What Is Connected Banking? A Complete Guide for Indian Businesses

India's financial infrastructure is undergoing a once-in-a-generation transformation. For decades, businesses juggled multiple banking portals, reconciled statements from different banks manually, and struggled with fragmented treasury views. Connected banking changes all of that. It is the practice of unifying multiple bank accounts, payment rails, and financial data streams into a single programmable layer — giving businesses real-time visibility, automated workflows, and frictionless fund movement across their entire banking network.

In this comprehensive guide, we explore what connected banking means for Indian businesses, why it matters in the post-UPI era, and how Paywize's connected banking infrastructure is helping companies of every size take control of their finances.

The Problem: Fragmented Banking in India

Most businesses in India work with three to seven banks. A manufacturing company may have an HDFC current account for operations, an ICICI account for vendor payments, a State Bank account for government-linked transactions, and a Yes Bank or Axis account for payroll disbursals. Each bank provides its own netbanking portal, its own file formats, and its own API — if it offers an API at all.

For the finance team, this means logging into multiple dashboards each morning, downloading CSV files, manually matching transactions, and consolidating balances in spreadsheets. Treasury managers lose hours every day to operational tasks that add no strategic value. Errors creep in. Cash positions are stale by the time they are calculated. And when a payout fails on one bank, there is no automatic fallback to another.

What Connected Banking Actually Means

Connected banking is the architectural principle of abstracting bank-level complexity behind a unified API and dashboard. Instead of integrating with each bank individually, a business connects to a single platform — such as Paywize — which maintains direct integrations with 30 or more banks. This means:

• One API for payouts across IMPS, NEFT, RTGS, and UPI — regardless of which bank executes the transfer.
• Real-time balance aggregation across all connected accounts, displayed in a single treasury dashboard.
• Unified transaction history with standardised formats, eliminating the need for manual CSV merging.
• Automatic failover: if a payout rail on Bank A is down, the platform routes through Bank B seamlessly.
• Programmable rules for fund sweeping, auto-reconciliation, and cash pooling.

The Technology Behind Connected Banking

Multi-Bank API Orchestration

At the core of connected banking is an API orchestration layer that normalises disparate bank interfaces into a consistent schema. Paywize maintains certified integrations with each partner bank, handling authentication, encryption, and protocol differences (REST, SOAP, ISO 20022) behind the scenes. When you call our Payout API, you send one standard request — the routing engine selects the optimal bank and translates the request into that bank's native format.

Real-Time Webhooks and Event Streams

Every transaction state change — initiated, processing, settled, failed — fires a webhook event to your system in real time. This replaces the painful batch-file reconciliation model where businesses wait until end-of-day to discover which payouts succeeded. With event-driven architecture, your ERP or accounting system stays in sync continuously.

Bank Health Monitoring

Paywize continuously monitors the health and latency of every banking rail. We track success rates, response times, and downtime windows across all partner banks. This data feeds our Smart Routing engine, ensuring that your transactions always travel on the fastest, most reliable path. If HDFC's IMPS gateway is experiencing degraded performance at 2 PM, your payouts automatically shift to ICICI or Axis without any manual intervention.

Use Cases Across Industries

E-Commerce and Marketplaces

Marketplaces need to collect payments from buyers and disburse settlements to hundreds or thousands of sellers. Connected banking enables instant settlement splits — the platform collects via UPI or cards, and Paywize disburses seller payouts across multiple banks in parallel, with full reconciliation handled automatically.

Lending and NBFC Platforms

Lenders require fast loan disbursals (often within minutes of approval), EMI collection via e-mandates, and real-time tracking of repayments across bank accounts. Connected banking provides the multi-rail infrastructure for instant disbursals and the event-driven architecture to track every repayment as it lands.

SaaS and Subscription Businesses

Recurring revenue companies benefit from automated collection via UPI AutoPay and e-NACH, combined with treasury visibility to forecast cash flow accurately. Connected banking lets finance teams see incoming subscription payments across all banks in one view and automate dunning workflows for failed collections.

Manufacturing and Supply Chain

Manufacturers manage complex vendor payment cycles with different banks for different suppliers. Connected banking enables bulk vendor payouts from a single API call, with each payment routed through the optimal bank for that supplier's account. Payment confirmations flow back to the ERP system instantly.

How Paywize Delivers Connected Banking

Paywize's connected banking infrastructure is purpose-built for the Indian financial ecosystem. Our platform integrates with over 30 banks through direct API partnerships — not screen-scraping or third-party aggregators. This means faster processing, higher success rates, and full regulatory compliance.

Key capabilities include a unified payout API supporting IMPS, NEFT, RTGS, UPI, and bank-specific instant transfer modes; a collection API for UPI QR, UPI Intent, e-NACH mandates, and payment links; a real-time treasury dashboard with multi-bank balance aggregation; Smart Routing 2.0 with ML-driven bank selection; and comprehensive webhook-driven reconciliation.

The Open Banking Context in India

India's regulatory framework is increasingly supportive of connected banking models. The Account Aggregator framework, launched under RBI guidelines, enables consent-based sharing of financial data between regulated entities. UPI's interoperability mandate ensures that payment rails remain open. And RBI's push toward API-based banking means that more banks are exposing modern interfaces that platforms like Paywize can leverage.

Connected banking is not a future aspiration — it is happening right now. The businesses that adopt it earliest will benefit from lower operational costs, faster fund movement, fewer errors, and better financial visibility. Those that do not will continue to drown in spreadsheets and manual processes.

Getting Started

Migrating to connected banking does not require ripping out your existing bank relationships. Paywize works alongside your current banks, adding a programmable layer on top. Integration typically takes 2-5 days using our REST APIs and SDKs (Node.js, Python, Java, PHP). You can start with payouts or collections and expand to full treasury management as your needs grow.

Visit dashboard.paywize.in to create your sandbox account and explore the API. Our integration team is available for a personalised walkthrough of how connected banking can transform your financial operations.