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Banking In Digital World

A bank branch for the digital age Indian banking system is not going to be the same as the traditional way in fact it has already begun to witness changes in carrying out its business. Today’s banking business is all about innovation and next-generation banking is all about more innovation. Digital in banking is the most convenient way of banking right now as individuals (customers) can transact efficiently without interruption in most convenient manner. Using Big Data and Fintech analytics has helped to shift the definition of banking experience for the masses.

As expectation of customers are not same and is dynamic in nature who always demand more for better and continent way of banking and internet connectivity is all that they need, with the advent of new technologies and artificial intelligence capabilities the technology is now capable adding more functions. But digital banking is not what we think, most of us think digital banking is just mobile banking or just online banking which are just add -ons to the existing traditional way of banking as these are too narrow-focused, which fails us to interpret the big picture.

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So Digital banking is merely the use or application of technology in way of banking to ensure smooth processing of banking transaction or operations ensuring maximum utility in terms of experience, cost and reducing error.

India is one of the leading countries in cash transaction as only 13% of people in India are using digital banking which calls for 25% of people using in India, being the fastest moving economy it is expected that the citizens are to be encouraged to make digital transactions rather than handling cash or cash transaction.

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To counterpart, the handling of cash and cash transaction the government launched an attack called Demonetization though the prime reason was to control corruption and fight back against black money, but somewhere this had apart to enhance digital banking in the country as people post demonetization were forced to make digital transaction. This revolution gave a boon to the banking regulatory as the adoption of new technology and change in user interface helped the banks to book their profits.

Depositing more in their CASA accounts to transact digitally restructured the profitability of the banks whereas reduction in the cost structure has also been impacted that is over 40% of bank establishments costs are related to cash. Banks are earning hype by creating marketing awareness that could pay off them in upcoming years. Every bank in India is being focused on retail banking since it can earn more and this marketing strategy followed by banks suits them best, lastly the level of transparency created by the digital transactions is much more accurate in nature.

Understanding the Digital Revolution: Banks in India adopted technology in late 1980 in order to meet customer expectations and the need for computerized banking was noticed when Indian banks were facing tough competition from foreign banks so in 1992 adoption of technology was must of banks in order to sustain in the economy.

Mentioning about digital banking as explained as a broad term which is use or application of technology in way of banking to ensure smooth processing of banking transactions or operations ensuring maximum utility in terms of experience, cost and reducing error. Earlier the banking transaction costs around 70 -75 whereas ATM costs around 15rs and with the advent of technology the transaction merely costs around 0.8 paisa which is less than a rupee this is due to reduction of human error. Most of the commercial banks have moved towards the adoption of MICR, EFT, NEFT, RTGS, IMPS, UPI, Mobile banking, and mobile wallets.

  • There are many benefits that can be availed through these services such as:
  • Banking service available 24/7 through mobile phone and pcs
  • Smart banking access that eliminated human interface and allows more transparency
  • Clients meeting their needs rather meeting banks

 

But to understand this deeper there is a need for a clear idea of pros and cons. As digitalization cannot be the solution to the entire problem faced by banks and cash is not that bad for an economy as there must exist a balance of both. This is a good way to eradicate corruption and

depending considerably on the inter-operability of payment system. The digitization comes at a cost that has to be borne by the economy in order to have long term benefits, and this cost is ultimately borne by customers as banks will charge customers for this. To have a look at the impact of it in the rural area the opportunities that banks have right now and ahead are huge as still, more than 50% of population is to be expected to stay in the rural area by 2025. Technology and process becoming easier to perform hence now more than 30% of villagers are opting for digitization in making their utility payments; utility payments in the rural area will leapfrog urban India by 2020 as E-platform is the main reason for adoption.

Although progressing steadily in technology the banking sector has a lot more to face ahead as technology can or must say will be a backdrop for the traditional banking system. Fintech the most revolutionary innovation and adoption of artificial intelligence with big data analytics has made it quite worrying for the banking system as to improve the interface and accessibilities.

Banks are adopting robots to function its utility functions at much faster rate. Till now, most banks were allergic to Fintech, conventionally speaking bank’s human capital serves as a significant aspect of any customer experience. There is a large investment in the Fintech sector by venture capitals to support around 12 billion was invested in 2015 which rose to around 35 – 40 billion in 2018.

The use of blockchain is been used for security reasons. Frequently viewed benefits of Blockchain are its transparency, security and the fact that transactions are logged in the network. Some of the disadvantages currently include the lack of coordination and the scalability of this technology. One of the best -known applications of Blockchain technology at the present time is bitcoin. Transactions in this virtual currency are largely anonymous. This creates ethical risks for financial institutions dealing with users of this currency because they are unable to (fully) verify their identity.

Taking about customer relationship management in banking humans have been always the face of banks for ensuring service and delivering on right time. Banks to ensure customer maintenance started investing in CRM but things have changed as it’s moving towards digital. More than 50% of services by 2012 were taking away by alternatives channels. Now products of banks are no more the value generator for the banks but it’s their customer relationships they maintain by the way of creating experience creating value for banks. In era of digital, there are no more IVR as banks are on its path to digital voice-first society same way as the call centers been replaced by voice -bots. Almost 40% of the voice assist functions are done independently with a platform like LEX but they have to be backed by the right process. It’s important for banks to start working on culture to embrace digital more deeply, the re-thinking strategy is what driving banks in their successful customer relationship management.

To say it all, the Indian economy is a cash-based economy moving towards the path of Digitalization. With the advent of many payment gateways like UPI banks in India have got a lot of opportunities to grow its market as technology and process are becoming easier and making the transaction easier to perform with more transparency and better security.

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Banking In Digital World. (2019, Dec 16). Retrieved from https://studymoose.com/banking-in-digital-world-essay

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