Historically, internet banking operations in India relied on a complex network of fragmented bilateral integrations. Payment aggregators were required to independently negotiate, develop, certify, and manage bespoke, one-to-one connections with individual banking institutions to facilitate purchases or payments through net banking as a payment method.
This decentralised approach resulted in a structurally fragile architecture characterised by inconsistent error-handling protocols, multi-day settlement cycles, and a pronounced systemic settlement, often exceeding two or more days, before the regulatory body gained visibility into transaction data.
This traditional ecosystem has now been fundamentally transformed. The introduction of Banking Connect, launched by NPCI Bharat BillPay Limited (NBBL) at the Global Fintech Festival in October 2025 in the presence of RBI Governor Sanjay Malhotra, replaces the legacy bilateral mesh with a single, unified, interoperable central switch.
As a result, the strategic focus for banking technology leadership has shifted completely: the question is no longer whether to transition to this model, but how rapidly to execute the integration.
What Is Banking Connect?
Banking Connect is an interoperable net banking platform built by NBBL, a wholly owned NPCI subsidiary. In one line: it lets a bank connect once to a central switch and reach every payment aggregator on the network, instead of building, certifying, and maintaining individual integrations with each one.
The platform is already live with eight major banks, including SBI, HDFC Bank, ICICI Bank, YES Bank, Axis Bank, AU Small Finance Bank, and Federal Bank. Eleven payment aggregators are integrated, among them Razorpay, PayU, Cashfree, Pine Labs, Juspay, Easebuzz, and SBI ePay. Axis Bank’s go-live in April 2026 alone brought 37 million customers and over 4,800 merchants onto the platform.
Why Banks Are Shifting Away From the Old Model?
Net banking is one of the few payment rails in India still growing in single digits, while UPI explodes. The gap is not because customers stopped wanting it. UPI now accounts for around 85% of India’s digital payment volumes, driven by 22,828 crore transactions worth ₹300 lakh crore in calendar 2025 alone. Net banking, by contrast, has been growing in single digits. The friction isn’t on the customer side. It’s in the plumbing.
The friction lives in the plumbing:
- Aggregator and merchant onboarding takes between 10 and 15 days under the legacy model.
- Settlement timelines, error codes, and dispute workflows are bank-specific, so aggregators end up reconciling across a patchwork of standards that don’t work with each other.
- Transaction caps are negotiated bank by bank, which turns high-value payments into a guessing game for the customer and the merchant alike.
- Success rates suffer from redirect failures, timeouts, and integration drift between bilateral connections.
- Regulatory visibility lags by days or weeks, leaving the RBI without a live view of sensitive flows like gaming and crypto-linked transactions.
None of these are user-experience complaints. They are structural costs that scale linearly with every new partner, and they are the reason net banking has lost share to faster rails.
How Banking Connect Improves Banking Infrastructure?
Banking Connect operates as a central platform. One certified integration replaces the entire bilateral mesh. The heavy lifting of managing multiple bank-aggregator relationships moves to NBBL. Similarly, the aggregators are absolved from integrating individually to each bank and require a single integration with the centralised Banking Connect platform.
The technical fundamentals that make the platform credible at scale:
- Standardised APIs across the network, designed to cut down on redirections, timeouts, and partial failures.
- Built with mobile-first architecture.
- Removal of transaction caps that previously fragmented the experience.
- Same-day settlement and standardised error codes for cleaner dispute resolution.
- Low-code and no-code integration paths for aggregators activating new merchants.
- Real-time transaction visibility for the RBI effectively eliminates the legacy settlement lag.
Powering online banking with uniform interoperable journeys, Mindgate’s Internet Banking and Mobile Banking (IB/MB) platform, operating in tandem with NBBL, functions as a unified gateway. It enables both issuing banks and acquiring banks or payment aggregators to interface seamlessly with the NBBL central switch. By leveraging a standardised API framework, it entirely removes legacy integration complexities and settlement risks.
Furthermore, NBBL’s strategic roadmap introduces advanced enterprise capabilities, including Direct-to-Merchant Settlements, Third-Party Verification (TPV), and mandate and lien features. Enriched by Mindgate’s robust infrastructure, these upcoming functionalities will serve as the core framework required to securely transition complex, high-value payment flows onto the unified network.
What This Means for Bank CTOs?
The infrastructure case writes itself. The strategic case is sharper.
- Integration debt collapses. One certified connection replaces a portfolio of bilateral relationships, each of which carries its own SLAs, change-management cycles, and compliance overhead.
- Operational risk shifts. Reconciliation, dispute handling, and error-code interpretation all converge to a single standard. Engineering teams stop debugging seven different aggregator quirks.
- Regulatory alignment is built in. Banking Connect aligns directly with RBI’s Payments Vision 2028, which means the compliance roadmap is one less variable to manage.
- Competitive parity is now table-stakes. With SBI, HDFC, ICICI, and Axis already live, banks that delay integration are not choosing the status quo. They are choosing a slower checkout experience that their competitors no longer have.
The decision to move is not an IT project. It is a strategic call about whether the bank wants to spend the next decade maintaining bilateral plumbing or running on shared rails.
How Banks Can Modernise Legacy Payment Systems?
A clean migration onto interoperable rails like Banking Connect isn’t a single sprint. The work splits into roughly five tracks:
- Audit existing aggregator integrations. Map every bilateral connection, its SLA, its error patterns, and the contractual obligations attached. Most banks underestimate this footprint by 30–40%.
- Identify the abstraction layer. Modern payment switches expect clean, standardised data feeds in and out. Legacy core banking stacks rarely produce these clean feeds natively, necessitating the deployment of an intermediary middleware layer.
- Plan for parallel operation. Cutover is rarely a big bang. Most banks run Banking Connect alongside legacy bilateral routes for an initial period, with progressive traffic migration.
- Invest in observability. A central switch only delivers operational gains if the bank can see what it is doing. Real-time fraud, risk, and reconciliation monitoring becomes a precondition, not a bolt-on.
- Choose the integration partner carefully. The certified integration is the easy part. The hard part is sustaining performance across NBBL’s quarterly platform updates, future capabilities like Direct-to-Merchant Settlements, and the inevitable RBI policy refinements that follow.
The banks that get this right won’t just offer seamless net banking checkout to their customers. They will have the foundation to participate in the next layer of India’s payment infrastructure without rebuilding from scratch.
Mindgate’s IB/MB platform (Netbanking 2.0 gateway) bridges this structural gap. By converting legacy core data into standardised, switch-compliant APIs, it ensures seamless interoperability with the NBBL Central Switch without requiring high-risk overhauls of primary core banking rails.
FAQs
1. What is Banking Connect?
Banking Connect is an interoperable net banking platform that was launched by NPCI Bharat BillPay Limited (NBBL) at the Global Fintech Festival 2025. It replaces the legacy bilateral integration model between banks and payment aggregators with a single central switch; a bank connects once and reaches every aggregator on the network.
2. Why are banks shifting to modern banking platforms?
The legacy bilateral model carries structural costs that scale linearly with every partnership — slow onboarding (several weeks per aggregator), inconsistent error handling, no standardised settlement, and weak regulatory visibility. Modern platforms like Banking Connect eliminate that drag while aligning with RBI’s Payments Vision 2028.
3. How does Banking Connect improve banking infrastructure?
By centralising integration, standardising APIs and error codes, enabling same-day settlement, removing transaction caps, and giving the RBI real-time transaction visibility.
4. What are the key benefits for bank CTOs?
Collapsed integration debt, lower operational risk, built-in regulatory alignment, and competitive parity with peers already live on the network — Axis, SBI, HDFC, ICICI, YES Bank, Federal Bank, and AU Small Finance Bank, among them.
5. How can banks modernise legacy payment systems?
A structured five-track approach: audit existing bilateral integrations, build an abstraction layer between core banking and modern switches, plan for parallel operation during cutover, invest in real-time observability, and select an integration partner that can sustain performance through platform updates and regulatory changes.
