Digital transformation has been phraseology for the past decade, with businesses and industries across the world realizing the importance of embracing technology to stay competitive and relevant. One sector that has been particularly affected by this trend is the financial sector. Digital transformation in the financial sector refers to the process of using technology to improve business operations, enhance customer experiences, and create new products and services. This can involve a range of initiatives, from creating mobile banking apps to implementing artificial intelligence in customer service to using blockchain to facilitate secure and efficient transactions. One of the main drivers of digital transformation in the Indian financial sector has been the rise of fintech companies. These start-ups are often born out of a desire to disrupt traditional financial institutions, and they use technology to offer innovative products and services that challenge the status quo. FinTech companies in India have become increasingly popular among consumers, particularly younger generations who are more comfortable with digital technology and they have forced traditional financial institutions to adapt or risk losing market share.

Digital transformation in the finance sector offers numerous benefits. For one, it has the potential to reduce costs and increase efficiency. By automating certain tasks and using data analytics to make more informed decisions, financial institutions can streamline their operations and become more agile. This, in turn, can lead to improved profitability and a more competitive position in the market. In addition to improving internal operations, digital transformation can also lead to better customer experiences. Digital technology can enable financial institutions to offer various types of services, as well as personalised recommendations based on customer data.

Despite the challenges, digital transformation in the financial sector is a trend that is unlikely to slow down anytime soon. As technology continues to advance and customer expectations continue to evolve, financial institutions will need to embrace digital transformation to remain competitive and relevant.

Businesses in India have embraced technology to a large extent and new digital business models may expand to most industries. By 2025, core digital industries like IT and business process management, digital communication services, and electronics manufacturing could double their GDP levels to US$ 355-435 billion, while newly digitised industries and digital applications in the public sector and the labour market could each add US$ 10-150 billion to the economy over the same period. By 2025, the productivity boom may generate 60-65 million new employments, but redistribution will be necessary to assist the 40-45 million employees whose jobs are expected to be eliminated or altered by digital technology in various sectors of India.

The concept of digital transformation has great significance in the banking sector specifically. With the digitisation of Indian banks people are choosing banks and other financial institutions depending on how they perceive them. The perception is being shaped by the way these institutions are positioning themselves online. The second point is to help in the acquisition of new customers and retaining the existing ones. The more user-friendly services any institution offers the more customers they get.

Digital Transformation in India’s Financial Sector
The conventional finance profile has evolved significantly with time from a normal compliance role to a larger and more strategic role in building the organisation’s growth story for the future.

The use of technology to reconstruct effective operational systems and processes within the finance industry without displacing existing systems is known as "digital transformation." The Indian financial sector has undergone a significant transformation in recent years, driven by digitalisation. As a result of this transformation, the Indian financial industry has become more efficient, cost-effective, and customer-centric. One of the global surveys by Mastercard in 2022 reveals that India is the most willing nation in the Asia Pacific region to embrace emerging digital payment methods. Around 93% of people made digital payments last year (2021). More than half of these transactions were done via QR codes or digital money transfer apps. The adoption rate of cash as a mode of payment was 51% while other conventional methods like in-person credit, debit, or pre-paid cards/ contactless cards were used less in comparison with cash.

Digital Transformation is the integration of digital technology into all areas of a business, resulting in fundamental changes to how the business operates and delivers value to its customers. The Indian financial sector has been undergoing digital transformation since the early 2000s, with the introduction of online banking and the use of ATMs. However, the pace of digital transformation in the financial sector has accelerated significantly in recent years due to the increasing availability of digital infrastructure and the growing demand for digital financial services.

One of the key drivers of digital transformation in the Indian financial sector is the government's push towards a cashless economy. In November 2016, the government launched the demonetisation drive, which aimed to curb the circulation of black money and promote digital payments. The government's Digital India initiative has also been a major contributor to the growth of digital financial services in the country. Digital transformation has also enabled financial institutions to improve their operational efficiency and reduce costs. For example, digital banking allows customers to perform banking transactions from anywhere at any time, reducing the need for physical branches and sellers. This has helped banks to reduce their operating costs and increase their profitability. The inclusion of digitisation in banking even powered payments like digital currency, blockchain and other digital modes of banking transactions.

• One of the surveys conducted by McKinsey in March 2019 to understand the adoption of digital transformation in India noticed that 94% of the total small firms mentioned that they accept payment by debit or credit card, as compared to only 79% of big firms using the same mode of payments. Along with digital payments adoption, around 70% of small firms have focussed on building their websites to reach potential clients.

Furthermore, digital transformation has enabled financial institutions to better understand their customers and offer personalised services. By analysing customer data, banks and other financial institutions can offer customised products and services that meet the specific needs of their customers. This has helped to improve customer satisfaction and loyalty.

The Indian government has also introduced various initiatives to encourage digital transformation in the financial sector. For example, the Reserve Bank of India (RBI) has introduced a regulatory sandbox that allows financial technology (fintech) companies to test their products in a controlled environment. This has encouraged innovation in the fintech sector and has helped to bring new and improved financial services to market.