The Indian banking sector has undergone several changes and recorded a remarkable growth since liberalization. With the development of technological innovations in the banking sector, new regulations along with increasing needs of customers, the banking sector is facing challenges. Indian banking sector has been introducing new technology enabled operations to satisfy its customers. The present paper is aimed to study the technological innovations introduced in the banking sector for digital payments which made easy for payments and settlements of banks as well as customers. Demonetization of rupee was expected to increase in digitalization of payments and settlement systems in India. This study uses monthly data to study degree of digitalization of banking system in both pre and post demonetization periods . The paper considers four forms of digital transactions over the period 44 months (22 months for pre-demonetization (Jan.2015 to Oct.2016) and 22 months for post-demonetization (Nov.2016 to Aug.2018) from the RBI website. Kolmogorov-Smirnov (K-S) and Shapiro-Wilk normality tests and equality of variance in selected modes of payment systems between the two periods have been conducted. Then t tests have been conducted for each form of digital transaction to test hypotheses of equality of variance.