ICTs in Banking: Enhancing Efficiency and Access

Walk into any bank today and compare it to what your parents described from the 1980s. Long queues, stacks of paper forms, and ledger entries written by hand have given way to fingerprint scanners, instant transfers, and apps that settle a shopkeeper’s bill in two seconds. This shift is the result of Information and Communication Technologies (ICTs) quietly rewiring how banking works, and the speed of change has been remarkable.

What ICTs mean for modern banking 🔗

ICTs in banking refer to the combined use of computer systems, internet networks, mobile platforms, and digital infrastructure to deliver financial services. The scope goes far beyond putting a bank’s logo on an app. It covers everything from core banking software that links every branch in real time, to artificial intelligence tools that flag suspicious transactions before a customer even notices them.

The scale of this transformation is visible in the numbers. Research published in the Journal of Financial Services Marketing notes that information technology has fundamentally altered how financial institutions operate, deliver services, and engage with customers. The sector has moved from being paper-driven to being software-driven, and this shift is the foundation on which every modern banking service now stands.

From ATMs to apps: the frontline of convenience 🔗

The Automated Teller Machine was the first ICT innovation that ordinary customers actually touched. Before the ATM, banking hours dictated when you could access your own money. The machine broke that barrier by offering round-the-clock cash withdrawals, balance checks, and mini statements.

The network expanded rapidly, though the story is now shifting. According to the Reserve Bank of India data reported by Policy Circle, the country had around 2.15 lakh ATMs in 2024, and the total has begun to plateau as customers move towards mobile channels. The RBI’s Trend and Progress of Banking report for FY25 confirms that the ATM count stood at 2,51,057 as of March 2025, a small dip from the previous year as digital transactions gain ground.

This does not mean ATMs are disappearing. Instead, they are being reinvented with biometric authentication, cardless withdrawals through UPI, and bill payment options. In rural pockets where internet connectivity is thin, they remain the most reliable way to access cash.

Internet and mobile banking 🔗

Internet banking changed the very meaning of a bank visit. Instead of turning up at a counter to request a demand draft or check a balance, customers began handling these tasks from home or office. Mobile banking pushed this further by placing the bank inside the smartphone.

The adoption has been striking. An Indian Institute of Banking and Finance study records that by August 2021 there were 425 million mobile banking users and 141 million internet banking users, with digital banking adoption jumping from 42 per cent in 2019 to 66 per cent in 2020. The pandemic was a clear accelerator, but the trend has continued well after it.

UPI and the payments revolution 🔗

No conversation about ICTs in banking is complete without the Unified Payments Interface. Launched by the National Payments Corporation of India in 2016, UPI allows a user to link multiple bank accounts to a single app and send money with nothing more than a mobile number or QR code.

The growth figures are extraordinary. IBEF reports citing the RBI Payments System Report show that UPI captured 83 per cent of total digital payment volume by the end of 2024, up from 34 per cent in 2019. Transaction volume rose from 375 crore in 2018 to 17,221 crore by 2024, with value climbing from Rs 5.86 lakh crore to Rs 246.83 lakh crore over the same period.

The International Monetary Fund’s June 2025 report recognised UPI as the world’s largest retail fast-payment system by transaction volume, with the platform accounting for close to half of global real-time payment transactions. This is not just a domestic achievement. UPI is now accepted through QR codes in Bhutan, France, Mauritius, Nepal, Singapore, Sri Lanka, and the UAE, extending the reach of the system to travellers abroad.

Why UPI matters for inclusion 🔗

A vegetable seller in a small town can now accept a Rs 20 payment without needing a card machine or change. Every transaction leaves a digital trail, which makes it easier to build a credit history and apply for loans. Press Information Bureau data shows that the RBI’s Financial Inclusion Index climbed from 64.2 in March 2024 to 67.0 in March 2025, with UPI handling over Rs 24.03 lakh crore in June 2025 alone across 18.39 billion transactions. Financial inclusion has moved from being a policy target to a lived reality for millions.

Services that go well beyond transactions 🔗

The role of ICTs stretches far past payments. Customers today can handle almost every interaction with their bank online.

Bill payments and recurring transfers: Utility bills, insurance premiums, and subscription payments can be scheduled to run automatically, removing the risk of missed deadlines.

Loan applications: Automated credit scoring lets banks evaluate a borrower in hours rather than weeks. Digital document verification, video KYC, and e-signatures mean a personal loan can be approved without a branch visit.

Investments and insurance: Fixed deposits, mutual funds, and term insurance products are now sold through the same app used for transfers. The friction of paperwork has been largely removed.

AI-driven customer support: Chatbots handle routine queries, while human agents focus on complex cases. Some public sector lenders are taking this further, with Bank of Baroda launching an AI-powered multilingual conversational platform supporting 22 languages across branches, as reported in IBEF’s banking industry update.

Operational efficiency inside the bank 🔗

The visible customer-facing gains are matched by deep changes inside the bank. Core banking systems link every branch to a central database, so a customer can deposit cash in one city and withdraw it in another minutes later. Reconciliation work that once needed teams of clerks is now handled by software, with human staff stepping in only for exceptions.

Data analytics has also become central. Banks use transaction patterns to offer pre-approved loans, spot early signs of loan default, and personalise product recommendations. Industry analysis published by Elets points out that AI, blockchain, cloud computing, and fortified cybersecurity are the four pillars driving the next wave of banking transformation.

Security: the other side of convenience 🔗

Every new digital channel also opens a new route for fraud. Phishing messages, fake customer care calls, OTP scams, and malware-based attacks have grown alongside digital adoption. The regulator has responded with an expanding rulebook.

The RBI’s Authentication Directions, detailed in compliance analysis by Corbado, mandate two-factor authentication for digital payments, with a risk-based model that applies lighter checks for low-value transactions and stricter layers for larger or suspicious ones. Dynamic authentication codes, biometric verification, and real-time transaction alerts have become the norm.

Consumer protection has been strengthened too. A Business Standard editorial on the RBI’s draft framework explains that customers who lose up to Rs 50,000 in digital fraud may receive compensation of up to 85 per cent of the loss or Rs 25,000, whichever is lower, provided the fraud is reported promptly. Mandatory SMS alerts for transactions above Rs 500 and defined complaint-resolution timelines add further weight to customer rights.

The scale of the problem is real. RBI data cited in the same editorial shows that card and internet frauds made up 66.8 per cent of total fraud cases numerically in 2024-25, with nearly 13,500 cases involving around Rs 520 crore. ICTs, in other words, need to be matched by equally strong safeguards.

Challenges that remain 🔗

The picture is not uniformly positive. Several gaps continue to limit the full promise of digital banking.

The digital divide 🔗

Smartphone penetration and internet reach are still uneven. Elderly customers, rural users with limited literacy, and those in regions with patchy connectivity often struggle to adopt mobile banking. A study on digital transformation in public sector banks notes that slow digital adoption in rural areas remains a significant obstacle, alongside outdated legacy systems and regulatory complexity.

Cybersecurity pressure 🔗

As banks integrate cloud services and third-party fintech partners, the attack surface grows. Research on digital transformation in the banking sector highlights that interconnected digital networks and cloud-based solutions heighten cybersecurity risks, while regulatory compliance becomes more complex with stringent data protection requirements.

Legacy systems 🔗

Many public sector banks still run on core platforms built decades ago. Migrating to modern, agile architectures is costly and disruptive, and the transition has to happen without breaking day-to-day service.

What lies ahead 🔗

The trajectory points towards deeper integration of artificial intelligence, blockchain-based settlement, and embedded finance inside everyday apps. The RBI has set a target of reaching one billion unique UPI users by 2030, a figure detailed in MediaNama’s coverage of the National Strategy for Financial Inclusion 2025-30. The strategy also aims for 100 per cent digital payment coverage in designated districts by March 2027, tying banking infrastructure directly to welfare delivery.

Central bank digital currency, voice-based banking in regional languages, and further expansion of UPI to other countries are all moving from pilot to mainstream. ICTs have taken banking from being a place you go to, to a service that travels with you. The next decade will test how well the system can balance speed, inclusion, and security all at once.

What do you think? Has digital banking genuinely improved your relationship with your money, or does it feel like one more thing to worry about? And how should banks balance the push for innovation with the responsibility to protect users who are still learning the ropes?

References

1. https://link.springer.com/article/10.1057/s41264-024-00287-3
2. https://www.policycircle.org/economy/atm-count-falls-in-india-rbi/
3. https://www.angelone.in/news/economy/from-cash-to-clicks-why-is-india-using-fewer-atms-despite-the-availability-of-bank-branches
4. https://iibf.org.in/documents/BankQuest/2.%20Adapting%20to%20Digital%20Disruption%20A%20digital%20transformation%20strategy%20for%20Indian%20Banks%20-%20Dr%20Vigneswara%20Swamy.pdf
5. https://www.ibef.org/news/united-payments-interface-upi-dominates-digital-payments-sees-explosive-growth-over-five-years
6. https://www.pib.gov.in/PressReleasePage.aspx?PRID=2200569&reg=3&lang=1
7. https://www.pib.gov.in/PressNoteDetails.aspx?NoteId=154980&ModuleId=3&reg=3&lang=2
8. https://www.ibef.org/industry/banking-india
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10. https://www.corbado.com/blog/reserve-bank-india-compliance
11. https://www.business-standard.com/opinion/editorial/fraud-safety-net-rbi-s-new-framework-will-boost-trust-in-digital-payments-126030800796_1.html
12. https://www.ijrti.org/papers/IJRTI2503105.pdf
13. https://www.researchgate.net/publication/382797747_DIGITAL_TRANSFORMATION_IN_INDIAN_BANKING_SECTOR_OPPORTUNITIES_AND_CHALLENGES
14. https://www.medianama.com/2025/12/223-goal-one-billion-unique-upi-users-2030-rbi-financial-inclusion-report/