Innovating Finance: Navigating Risks for Enhanced Banking Performance in India

Banks are the supporting pillars of any economy around the world as their advancement and progress, paves way to a thriving economy. With the broadening dimensions of innovations in the banking sector and new neo-banking models coming up, banks have had to be dynamic and resilient enough to face global competition to retain their customer-base, as well as manage the risks that come with it. In India, banks are incorporating many technological financial innovations to improve their efficiency and performance. Through this study, an effort has been made to explore how financial innovations impact banking performance and what effect risk management has on the relationship of financial innovation and bank performance. The study strives to explore if an improvement in risk management could enhance the mediating impact of financial innovation on bank performance significantly in a positive manner. Secondary data collected from public sector banks in India over 10 years from 2012-13 to 2021-22 has been utilized to attain the study objective. It becomes apparent from the results that, with the restriction on the physical availability of ATMs and POS, mobile banking is taking on a more active role in the future.