Banks are one of the important professional institutions that interact with the masses and hold a unique & intermediary position in the economy. It influences the economic development of the country both in terms of Quality and Quantity. As in today's era needs and perception of customers are changing and other challenges too, the old way of doing banking is no more successful. India's banking system has seen some major financial innovations in the past decades which lead to tremendous improvements in banking services and operations such as ATM banking, NEFT,RTGS, IMPS, Online and Mobile banking. There is a further lot more scope to go forward The objective of this paper is to find out the benefits and challenges of technology driven banking trends and to study how innovations have contributed to the development of Indian Banking. The necessitate of this millennium is to devise such a system that encourages the efficiency of investment, focus on future sustainability and can provide better customer service which leads towards satisfaction. The paper concludes by focusing on the current challenges, opportunities and future trends and scope of Innovative practices by Indian banking sector.