Covid-19 has brought the world to a standstill. The adverse impacts of the situation have been massive. However, sweet are the uses of adversity! The pandemic has given an enormous boost to the digital transactions. What began as a health and hygiene concern for people expedited quickly and became the most used payment and transaction methodology. Factors such as ease of use, convenience, hassle- free and seamless transaction options were some of the other reasons that bolstered the rate of digital adoption in India. Previously there was a lack of awareness about digital transactions in Indians. However, the present scenario has acted as a catalyst in educating them about the perks of shifting to digital transactions.

Indians prefer their money to be within their control. Hence, a significant reason for the rapid adoption of digital payments is the ease of managing finances. Digital payment users can easily keep tabs on their spending and expenditures through mobile apps that come in handy. With just a few taps, they can check in on their expenses and manage their finances better. However, the same cannot be said for traditional payment methods since it takes time for banks to update and showcase any transactions in the passbooks. Additionally, a study by BI suggests that about 97% of the younger population prefers internet and digital banking services. It offers them a personalised experience when it comes to expense monitoring and bill payments.

Financial innovations in the banking sector have made the entire the system of payments and transactions safe and transparent. For instance, QR codes, contactless cards and the likes have been found conducive in alleviating risks related to transactions. The use of advanced intelligence and other cutting-edge technologies help payment apps determine user’s behaviour patterns and build a layered protection against unauthorised activities and prevent online frauds. Besides, AI and ML help digital payment systems to actively monitor any abnormal payment behaviours and immediately alert the bank about such unnatural activities and probable frauds.

Businesses have gained by adopting digital banking as it allows them to tap into international markets and expand the reach of their services. Additionally, financial innovations have helped businesses assess their revenues in a structured manner, gauge their spending and seamlessly secure modern financial services. All of which can be utilised to diversify their business further.

While adoption of digital banking and financial innovations is on the rise, it is worth noting that the surge in digital adoption would not have been possible without a helping hand from banking institutions to FinTech providers. As such, banks are known to being risk-averse in nature and sceptical about technological innovations. However, the acceptance of fintech is indispensable to help rake up digital transactions system to the public and businesses. Adapting cutting edge financial innovations for daily needs has been a win-win for both banks and customers. It has eased the burden of banking systems in managing customer services and has also helped them provide user-friendly and economical financial solutions.

To conclude, India is evolving as one of the biggest FinTech markets in the world and banks are increasingly aware of this. Which is why they are investing in newer financial solutions with each passing day. FinTech is instrumental in leading the growth spurt in digital adoption, which is bringing in a paradigm shift in the payment and transaction ecosystem in the country.

The author is Founder, Zaggle and ZikZuk

DISCLAIMER: Views expressed are the author's own, and Outlook Money does not necessarily subscribe to them. Outlook Money shall not be responsible for any damage caused to any person/organisation directly or indirectly.