Payment banks and broad digital transformation initiatives have reshaped India’s banking landscape by shifting large parts of routine payment flows away from traditional bank branches toward low-cost, technology-centric channels. This paper—based entirely on secondary data (RBI, NPCI, EY, PwC, Government sources and industry reports)—examines the evolution of payment banks since RBI licensing (2015), quantifies the growth of digital payments (UPI and other channels), and assesses the implications for traditional banks (market share in payments, operational efficiency, inclusion). Key findings: UPI and payment-centric providers have driven a very rapid increase in transaction volumes and users, creating both opportunities (financial inclusion, cost reduction) and threats (fee income pressure, disintermediation) for full-service banks. Managerial recommendations include hybrid partnerships, API/open-banking strategies, and customer education. (RBI, 2016).
Kailas et al. (Sun,) studied this question.