How Airtel Payments Bank Is Bridging The Financial Gap In India With Digital Banking

India’s banking landscape has undergone a seismic shift over the past decade — from the days of manual passbooks and crowded branches to today’s reality of biometric authentication, mobile-first experiences, and instant digital transactions. This evolution was not just technological — it was transformational, extending the reach of financial services into the remotest corners of the country.

A pivotal moment in this journey came in 2015, when the Reserve Bank of India introduced payments banks as a new class of institutions designed to foster financial inclusion. These financial institutions could accept deposits (now up to INR 2 lakh), enable digital payments, and operate without physical branches—making them ideal for a country as vast, diverse, and digitally inclined as India.

At the time, there was considerable skepticism about whether the model could be sustainable. But that debate is no longer relevant. As the dust settles, the Payments Bank ecosystem is now defined less by ambition and more by execution. The initial rush has passed, the hype has cooled, and what remains is a resilient group of challengers that are not only fulfilling the original inclusion mandate but are starting to prove their business viability in real terms. 

Of the 11 licences allotted, now 6 remain operational — Airtel Payments Bank, India Post Payments Bank, Fino Payments Bank, NSDL Payments Bank, Jio Payments Bank, and Paytm Payments Bank. With the first three having demonstrated that inclusion-driven financial models can achieve financial sustainability. But among these, Airtel Payments Bank, launched as the first-ever payments bank in November 2016, has carved out a distinctive role. Over the years it has built a technology first low-cost model that serves customers digitally and through a network of banking points. 

How did Airtel Payments Bank build this model? Before delving deeper into its strategy, it is worth tracing the key shifts that shaped the country’s banking landscape in the last decade.

A Payments Bank Model That Worked For India

In the past five to six years, payments banks have established themselves as a critical component of India’s digitally driven financial infrastructure. Reaching an estimated 15-20 Cr users each month, these institutions now serve a broader customer base than the country’s small finance banks (SFBs). However, they operate under tighter regulatory constraints and with far less fanfare. 

Often labelled as ‘non-digital’ entities due to their cash-intensive customer base, payments banks have effectively digitalised transactions at the grassroots. By partnering and onboarding local kirana stores, pharmacies and mobile outlets as banking outlets, they brought banking services at the doorstep of underserved users and enabled seamless mobile transactions even in rural belts where cash is king. 

In the absence of a full-fledged digital banking framework across the country, Airtel Payments Bank has emerged as a functional proxy, a telecom-backed, tech-led institution operating under a payments bank licence but behaving like a digital-only bank. Its success stems from three strategic advantages — deep rural reach, sharp urban segmentation and a decisive monetisation model.

Its business strategy hinges on serving three distinct customer segments. In rural India, Airtel Payments Bank is solving the problem of access and trust. The Bank has built the world’s largest banking point network, with over 5 Lakh active banking points, offering assisted access to banking and other financial services near to the homes of rural underserved customers. With customers at heart, the Bank creates products and solutions that serve the evolving financial needs of the customers. This allowed Airtel Payment Bank to scale quickly and efficiently at 1/30th of the cost of traditional banks, sidestepping high overhead costs and entering markets where legacy banks often found their operations unviable. 

In digitally savvy urban markets, it positioned itself as a secure, digital-first secondary account for daily payments. The Bank’s Safe Second Account enables customers to keep their primary savings protected, while they freely use the Airtel Payments Bank savings account as their second account for everyday digital payment needs. This way, the main savings remain insulated from fraud. A user can easily open a Safe Second Account within minutes through the Banking section on the Airtel Thanks app. 

In time, parallelly the third growth engine also emerged in the form of a B2B franchise – a mix of cash management services, digital payments with payment aggregators and a leading urban transit player. Recognising the operational needs of cash-heavy sectors such as NBFCs, logistics and ecommerce, the Airtel Payments Bank utilised its deep distribution to support them and today is the largest micro cash player in the country. Today, the Bank is a leading urban transit player powering the key metro network and has issued over 4 Mn cards.

Built on a lean operating model (including the infrastructure and workforce) and free from the risks of credit exposure, Airtel Payments Bank is now reaching operational maturity. Its steady rise also underscores a broader shift in digital finance. Clearly, strategy-focused and infrastructure-first institutions, anchored in trust, simplicity and proximity, can deliver scale without complexity, and inclusivity without compromise.

Airtel Payments Bank recently reported a net profit of INR 11.8 Cr on revenues of INR 804 Cr in Q2 FY26. This performance underscores its long-standing efforts to prove that payments banks have built a sustainable model, and are serving India well.  

“Today, we are the third-largest mobile bank in the country by user base. As we continue to scale, we are committed to empowering every Indian with simple, safe and accessible digital banking solutions to bridge the digital divide,” Anubrata Biswas, MD and CEO of Airtel Payments Bank, earlier told the media.

Technology Helped Build Core Pillars of Strength

Airtel Payments Bank’s growth trajectory could be split into three defining phases. The first phase, spanning 2017-2019, focused on discovery, business model refinement, trust building and understanding diverse customer requirements.  

Then came the Covid-19 pandemic, a game changer, with millions turning to digital and mobile banking. As physical visits to branches drastically dipped during 2020-2021, users in urban India flocked to the platform for safe, contactless banking, significantly boosting Airtel Payments Bank. By 2022, it reached an impressive milestone and turned profitable. The RBI also granted it scheduled bank status on January 5, 2022.

This organic growth was powered by the Airtel Payments Bank’s deep distribution, which allowed it to reach remote and underserved areas at minimal cost. Moreover, the simplicity and efficiency of its digital offerings attracted a steady stream of new customers.

The model has been rooted in trust and simplicity. For instance, most users are onboarded through local agents they already know, providing a sense of familiarity and reliability. Again, customer authentication is done with the help of familiar tools like Aadhaar based Face Authentication and biometric fingerprint scans. Transactions are processed in real time, offering complete transparency, with no paperwork, queues, or hidden charges.

At the core of this simplicity and safety lies a robust and scalable backend, a technology stack that handles a high volume of transactions, a trained BC agent network, real-time grievance redressal and end-to-end regulatory compliance. These components converge seamlessly to enhance operational efficiency and build user confidence.

At the same time, the Airtel Payments Bank aggressively deployed GenAI (generative AI) across four strategic domains. These include:

• Customer experience: Enhancing personalisation and engagement
• Growth via personalised marketing: Driving targeted marketing and product recommendations
• Operational efficiency: Automating workflows and optimising operations
• Risk and control: Strengthening fraud detection and compliance monitoring

The tech stack has since evolved to support more secure and scalable services, with GenAI now playing a role in streamlining operations. Some of the key technology features ushered in by AI/GenAI integrations are:

Airtel Payments Bank uses AI-powered facial authentication as a biometric layer during account opening to enable secure and frictionless onboarding. By integrating facial recognition, it has slashed onboarding time from five minutes to just two. This has seen a tenfold rise in daily account opening, from 300 to 3,000. 

This technology also extends to transaction-level security. When its machine learning-based fraud detection engine flags a transaction as high-risk, facial recognition is triggered as a secondary verification measure. Internally branded as Face Match, the system analyses behavioural signals, transaction history, and device data to prompt a selfie-based identity check, thereby enhancing fraud prevention without compromising user experience.

Is Airtel Payments Bank On Par With Global Neobanks?

Globally, digital-only banks, or neobanks, have redefined banking by going branchless and mobile-first. Players like Monzo, Starling Bank and Nubank show how lean infrastructure, intuitive apps and real-time transactions can drive mass adoption and shift consumer behaviour towards digital-first savings, payments and lending, reducing reliance on cash and legacy systems.

India’s context is different. Regulations do not allow full-stack digital banks. Instead, the landscape is shaped by payments banks, small finance banks and regulatory partnerships. Payments banks have been pivotal in onboarding first-time digital users, enabling low-ticket, high-frequency transactions and bringing neighbourhood shops into the fold, gradually building trust in digital banking.

Neobanking in India has emerged as a layered model rather than a licensed category. With no RBI-issued licences for neobanks, most players act as tech-led overlays on partner banks, offering services like automated savings, personalised money management and faster onboarding. These cater largely to urban professionals, freelancers and SMEs. But their growth is capped by dependence on partner banks and limited regulatory scope.

This is where Airtel Payments Bank diverges. Unlike overlays, it holds an RBI-approved payments bank licence, is a scheduled commercial bank, giving it operational independence, compliance control and direct customer ownership. In effect, it functions as a standalone financial institution while still embodying the branchless, mobile-first principles of global neobanks.

The difference is structural and significant. Airtel Payments Bank has built an India-first blueprint that is a unique blend of regulatory trust, last-mile reach, digital-first approach with focus on consumer safety via innovative solutions, unlike global peers that often focus on niches like savings or peer-to-peer payments. Its suite spans UPI, Aadhaar Pay, IMPS, Safe Second Account, NCMC enabled cards, QR codes, soundboxes, micro-insurance and government subsidy disbursals. Leveraging its deep distribution and digital platforms, it also embeds finance seamlessly into daily life, making payments ubiquitous.

This mirrors the wedge strategies of Revolut’s early forex or Chime’s fee-free accounts but adapts them to India’s complex demographics and infrastructure gaps. As Biswas put it, “We are not just building a digital platform while operating as a payments bank. We are building the rails for secure, inclusive and everyday banking for Bharat and India’s digital metros.”

Bridging The Financial Divide For A Digital-First Future

In the past decade, Airtel Payments Bank has built a robust network of partnerships across the digital ecosystem to deepen its reach and enhance its service delivery. Anchored by strategic collaborations with institutional enablers like the National Payments Corporation of India (NPCI) and the Unique Identification Authority of India (UIDAI), the bank has brought critical tools such as UPI, AePS and biometric authentication via Face Auth to its users. Its goal is to ensure secure and inclusive digital payments for the underserved population in remote parts of India. 

The payment bank’s alliance with Mastercard led to the launch of physical and eco-friendly debit cards. Again, India’s first NFC-enabled smartwatch, developed by the wearable brand Noise, has made contactless payments mainstream.

Airtel Payments Bank has also deepened its presence through tie-ups with fintech and insurtech players, integrating micro-insurance, digital gold and health protection into its app. In parallel, ongoing policy engagement with regulators like the RBI has helped shape a compliance-first growth strategy that balances innovation with systemic safeguards.

These partnerships have allowed it to evolve from a narrow payments utility into a full-stack, ubiquitous digital-first banking platform. Whether through contactless wearables or Aadhaar-based eKYC, it has prioritised convenience and inclusion across user segments, lowering the entry barriers for millions outside the formal banking system. Airtel Payments Bank is also simplifying access and redefining banking for a mobile-first generation.

Interestingly, this evolution has not come at the cost of regulatory rigour. Airtel Payments Bank has aligned itself closely with India’s digital financial architecture while strengthening its risk frameworks and growing its innovation road map. Its model is not an adjunct to legacy banks but a parallel infrastructure that is interoperable, scalable and designed to be both inclusive and commercially viable in a tightly governed sector.

In an era where digital transformation in finance often stalls at the interface of innovation and regulation, Airtel Payments Bank offers a working blueprint that aligns with India’s digital public stack and real-world user behaviour. By combining technological innovation with operational maturity, regulatory clarity and a long-term view of customer value, it sets a new benchmark for how digital financial systems should be structured in India.

Redefining Banking For The Next Billion

Airtel Payments Bank is charting an ambitious course for FY26 and FY27, unveiling a multi-pronged strategy to deepen its presence across the country’s diverse financial landscape.

At the heart of its plan is a continuous push to expand its footprint across urban and rural markets, powered by a vast network of more than 500K neighbourhood banking points. But its aspirations now extend well beyond basic financial services. It is now broadening its offerings to include micro-savings, small-ticket insurance products and assisted digital literacy initiatives designed to reach underserved communities and first-time users of formal banking. 

To that end, Airtel Payments Bank is deploying vernacular interfaces, voice-assisted support and simplified authentication methods. The goal is to drive rural adoption further and ensure digital financial inclusion.

In Tier III and beyond, where formal banking penetration remains limited, it is positioning itself as a full-service institution tailored to the needs of the underbanked. With a presence in 75% of Indian villages, and processing half of India’s remittances, and one in four Aadhar enabled payments, it is rolling out physical passbooks and accounts for ‘minors’ to onboard more than 100 Mn users by FY27.

In urban, Airtel Payments Bank is carving a distinct niche with its Safe Second Account proposition, a secure, best value digital account for users to insulate their main bank account from digital frauds, This standalone solution is a differentiator and ensures user value of protection in digital banking, a category often underserved by traditional players. 

Beyond retail customers, the payments bank is doubling down on its enterprise capabilities. It is enhancing its B2B collections suite through partnerships with payment aggregators and enterprise clients. Additionally, it is strengthening its leadership in transit payments, facilitating seamless transactions across toll booths, metros and bus networks.

The bank is scaling its small merchant offerings by bundling current accounts with soundbox-enabled payment solutions to pull more of India’s informal economy into the digital fold. This combination provides a holistic approach and a unique competitive edge over standalone fintechs with full-stack propositions.

Going ahead, the Airtel Payments Bank’s ambitions are as strategic as they are structural. With a digital-first operating model, robust distribution network and rapidly growing user base, it is laying the foundation to operate as a full-fledged digital bank that is scalable, secure and deeply embedded in India’s evolving financial ecosystem. Airtel’s vision is clear. It is keen to deepen inclusion, build trust and expand services, all while redefining banking for the digital era.

At this point, its profits remain modest. But the model is efficient and credit-risk free, paving the path for better viability. 

“We have shown that financial inclusion can be sustainable, not by copying legacy banking but by rethinking it for digital India,” said Biswas. “The bigger challenge now is future readiness — ensuring cybersecurity, evolving monetisation and securing capital in a sector projected to require $50 Bn in funding in the coming years.”