A Study on Fintech Innovations and Their Impact on Traditional Banking Models in Indian Banking System

Shweta  Shrivastava; Sushmita  Mallik

Abstract

The rapid growth of innovations in financial technology (Fintech) has intensely shaken traditional banking frameworks globally, with India being a vibrant case study based on its extensive unbanked population, digital infrastructure growth, and accommodating regulation policies. This research paper analyzes the influence of Fintech innovations – digital wallets, peer-to-peer lending platforms, AI-based credit scoring, blockchain-based settlement systems, and open banking APIs – on traditional banks’ business models, customer acquisition strategies, and competitive strategy in the Indian banking sector. By leveraging a mixed-methods research strategy integrating quantitative content analysis of industry reports, policy data from the Reserve Bank of India (RBI), and qualitative information from interviews conducted with banking executives and Fintech entrepreneurs, the research study indicates major areas of disruption: minimized transaction costs, improved financial inclusion, accelerated service, and heightened customer expectations for tailored experiences. The research shows that in contrast to mainstream banks struggling with agility and technological upgrading, strategic collaboration with Fintech companies, digital transformation investment, and sandbox experiments with regulators are empowering hybrid models combining institutional trust and technological innovation. The study concludes that Fintech is not replacing traditional banking but transforming it, developing an ecosystem of co-evolution where collaboration is more than competition. Policy suggestions are made to enhance regulatory coherence, provide security of data, and foster access to digital financial services in an equitable manner.

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