DIGITAL TRANSFORMATION IN MICROFINANCE: A PATHWAY TO SUSTAINABILITY.

The study is conducted with an objective to understand how digital transformation is vital in the pursuit of enhancing sustainability and business efficiency of MFIs in Bangalore. In response to the MFI representatives from the rural and the urban area, the study assesses impact of DigiTech on efficiency, financial accessibility, and uptake of microfinance products. The study adopted a random sampling technique, and data was collected through self-administered questionnaires containing Likert scale of 1-5. The current research study makes use of the analysis technique called Structural Equation Modeling (SEM) by employing SmartPLS 4. From the papers, it is clear that digital transformation improves the operational capability of MFIs as it reduces the cost of transactions as well as the time taken in providing the services which also brings financial outputs to financial exclusion especially the rural clients. Additionally, this has boosted the delivery and access of micro finance services since the use of the payment interfaces is on the rise. Nevertheless, there are challenges such as physical infrastructure limitation, illiteracy in digital technology, and culture that limit the adoption of the ideal digital model. Therefore, the study suggests enhancing internet connection, technology, IT awareness, cybersecurity, ease of use, and the integration of big data into personalized banking services. These activities will go on evolving the long–term sustainability of MFIs’ profitability and the growth of the financial services to the emerging sectors.