterprises) market. MSMEs have varied levels of receptivity to digitalization, but there has been a growing trend toward digital adoption in recent years. Many MSMEs have recognized the benefits of digitalization, such as increased efficiency, improved productivity, cost savings and expanded market reach. The level of receptivity to digitalization can depend on factors such as the size of the business, industry and location. Smaller MSMEs may have limited resources to invest in digital technologies or may lack the necessary skills and knowledge to implement them effectively. In addition, some traditional businesses may be resistant to change or may not see the value in adopting new technologies. Nevertheless, there has been a significant increase in digitalization among MSMEs due to the COVID-19 pandemic, which has accelerated the adoption of digital technologies as a means to stay afloat and remain competitive. Governments and industry bodies have also been actively promoting digitalization through various initiatives and incentives, further encouraging MSMEs to embrace digital technologies. Government initiatives Digital MSME Scheme – The government launched the Digital MSME Scheme in 2018 to encourage the adoption of digital technologies among MSMEs. Under this scheme, MSMEs can get access to cloud computing, e-commerce and other digital tools at a subsidized rate. For instance, small businesses under the digital scheme get financial assistance ranging between 15 Lakhs to 1 Crore. Udyog Aadhaar Memorandum (UAM) – The UAM is a one-page registration form that MSMEs can use to register online. This has made it easier for MSMEs to get registered and take advantage of various government schemes and incentives. As of January 17, 2022, 66,34,006 enterprises are registered on the Udyam portal out of which 62,79,858 are Micro (94.6%), 3,19,793 are small and 34,355 are medium enterprises. Technology and Quality Upgradation Support – The government provides financial assistance to MSMEs to upgrade their technology and improve the quality of their products. This support covers areas such as product design, testing and certification. For instance, financial support is given to MSMEs who fall under ZED Certification Scheme (supporting the ‘Make in India’ initiative). Under this scheme, the Government provides upto 80% subsidy to MSMEs. Digital India Program – The Digital India Program is an initiative launched by the government to transform India into a digitally empowered society and knowledge economy. The program has several components that specifically target MSMEs, such as the Common Service Centres (CSCs) that provide digital services to citizens, including MSMEs. Startup India – The Startup India program aims to promote entrepreneurship and innovation in India. The program provides various incentives and support to startups, including MSMEs, to help them grow and scale their businesses using digital technologies. Under this scheme, eligible startups can be exempted from paying income tax for 3 consecutive financial years out of their first 10 years since incorporation. With several schemes, initiatives and incentives put in place, it is safe to say that the MSMEs have been reciprocating well to be brought under the ‘digitized’ realm. With each step taken by the government, financial institutions and businesses, the vision of making India digital-first seem achievable. For businesses, it is about leveraging the schemes and initiatives to remain competitive in the market however, the intention is also serving them with growth through technology!
Indian banks migrating to digital channels; more on the evolution
The evolution of Indian banks migrating to digital channels can be traced back to the early 2000s when the Reserve Bank of India (RBI) started promoting the use of electronic payment systems. The introduction of the National Electronic Fund Transfer (NEFT) in 2005 and the Immediate Payment Service (IMPS) in 2010 were significant steps toward the digitization of payments. However, the real push towards digital banking in India came with the demonetization drive in November 2016. The sudden withdrawal of high-value currency notes led to a surge in digital payments, forcing banks to ramp up their digital infrastructure and services. Since then, there has been a significant increase in the adoption of digital channels by Indian banks. Today, most banks in India offer a range of digital services, including mobile banking, internet banking and digital wallets. Customers can access their accounts, transfer funds, pay bills and even apply for loans online or through mobile apps. Banks also invest heavily in artificial intelligence, chatbots and other digital technologies to enhance customer experience and streamline operations. The COVID-19 pandemic further accelerated the adoption of digital banking in India as customers increasingly relied on online channels to conduct their banking transactions. Banks responded by launching new digital products and services, such as video KYC (Know Your Customer) and virtual credit cards. Examples of Banks that have revamped their offerings approach Indian banks are increasingly adopting digital channels to provide a more convenient and efficient banking experience to their customers. Whether it was Internet banking to reduce touchpoints or mobile banking to bring services to your fingertips, the transformation has been massive. Building on the evolution, Indian banks also proactively introduced altering service designs and encouraged the use of contactless payments through technologies like the NFC, QR codes, mobile wallets, etc. Today, urban India experiences the provision to make payments to street vendors too through digital methods. It is a vision to convert India into a digital-first country from a cash-heavy economy and joining force with the banks to achieve the said vision is Fintechs. Collaborating with Fintechs has accelerated the entire process whether in terms of internal operations of the bank or external aspects. The evolution of Indian banks migrating to digital channels has been rapid and transformative and the trend is expected to continue as more customers shift towards digital banking.
Multiexperience in Digital Transformation
Multiexperience is the practice of creating digital experiences across multiple touchpoints, such as mobile devices, wearables, smart speakers and other connected devices whereas digital transformation is the process of using digital technologies to fundamentally change the way businesses operate and deliver value to their customers. In the context of digital transformation, multiexperience plays a crucial role in enabling organizations to provide seamless, intuitive, and engaging digital experiences to their customers across different channels and devices. By leveraging a multiexperience approach, businesses can create a consistent user experience across various touchpoints, which can lead to increased engagement, customer satisfaction, and loyalty. Customers today are attracted to any service that gives them a sense of seamlessness and enhanced experience. Multiexperience platforms ensure customers are provided with what they need and get used to such services for the future. Its enhanced workflows and ability to mitigate repetitive tasks allow internal operational smoothness that also reflects on the front end for the customers to enjoy. Furthermore, multiexperience also means new technologies and approaches are tested for better CX. For instance, experimenting with AI, AR/VR and voice interfaces to create engaging and personalized digital experiences. This gives businesses a competitive edge over others as embracing digital transformation is the need of the hour. It will surely help businesses stay ahead of the curve in terms of customer expectations and market trends. Another very interesting aspect of multiexperience is the amount of data it is capable of collecting. This characteristic gives great insight into customer behaviour, preference, need and trend, enabling businesses to make data-driven decisions. In the long run, this gives businesses a complete understanding of what a customer needs and wants. For a better understanding, let’s peep into how the finance industry leverages multiexperience modes. Alongside physical stores, banks invest heavily in web portals and mobile applications. The user is offered multiple methods to handle their account and from any location. Financial institutions also indulge in digital marketing activities on these platforms to give users insights or inform them of new services, products and features. Given that multiexperience can help businesses improve development by 10 times, it has become more of a strategy to build a business nowadays and any business that does not conform to this change, lags in its growth. Multiexperience Summary In conclusion, multiexperience is a critical component of digital transformation, enabling businesses to provide more engaging and personalized digital experiences across multiple touchpoints and devices, while improving operational efficiency and fostering innovation.
The Future Of Online Banking In India
Digital banking in India is expected to grow with a CAGR of 23.1% from 2022 to 2030. NBFC growth is also estimated to hit $5 trillion in 2024. E-Banking existed as an additional service before COVID-19. However, after the pandemic, globally, the concept of Internet banking has changed. Indian banks have achieved phenomenal growth by adopting digital technologies. Banks hope to have a multi-dimensional relationship with customers to improve banking services. Upcoming Digital Banking Trends As digital banking continues to grow, it opens up new opportunities to reach the underserved market. Rural India has numerous small businesses and cottage industries that can thrive well with futuristic funding options. However, it was difficult for banks to reach out to those consumers. The following digital banking trends will bring financial services and products closer to the rural parts of the country as well: Mobile Banking According to a study, 89% of consumers use mobile banking services. Mobile wallets are also increasingly adopted by rural India due to the widespread growth of digitisation. Security is often a major concern for mobile banking users. Mobile banking has reached 5X growth compared to online banking. Mobile banking will gain even more popularity as the number of millennials and Gen Z customers increases. Emerging Trend Of Neobanks Neobanks are growing at a rapid pace in India. These neobanks operate digitally without any physical branches. They are great alternatives to traditional banks, offering innovative products and reaching out to underserved markets. Due to RBI regulations, Neobanks partners with traditional banks to extend customer services. BaaS The banking As A Service (BaaS) sector is causing major disruption in the fintech industry. Instead of building every service from scratch, it is much easier for NBFCs (Non-Banking Financial Companies) to set up Neobanks using the BaaS platform. The neobank technology stack can be customised according to the goals and needs of NBFCs. Partnering with a BaaS provider such as Niyogin, neobanks can offer services using the APIs. They can build on the infrastructure platform already complete with rails that can easily connect with rural customers. Innovative Technologies According to Insider Intelligence Survey, 66% of banking professionals believe that newer technologies such as Artificial Intelligence (AI), blockchain, and the Internet of Things (IoT) will positively impact banking by 2025. AI is now widely used in credit risk evaluation, customer authentication, and customer support. Blockchain technology will also help financial institutions cut down middlemen and reduce operational costs. Challenges For Future Digital-Only Banks Currently, RBI has a strict regulatory framework for digital banks. Digital banks must comply with liquidity standards and capital adequacy similar to commercial banks. Initially, these banks can get a restricted license, and after proving their efficiency, they can upgrade their license. To avail of digital banking services, customers need computer literacy. This is one of the main challenges for digital banks interested in providing services to rural India. Also, the need for secure banking services is also on the rise. The digital banking platform market is expected to reach $1485.5 million by 2028, from $776.7 million in 2021. Currently, 26% of Indians have a digital bank account, which is expected to grow in the future. RBI is also creating a closed sandbox environment for digital banking services. The budget has also carved some space for digital bank units, which is a clear sign of progression for the Indian banking sector. A fintech partner like Niyogin will help banking institutions easily transition from legacy systems to modern and advanced banking technology for futuristic customers.