Digitalization and its impact on non-banking financial companies: Barriers, enablers, and strategic implications

Abstract

The digitalization of financial services has repositioned Non-Banking Financial Companies (NBFCs) as a critically important yet structurally vulnerable constituency of India's financial ecosystem. As technologies including Artificial Intelligence (AI), Robotic Process Automation (RPA), and advanced cybersecurity systems become operationally indispensable, the capacity of NBFCs to adopt these tools efficiently and safely has become a material determinant of their institutional survival and competitive relevance. This study examines the adoption barriers, operational challenges, and measurable benefits of technology integration among NBFCs registered in Guwahati, Assam, using primary survey data collected from forty institutional respondents through a semi-structured questionnaire administered in 2024. Analysis reveals that workforce skill deficits (45.2%) and technology acquisition costs (35.7%) constitute the primary structural barriers to adoption, while system compatibility challenges (59.5%) emerge as the dominant technical obstacle. Regulatory compliance, whilst present as a challenge, is perceived by the majority of institutions as only slightly challenging (73.8%), with financial reporting requirements generating the greatest procedural difficulty (45.2%). Data security breaches are identified as the foremost long-term institutional risk (71.4%), a finding that aligns with national-level evidence of intensifying cybersecurity threats in India's Banking, Financial Services, and Insurance sector. Despite these constraints, AI is broadly perceived as effective in enhancing decision-making, RPA is adopted primarily for the automation of high-volume repetitive processes, and vendor technical support is rated favorably by over 83% of respondents. The study concludes with recommendations for institutional capacity-building, strategic technology investment, and regulatory navigation frameworks adapted to the resource constraints characteristic of smaller NBFC institutions.