Observational analysis examines the link between innovation and financial performance in Indian banks, suggesting key implications for the sector.
In the current financial landscape, several industry-wide trends further emphasize the urgency of this research. Indian banks are experiencing increased pressure to digitize and modernize operations due to the rise of mobile banking, artificial intelligence, and blockchain technologies. As of recent reports, digital transactions have grown exponentially in India, supported by government initiatives like Digital India and Unified Payments Interface (UPI). Moreover, a surge in fintech start-ups has disrupted traditional banking models, compelling established banks to innovate or risk obsolescence. Analysts forecast that by 2025, India's banking sector could become the third-largest in the world. This projection is supported by increased investments in digital infrastructure, changes in consumer behavior favoring convenience and personalization, and regulatory frameworks encouraging innovation and financial inclusion. As customer expectations evolve, innovation in processes, products, and delivery systems becomes a strategic imperative rather than a competitive luxury. Thus, evaluating the relationship between innovation and financial performance, particularly in the Indian banking context, offers timely insights for policymakers, banking professionals, and scholars alike.
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Rethesh et al. (2025) studied this question.
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