Authors: Rajesha K S, Dr. Suresh.B.K
Abstract: This study investigates the impact of digital banking on the performance of Micro, Small, and Medium Enterprises (MSMEs) in Karnataka, with emphasis on adoption levels, financial outcomes, and factors influencing effective utilization. The findings indicate that digital banking adoption among MSMEs has increased steadily, with approximately 72% of enterprises using services such as online payments, mobile banking, and digital credit facilities. MSMEs adopting digital banking reported significant improvements in financial performance, including an 18–22% rise in revenue, a 15% reduction in operational costs, and notably faster loan approvals compared to non-users. The study further identifies trust, digital literacy, and technological readiness as key determinants of successful digital banking usage, each showing strong positive correlations with adoption levels and efficiency gains. Despite these benefits, challenges persist in the form of limited awareness, inadequate infrastructure, and concerns regarding security. These gaps highlight the need for enhanced digital literacy initiatives and strengthened system safeguards to ensure effective and safe usage. Overall, the research concludes that digital banking plays a pivotal role in enhancing MSME growth, financial transparency, and operational efficiency, thereby contributing significantly to the competitiveness and long-term sustainability of MSMEs in Karnataka.
DOI: http://doi.org/10.5281/zenodo.17722863
