Digital Transformation of Financial Sector - Evolution, Issues and Challenges: Indian Perspective

Abstract

The Indian financial sector has remarkable progress in its digital transformation, driven by government initiatives, technological advancements, and evolving consumer preferences. This shift has significantly enhanced access to financial services while boosting efficiency and transparency. Embracing digital financial transactions is vital for fostering financial inclusion, convenience, transparency, and economic growth. It empowers individuals, lowers costs, strengthens security, and aligns with the government’s goals of promoting digitalization and financial literacy. Encouraging digital adoption will remain a key focus in India’s efforts to modernize its financial sector and stimulate economic progress. The rise of UPI transactions in India stems from its user-friendly design, interoperability, strong government backing, robust security features, affordability, and widespread adoption. This innovation has revolutionized how Indians conduct transactions and has played a pivotal role in advancing financial inclusion and digitalization. To sustain the growth of digital financial payments, continuous education, enhanced security protocols, and improved infrastructure are essential. The COVID-19 pandemic further accelerated the adoption of digital payments globally, including in India, underscoring the critical role of such systems in the modern economy. However, challenges like inadequate internet connectivity, cyber threats, technological disruptions, language barriers, and limited digital literacy pose significant risks to the growth of digital financial transactions in India. These challenges have the potential to widen societal inequalities if left unaddressed. Overcoming these obstacles requires a collaborative approach involving government agencies, financial institutions, technology providers, and users. This article explores the evolution of India’s digital journey, the necessity of adopting digital financial transactions, the factors driving their growth, the hurdles encountered, the global expansion of digital payments, and the roadmap for the future.Bottom of Form