India's digital disruption poses a relatively low risk to the longstanding market position of its top-tier banks, S&P Global Ratings said on Monday. In a report titled 'Tech Disruption in Retail Banking,' it said COVID-19 restrictions have been a boost for Unified Payment Interface (UPI).

The value of transactions processed via the UPI almost doubled from June to November 2020 from the same period a year ago. "We expect this shift in consumer preferences to remain. Rising smartphone penetration, increasing internet connectivity, and the young, tech-savvy demographic segment present vast opportunities in India for existing banks and new players."

The Reserve Bank of India and the government have also been pivotal in laying the foundation and raising the bar for the development of fintech in the country, said S&P. Many banks in India have been quick to embrace new technologies to cater to a vast and growing, young, tech-savvy customer base. "We believe India's top tier private-sector banks and State Bank of India (SBI) are well-placed to deal with tech disruptions, given their dominant market positions and continued investments in technology," said S&P Global Ratings credit analyst Deepali Seth Chhabria.

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