Three years after note ban, banks see ‘spurt’ in digital transactions

The share of digital transactions in the banking sector has been showing a significant increase three years after demonetisation was introduced.

This includes transactions undertaken through internet, mobile, UPI, and green channels of different banks. The latest data, as per the second quarter numbers of major banks, show that there has been a steady surge in the digital journey in the last three years.

For SBI, the share of digital transactions comprising net, mobile, UPI, Yono, and green channel went up 56 per cent as on September 2019, compared to 48 per cent in the year-ago period. With 23 per cent of market share in UPI, SBI crossed the 20-million-mark in transactions processed in a day on October 1. ICICI Bank said that during the last one year that ended September 2019, the volume of mobile banking transactions increased 136 per cent to ₹22,300 crore from ₹9,400 crore. As per data pertaining to Punjab National Bank and UPI, transactions went up by 125 per cent at the end of June; PNB E-Rupaya, the patented digital solution for villages without internet connectivity, has also been making steady progress.

Data from others banks and NPCI also confirm the trend. According to NPCI data, UPI transactions crossed the milestone of one billion transactions in October. Experts see a link between demonetisation and spurt in digital transactions. “What started as a forced practice in the initial months of demonetisation and cash shortage, which almost extended for over six months, has now become practice and a matter of convenience,” said a senior official with SBI.

Individual products of banks, such as YONO of SBI, have also been contributing to the growth. “The spurt is definitely not a trend line, though some are calling it that way,” said Prasanna Tantri, Professor and Academic Director, Centre for Analytical Finance, Indian School of Business (ISB). “Data costs are now cheaper in India than in some other markets. This, coupled with the increasing base of mobile phones and percolation of regional language tools, are among the key drivers of digital financial transactions,” added Tantri.