Research pick: Digital banking in India - "Impact assessment of COVID-19 on digital payment: an Indian perspective"

Research published in the International Journal of Business Process Integration and Management has looked at the impact of the COVID-19 pandemic on digital payment use in India. The research used a cluster analysis technique to classify two types of banking customer according to their payment behaviour – late majority and early majority. The behaviour of these two different groups of people as the pandemic unrolled and in particular with lockdowns and other restrictions could offer new cues to both private and public sector banks to guide their payment operations and to direct their future policies and practices with a view to improving operations and reducing overheads.

The impact of the COVID-19 pandemic on society and economies around the world has been enormous and is ongoing. Many aspects of the so-called “new normal” have changed the way we live in an unprecedented way. Many of the changes and challenges we have had to face in this pandemic world have been detrimental to quality of life. However, there was technology in place that was less well used than it might have been, before the pandemic, that has come to the fore as a potent solution to some of the problems we have faced in the last few years since the emergence of the SARS-CoV-2 virus and the ensuing health crisis we faced.

Banking reform in 1991 across India revolutionised the industry. Previously rather limited opening hours at branches were extended, online bank became “24-7” for bill payment, money transfers, cheque book requisition, and online payment for e-commerce. Automated teller machines, ATMs, become more common at select branches. Banks also introduced new products in the wake of these reforms such as new approaches to loans, train booking, and online shopping. Indeed, the very fact that such banking products and technology were already in place when the pandemic arose means that India was ready with financial services in place to face the crisis.

Of course, the disease had devastating and tragic consequences for many people with debilitating infection, death, and long-covid. From the economic point of view, the closure of commercial premises and lockdowns quickly drove down the economy. For many people staying at home and working from home under lockdown and restrictions meant they had to rely on digitalized financial services in a way they never had before, regardless of their technological literacy.

Smartphone usage and internet access are on the increase even in rural areas and given the characteristics of the banking sector in India at the time of the pandemic, there was little option but to utilize those services in a way that had not been done before. The team points out that fear of the pandemic reduced technophobia to some degree and nudged people to digital and online alternatives to the facilities and services they previously used offline.

Parihar, S.S., Siddiqui, M.H. and Mehrotra, S.A. (2021) ‘Impact assessment of COVID-19 on digital payment: an Indian perspective’, Int. J. Business Process Integration and Management, Vol. 10, Nos. 3/4, pp.259–266.