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Banking Technology: Where we've been and where we're going

Indian banking has come a long way since the days of manual bookkeeping and paper ledgers.

Today, India is home to some of the world's leading banks and financial institutions, innovating in areas such as artificial intelligence (AI), cloud computing, and mobile banking. But it hasn't always been this way. Just a few decades ago, Indian banks were far behind their western counterparts in terms of technology. So, how did India's banking sector make such strides in such a short period?

In the past, banks have been largely reliant on traditional methods – such as in-person visits to branches – to conduct transactions. However, with the advent of new technologies, banks are now looking to move towards a digital-first approach.

This shift is being driven by several factors, including the increasing use of smartphones and mobile devices, the rise of digital banking platforms, and the growing preference for cashless transactions. By embracing new technologies, banks can offer their customers a more convenient, user-friendly experience. In turn, this helps to attract new customers and retain existing ones.

Let's take a look at some of the most significant changes that have taken place in the banking sector over the past few years, as well as what we can expect to see in the future.


Banking in India can be traced back to the 18th century with the establishment of the Bank of Bengal in Calcutta. However, it was not until after Independence in 1947 that the modern banking system began to take shape. The Reserve Bank of India (RBI) was established in 1949 and charged with regulating the country's monetary policy. In 1955, the government nationalized 14 major banks including the Bank of India, Bank of Baroda, and Canara Bank.

The 1980s: The Early Days of Indian Banking Technology

The 1980s marked a period of deregulation, a pivotal decade for the Indian banking sector which led to the advent of new private banks such as HDFC Bank, ICICI Bank and Axis Bank in the 1990s.

It was during this time that the Reserve Bank of India (RBI) embarked on a mission to modernise the country's banking sector. One of the RBI's first moves was to set up the Indian Financial Network (INFINET), which was designed to be an electronic clearinghouse for all banks in India. INFINET was launched in 1986 and quickly became a success.

By 1988, all major banks in India were using INFINET to clear transactions.

The 1990s: Expanding Banking Services and Technologies

It was not until 1991 that the real influx of foreign banks began with the opening up of the economy to foreign investors. In that year alone, 24 foreign banks were given licenses to operate in India. This marked the beginning of a new era for Indian banking.

In the 1990s, Indian banks began expanding their services beyond basic deposit-taking and lending. ATMs were introduced and bank branches began offering 24-hour service. Internet banking was also introduced in this decade, though it would take a few more years for it to really take off.

The 2000s: Consolidation and Expansion

The early 2000s saw consolidation in the Indian banking sector, as smaller banks were acquired by larger ones. This consolidation led to an increase in competition and spurred further innovation among banks who were now seeking new ways to differentiate themselves from their rivals.

Perhaps the most important development during this time was the launch of the National Electronic Funds Transfer (NEFT) system in 2005. NEFT allowed customers to transfer funds between any two bank accounts in India electronically. This was a game-changer for the Indian banking sector, as it greatly increased the speed and efficiency with which transactions could be processed.

However, traditional banking methods were still predominant up until a few years ago. The primary mode of conducting transactions was through visiting branches in person. This was time-consuming and often inconvenient for customers, leading to long queues at teller counters.

In addition, there was no real-time visibility into account balances or transaction history. This lack of transparency made it difficult for customers to track their spending and manage their finances effectively. As a result, many customers ended up overspending or making late payments on their loans and credit cards.

Banks also had little insight into customer behaviour and preferences. This made it difficult to personalise products and services in a way that would appeal to customers. In short, traditional banking methods left something to be desired in terms of customer experience.


In recent years, there has been a shift towards more digital methods of banking. Mobile banking and online banking have become increasingly popular, as have point-of-sale (POS) terminals for credit and debit card payments. Banks also began investing heavily in customer relationship management (CRM) systems so they could better understand and serve their customer base.

Customers are now able to conduct transactions online or through mobile apps – without having to visit a branch in person.

This is not only more convenient for customers but it also enables banks to provide a better overall experience. For example, banks are now able to offer features such as real-time balance updates and notifications of account activity. This helps customers stay on top of their finances and avoid overspending. In addition, banks are able to offer personalised products and services based on customer behaviour and preferences.

Digital channels also provide banks with valuable data that can be used to improve operations and make better business decisions. For example, data collected from mobile apps can be used to identify potential fraud cases or areas where customer service can be improved. Overall, digitisation has helped banks become more efficient and customer-centric.


Looking ahead, it is clear that technology will continue to play a major role in reshaping the Indian banking sector. One major trend that we can expect to see is an increase in the use of artificial intelligence (AI). AI will help banks automate various processes – such as fraud detection and customer service – thereby freeing up employees to focus on more strategic tasks.

In addition, AI will allow banks to provide even more personalised experiences to their customers. For example, AI-powered chatbots will be able to handle simple customer queries 24/7 without human intervention. This will help improve customer satisfaction levels as well as reduce operational costs for banks. AI can also be used for fraud detection and prevention by analyzing customer behavior patterns. Cloud computing is also being used by banks to store customer data securely and increase operational efficiency.

Finally, biometrics – such as fingerprint scanning and iris recognition – will become more widely used for authentication purposes instead of traditional passwords or PINs codes. This will help improve security while also making it easier for customers to access their accounts.


In conclusion, Indian banking has come a long way since its humble beginnings in the 18th century.

Today, it is on the cutting edge of technology with many banks adopting AI-powered chatbots and cloud computing into their infrastructure. Technology is playing an increasingly important role in shaping the future of Indian banking sector. With new technologies emerging every day, it's becoming easier for banks to offer convenient, user-friendly experiences tailored specifically to their individual needs. In turn, this helps attract new customers while retaining existing ones.

As technology evolves, we can expect to see even more changes in the way Indian banking functions – all of which aim to improve efficiency, cut costs, and deliver an even better overall experience for customers.

The next decade is likely to see even more changes as technology continues to advance at a rapid pace.

If you are part of a financial institution or bank, and wish to explore how to integrate these advances in technology as part of your business initiatives, or need support with execution - reach out to us today on


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