Synopsis: Speaking at a high-level banking conclave, a senior RBI official highlighted how technology has moved from being a support tool to becoming the foundation of modern banking. Drawing lessons from India’s digital journey — from ATMs to UPI — the address explained why fintechs surged ahead, where banks lagged, and how Digital Public Infrastructure (DPI) is reshaping the future of financial intermediation.
Technology, Banks & India’s Digital Leap: Lessons from the UPI Era
Addressing leaders of the financial fraternity, the speaker described India’s banking ecosystem as the nerve centre of the nation’s financial system. Against the backdrop of a fragmented global order and rising protectionism, the theme of the conclave — India’s Quest for Self-Reliance — could not have been more relevant.
As globalisation’s old assumptions fade, economies are grappling not only with rapid technological change, but with a deeper shift — technology itself has become foundational to finance, not merely a tool for efficiency.
Technology Is No Longer Optional for Banking
From payments and credit to savings, investments, regulation and supervision, every aspect of finance is being redefined by technology. Emerging forces such as Artificial Intelligence and quantum computing present both opportunity and risk.
The challenge for banks today is not whether to adopt technology, but how to adopt it wisely — ensuring systems are secure, inclusive, resilient and future-ready.
India’s Digital Public Infrastructure: A Global Model
India’s experience shows that countries which harness technology responsibly can do more than adapt — they can shape global standards. Platforms such as Aadhaar and UPI have positioned India as a leading example of digital transformation.
The key insight: technology must not only be widespread, it must be foundational.
Lessons from India’s Digital Payments Journey
India’s banking system has evolved through over two decades of payment innovation:
- ATM networking
- RTGS, NEFT and IMPS
- The game-changing UPI
- Experiments with digital currency
This gradual yet transformational journey offers important lessons.
Five Big Takeaways from India’s Digital Success
- Public sector leadership: Core initiatives like ATM switches, RTGS, UPI, Aadhaar, NPCI and RBIH originated from public institutions.
- Infrastructure-first approach: Digital systems were built as public goods, accessible to all at minimal or zero cost.
- Public–private collaboration: While the public sector built infrastructure, private players focused on innovation.
- Fintech explosion: Open access to DPI enabled rapid growth of payment aggregators, PPIs and third-party apps.
- Exposure of banking inertia: Fintechs, unburdened by legacy systems, moved faster than traditional banks.
Why Fintechs Outpaced Banks in the UPI Revolution
Although UPI transactions ultimately move funds between bank accounts, public perception associates UPI more with non-bank apps than banks themselves. Fintechs played a decisive role in taking UPI to every corner of the country.
Their advantages were clear:
- Technology edge: No legacy IT systems, allowing faster upgrades and scalability
- Data advantage: Access to cross-bank and multi-channel spending data
- Cost efficiency: Asset-light models, no branches, lighter compliance burdens
Banks: Safe, Regulated — But Slower to Innovate
Banks occupy a unique position in the economy. They are licensed, heavily regulated institutions with a critical role in money creation. While this offers stability and trust, it also comes with:
- Higher compliance and regulatory costs
- Complex KYC and AML obligations
- A more conservative approach to risk and innovation
Operating in a protected environment can unintentionally blunt innovation. As a result, banks underestimated UPI’s transformative potential — something fintechs recognised early.
The Real Challenge Ahead
The message for banks is clear: technology-led disruption is no longer peripheral. It sits at the core of future financial intermediation. Banks must overcome internal inertia, modernise legacy systems, and rethink how they partner with fintechs.
📌 Key Takeaway
India’s digital success proves that public infrastructure + private innovation can transform finance at scale. The next phase will test whether banks can match fintech agility while preserving trust, stability and inclusion — or risk being relegated to the background of their own payment systems.
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