This research paper investigates the impact of innovation on the digital transformation of foreign banks operating in India, with a specific focus on employees' perceptions towards the use of innovative methods. The study adopts a quantitative approach and employs Likert scale-based questionnaires to collect data from 216 respondents employed in various foreign banks across India. The objectives of the study are twofold: (1) to examine the influence of innovation on digital transformation in the banking sector, and (2) to understand employees' perceptions towards the implementation of innovative methods in digital transformation initiatives. The hypotheses are formulated and tested using one-sample t-tests, revealing significant positive impacts of innovation on digital transformation efforts and positive perceptions among employees towards the use of innovative methods. The findings underscore the importance of continuous innovation in driving digital transformation within the banking sector, highlighting the need for strategic initiatives aimed at fostering a supportive work environment and enhancing operational efficiency and customer experience