S&P Global Ratings in its report titled 'Tech Disruption in retail banking: Top tier banks lead the change' has said India's banking system's low profitability and weak asset quality present some difficulties in significantly boosting digitalisation for several state-owned and smaller private-sector banks. However, it said India's digital disruption poses a relatively low risk to its top-tier banks' longstanding market position.
It said COVID-19 restrictions have been a boost for India's major digital payment system Unified Payment Interface (UPI). The value of transactions processed via the UPI almost doubled in June to November 2020 from the year-ago period.
It added ‘We expect this shift in consumer preferences to remain. Rising smartphone penetration, increasing internet connectivity, and the young, tech-savvy demographic segment present vast opportunities in India for existing banks and new players.’ It mentioned many banks in India have been quick to embrace new technologies to cater to a vast and growing, young, tech-savvy customer base.