“In today’s era of volatility, there is no other way but to re-invent. the only sustainable advantage you can have over others is agility, that’s it. Because nothing else is sustainable, everything else you create, somebody else will replicate.”-Jeff Bezos, Amazon Founder
We’re living in a fast-paced, unpredictable world. Ideas, technology, and innovation are evolving rapidly, and their ripple effects are felt across every industry. The digital age—driven by powerful data, artificial intelligence (AI), and automation—is transforming how businesses operate, compete, and expand. In this volatile, uncertain, complex, and ambiguous (VUCA) world, staying relevant requires a different approach, a different strategy to stay adaptable. As John Chambers of Cisco poignantly said, “At least 40% of all businesses will die in the next 10 years… if they don’t figure out how to change their entire company to embrace new technologies.” Disruption has become the norm, not the exception.
Against this overarching canvas of proactive engagement with technology and the tipping point of widespread AI integration, institutions and researchers need to dovetail their methodologies to examine governance with accountable and transparent systems. Accordingly, AI could deftly handle repetitive, time-consuming tasks, leading to a sharper focus on unleashing more creative endeavours because there is magic “when human creativity meets AI ingenuity” (Dave Birss).
More than ever, businesses are pushed to rethink everything—from systems and products to customer experiences and internal processes. Ignoring digital transformation risks organizations becoming obsolete. Success today, amid winds of hurricane force, demands agile movement: agility in serving customers, speed in adopting new technologies, and flexibility in evolving architecture. The COVID-19 pandemic demonstrated that digital readiness isn’t just a competitive edge; it’s a lifeline.
Consider how quickly change occurs: it took traditional telecom companies two decades to handle 20 billion daily messages, while WhatsApp achieved 34 billion messages in less than seven years. That’s the scale and speed of the rapidity and volatility of change we face.
What’s Changing—and Why It Matters
| Area of Change | Shift | What It Means for Business |
|---|---|---|
| Markets | Local → Global | Companies must identify and serve new audiences. |
| Customers | Satisfied → Delighted | Success lies in listening, understanding, and exceeding customer expectations. |
| Competition | Moderate → Intense | Businesses face thinner margins, industry convergence, and pressure to consolidate. |
| Technology | Gradual → Exponential | Innovation, transparency, and rapid adoption are essential. |
| Society | Passive → Demanding | There’s a growing demand for responsible governance and social accountability. |
Lexicon of Disruption- Digitisation and Its Drivers
We’re at a tipping point, with disruption becoming the new normal. In today’s digital age, the current capabilities, future potential, and inner workings of AI and generative AI (GenAI) are more urgent due to the need to process large amounts of data and increasing computational power, along with advancing technology, quick decisions, and forecasts to boost cost savings, revenue, productivity, and efficiency. In a fluid and dynamic world, traditional algorithms must be adapted. GenAI can generalize this information and eliminate the need for new algorithms in the limitless future.
As breakthrough technologies like fire, steam power, electricity, and computing evolved, AI and other technologies are similarly poised to advance and become more capable of identifying innovative solutions. With AI transforming technology, many researchers are exploring artificial neural network models because of their higher accuracy, adaptability, and robustness. Support Vector Machine techniques, however, are recognized for their classification ability. Furthermore, several researchers highlight the superior interpretability and flexibility of the decision tree-based approach in feature extraction.
Conventional wisdom suggests that one size does not fit all, and there is no single solution for complex macroeconomic issues that span different regional and sectoral diversities. These peculiarities require more disaggregated risk models and adjustments to standard approaches. The World Bank recently emphasized that “From India to Senegal: driving local solutions” is key.
Additionally, the inherent uncertainty and unpredictability of financial markets complicate the creation of reliable models. Inaccuracies can cause spill-over effects and contagion, as changes in ratings impact asset prices. Improving credit rating methodologies to address these challenges and reduce associated risks is essential. As a result, AI is transforming credit rating agencies by streamlining data analysis, risk assessment, and fraud detection. Strategic digital transformation and value creation automate routine tasks, improve predictive models, and help reduce bias. AI enhances speed, accuracy, and data integration, aligning with long-term strategies and client needs.
Cloud computing, 5G, Internet of Things (IoT), AI, and advanced analytics are not just speeding up operations—they are redefining them. But with change comes complexity. Delivering seamless digital services and improving customer experiences remains a work in progress, requiring alignment of people, processes, and platforms.
It is common to emphasize disruptive innovations, regulatory compliance, and domain knowledge, along with broader industry and organizational challenges. However, it is less often recognized that these competitive realities blur industry boundaries, transform standard practices, and make traditional development models obsolete. This necessitates leveraging digital power by embracing uncertainty, exploring the unknown, and using digital tools to build smarter, more resilient models.
We have entered an age where innovation doesn’t just increase efficiency—it reshapes entire sectors. AI, machine learning, big data, robotics, and entrepreneurial thinking are converging to create unprecedented opportunities. Yet, amidst this flood of information, it’s worth asking, as T.S. Eliot once asked: “Where is the wisdom we have lost in knowledge? Where is the knowledge we have lost in information?” The progression from information to knowledge, and from knowledge to wisdom, is notably missing today. The path forward requires more than technology—it demands balancing culture, people, and purpose.
Syntax of Transformation-India at a Digital Crossroads
India’s digital economy is booming, driving extensive change. Thanks to AI, cloud adoption, and improved digital infrastructure, it is expected to contribute over 13% to national income by 2024–25. This digital surge has empowered employees, delighted customers, optimized operations, and transformed business models. Government programs like Digital India, Make in India, and Start-Up India have played a significant role in boosting entrepreneurship and innovation. Fintech is revolutionizing banking, lending, insurance, and investment. From Paytm to Swiggy, and from Ola to Freecharge, Indian startups are reshaping how people live, pay, travel, and eat. This is why Eric Pearson, CIO of the International Hotel Group (IHG), emphasized, “It’s no longer the big beating the small, but the fast beating the slow.”
As strategy expert Gary Hamel stated, “Industry revolutionaries don’t tinker at the edges—they blow up old models and create new ones.” Ultimately, there should be a sequence from product innovation to cost reduction and finally to creating unique value. That’s exactly what’s happening.
Digital Banking: A Game Changer
India’s financial sector has undergone a massive digital overhaul. UPI, Aadhaar, Jan Dhan Yojana, and DBTs have brought millions into the financial mainstream. In April 2025 alone, UPI handled over 1,867 crore transactions worth nearly ₹25 lakh crore, making India a global leader in real-time payments.
AI is transforming the way that people navigate the web. Banks are also leveraging AI-powered chatbots (like SBI’s SIA or HDFC’s EVA) to enhance customer service, automate operations, and simplify credit processes. As of early 2025, around 74% of financial firms had AI prototypes in place, with many already scaling them to boost productivity.
Digitization is driving cost reduction, scale, convenience, and transparency. With smartphones, affordable data, and a government push, electronic transactions are becoming the default. The benefits are immense—greater financial inclusion, better tax compliance, and fewer counterfeit risks. This overarching process has been greatly aided by policy, frameworks, and guidelines, together with 1.51 billion phones, over 918 million internet connections, 650 million smartphones, and all 5.33 lakh ration shops Aadhaar-enabled. Government initiatives, such as BharatNet, PM-WANI, and low-cost mobile data expansion, continue to bridge the urban-rural divide, although ~45% of the population (~665 million) remained offline in 2023. Rapid digitization requires an emphasis on API Banking; banking on the cloud; chatbots, virtual robots, artificial intelligence, social media, and bringing the bank to app strategy.
Discourse of Development- Unlocking the Power of India Stack
India Stack—a digital public infrastructure spanning Aadhaar, UPI, DigiLocker, eSign, and more—is at the heart of this transformation. It allows paperless, cashless, consent-driven service delivery at scale. For example, startups like RUGR are using this stack to offer rural vernacular payments, agri-finance, and neo-banking tools tailored for underserved communities.
While infrastructure-related issues like telco’s inadequate network, connectivity, financial institutions, and the availability of robust payment and settlement systems have been resolved, challenges of onboarding customers and merchants into the digital payment landscape; cyber security threats, particularly with data moving offline to the cloud; lack of consumer & data protection law framework for digital payment; co-existence of various policies; uncertain return on investment; partial digital literacy; and cash habits persist. There is a manifest need for greater care and vigil in crafting emerging India and carrying out mid-course corrections, as and when needed.
Real-time data on turnover, customer profile, lifestyle, spend, and customer’s instantaneous data can transform Indian fintech’s rapidly expanding space. This is doable with the convergence of data, technology, and money to transform the lives of borrowers, investors, and businesses.
Semantics of Progress-Cloud, AI, and Cybersecurity
While the death of the web was previously wrongly predicted due to social networks and smartphone apps, this time is different. India’s digital transformation is increasingly driven by cloud computing, advanced analytics, AI, and strong cybersecurity. Cloud and edge computing make up over a quarter of India’s digital market, while AI-powered platforms help businesses reduce costs, make faster decisions, and personalize services at scale.
New technologies like blockchain, NFTs, and distributed ledgers are changing data ownership, identity verification, and intellectual property management across sectors. AI is transforming logistics, agriculture, retail, and BFSI, with hyper-automation aiming to streamline everything from customer onboarding to predictive maintenance. Although progress will accelerate in unexpected ways, ongoing challenges include ensuring data quality, model transparency, cyber defence strategies, security, and building trust in AI. Addressing these issues requires practical insights from real-world case studies applicable in multiple security scenarios to improve accessibility, affordability, and quality.
Cyber threats are also increasing. Security measures must protect all vulnerabilities and ensure complete safety for clients’ networks and sensitive information. These challenges were highlighted in Cybersecurity protection company CrowdStrike’s faulty software update, which caused a global crisis in July 2024, affecting technology systems worldwide and impacting banks, brokerage firms, and trading infrastructure. In 2023, India faced over 1.3 million cyberattacks, with data breaches costing over $2 million each.
AI also raises concerns about control and competition, existential risks, public perception, and regulatory issues. Larger ethical questions involve AI’s potential downsides, the blurry line between truth and fabrication, and the risk-reward dynamics of the AI black box. As a result, Mr. Shaktikanta Das, the then RBI Governor, emphasized the urgent need to strengthen cybersecurity at the Global Fintech Festival (GFF), Mumbai 2024. All this adds up to a firm commitment to fostering a cyber-secure culture and adopting best cybersecurity practices.
But “worry never fixes anything” (Ernest Hemingway), especially in an ever-changing world. Recognizing the rapid pace of change, it is increasingly understood that policies, procedures, and operations in India and elsewhere need to expand to include locally relevant factors, such as well-defined standard operating procedures (SOPs) and a skilled cybersecurity workforce, given their wide-reaching impact on real-world outcomes. RBI’s guidelines now advocate for zero-trust frameworks, secure design principles, and continuous threat monitoring.
Morphology of Growth -Retrospect and Prospect
Key Challenges
- Digital divide: Nearly 45% of Indians still lack internet access.
- Skill shortage: India needs millions more trained professionals in AI, cloud, and cybersecurity.
- Tech dependency: Reliance on foreign platforms for cloud and semiconductors increases risk.
- Privacy & regulation: Data misuse, monopolies in payments, and evolving legal frameworks pose ongoing concerns.
What Needs to Happen
- Expand BharatNet and rural 5G to close the connectivity gap.
- Scale upskilling programs with industry support.
- Support domestic chip and cloud development for digital sovereignty.
- Strengthen AI governance, ethical standards, and cybersecurity systems.
- Build inclusive tech—regional-language apps, vernacular bots, and accessible fintech.
Rhetorics of Change- Futuristic Vision
India is on the verge of something extraordinary. With the right investments—in people, infrastructure, and innovation—it can lead the world in building a digital economy that’s inclusive, resilient, and self-reliant. But we must act with urgency and care. Closing the digital divide, securing data, training talent, and reducing dependency on foreign tech are critical next steps. George Westerman, MIT Sloan Initiative on the Digital Economy, justifiably stressed, “When digital transformation is done right, it’s like a caterpillar turning into a butterfly, but when done wrong, all you have is a really fast caterpillar.”
If we do it right, India won’t just be a participant in the digital era—it will define it. Execution is the key to digitizing brownfield assets to helping new technologies get to market fast.
Roadmap Ahead
India’s unparalleled “digitalization-driven productivity gains” (IMF) have been fuelled by government initiatives, technological advances, and the digital wave, from building extensive digital public infrastructure and transforming banking and governance to deploying advanced AI, analytics, and cloud at an enterprise level. This unstoppable process is expected to continue with a billion-strong digital population, visionary public platforms (India Stack, UPI, DigiLocker), and expanding AI and fintech ecosystems. However, challenges remain—the digital divide, talent shortages, cybersecurity and privacy risks, and reliance on foreign technology. Policymakers need to develop frameworks that support a systemic and fair transition, address the multiple risks of digital transformation, and promote its ethical use.
As businesses increasingly adopt new technologies like automation, cloud computing, and remote work, a strategic plan focusing on expanding infrastructure, developing domestic cloud and AI models, fostering ecosystem innovation, providing training, and ensuring strong governance is essential. This approach can help India become not just a digital adopter but a leader in digital transformation and sovereign digital technology. With the right investments in talent, infrastructure, ethical AI, cybersecurity, and inclusion, India can become a model digital economy—inclusive, resilient, self-reliant, and globally competitive by 2030. Overall, the future belongs to those who can adapt, learn, and innovate quickly. For India, the moment is now. As William Shakespeare eloquently expressed in his classic work, Julius Caesar (1599-1600),
“There is a tide in the affairs of men
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat;
And we must take the current when it serves,
Or lose our ventures.”
This “tide”, which Shakespeare stressed about six centuries ago, needs to be effectively leveraged by India to a new and higher level in ways more than one.
Note: This is a revised and expanded version of the lead article first published in the Indian Merchant Chamber’s (IMC’s) Journal -May-June 2025.
ABOUT THE AUTHOR
Dr. Manoranjan Sharma is Chief Economist, Infomerics, India. With a brilliant academic record, he has over 250 publications and six books. His views have been cited in the Associated Press, New York; Dow Jones, New York; International Herald Tribune, New York; Wall Street Journal, New York.
