Technology is constantly evolving, and the top industries have felt the impact. One such industry that is rapidly growing and transforming with the help of advancing technology is the banking and finance sector. For any economy, the banking and finance sector is the backbone. The development of this industry is significant to the development of the entire country and its economy. The impact of technological development on the Indian banking industry is revolutionary. This has resulted in digitization of the banking industry and the emergence of a new approach of banking method, Digital Banking. Let’s learn what is digital banking in India and the role of technology in its emergence.
Digital Banking in India?
First let’s address the most pertinent question, what is digital banking? It is simply a reference to internet banking or online banking. This means that banking activities can be performed 24/7 over the internet. Digital banking has completely changed the way the business of money and banking is done today. It has replaced traditional methods with more advanced banking technology. In addition, digital banking allows the person or the account holder to perform banking activities without having the need to visit the bank branch.
Some of the many banking activities and digital banking solutions that are available to the customers are money deposit, money withdrawal, money transfers, checking the balance, account management, application for financial products, loan management, bill payment, and account services. In addition, many banks offer their customers financial services like investment in mutual funds and more.
Digital banking technology and technological innovations have drastically changed the way people handle their money these days and the way banks interact with their customers. Similarly, digitization in the banking industry has changed the way we do transactions. Digital banking provides end-to-end solutions and enables the customer to perform banking activities with seamless security and safety. From withdrawing money to asset management, there is almost all banking activities that can be performed without stepping out from your house.
Mobile banking is a product of digital banking. It is simply the use of mobile technology for completing banking transactions and activities. It is relatively the most convenient and easy way of banking, today.
Brief History of Introduction of Digital Banking in India
Digital banking is a revolutionary movement and it had undergone several obstructions. It was in the late 80s when computer technology was introduced in the banking industry. During the time of liberalization, India witnessed a drastic change as the economy opened itself to the global market. The government allowed private and foreign banks to invest in India. Though, the indigenous banks were reluctant to change, but they were forced to adapt to the technological innovations if they wanted to sustain and compete with the modern banks. They had to adapt to the new technological changes and digitization in the banking industry to stay relevant in the industry. However, there were a number of technological innovations that contributed to the rise of digital banking in India.
Computerization, standard cheque encoders, Magnetic Ink Character Recognition (MICR), the introduction of LAN setup in the banks are first few steps taken in the history of digitization of banking industry. It was followed by a major shift that introduced Centralized Online Real-time Exchange (Core) Banking solutions. This allowed the customer to perform banking activities from any of the bank branches and created a centralized network for banks and its branches. ATMs, credit cards and debit cards made its appearance. The technological innovations continued to change the scenario in the banking industry of India. The 2000s witnessed some great changes and the introduction of online banking, telebanking, and easy and convenient ways of transferring funds such as Real Time Gross Settlement (RTGS), Immediate Payment System (IMPS), National Electronics Fund Transfer (NEFT), and National Electronic Clearing Service (NECS). Mobile banking is the most recent digital banking trend that is growing bigger with every passing day.
Besides, the rising trends hint at major revolution in the banking industry in the near future. Digital-only banks, use of Artificial Intelligence, Machine learning, Fintechs, wearables, and blockchain technology are some of the emerging technologies that have penetrated the banking industry and are said to be disruptive technologies that will revamp the banking sector globally.
Importance of Technology in Digital Banking
The rapidly evolving banking technology, the technological tools that support the banking industry, is the main game changer. Here are a few reasons why technology is important for the growth and advancement of digital banking in India.
- Hassle-free customer service: The new technology in banking ensures all customer needs are met with great satisfaction. With internet banking, they can connect and access their accounts anytime and anywhere, without the need of visiting the bank branch.
- Round-the-clock availability: 24/7 availability of the bank on the internet is a great contribution to technological innovations.
- Online transactions: Whether it’s money deposit, money withdrawal, or money transfer, there is no need to step out of your house. It saves a lot of time and expense. Customers can even pay their utility bills from the comfort of their homes. Standing in long queues is no more a problem.
- Cost-effective: Digital banking is economical when it comes to banks as well as its customers. It has reduced operating costs for banks and transaction fees for the customers.
- Increased accuracy: Use of digital banking software has reduced the chances of human error for bookkeeping, calculations, data manipulations, and more. The tasks that took long hours when performed by humans, can now be finished within a few seconds or in real-time.
- Easy Fraud Detection: Another reason why digital banking in India is good news because it can recognize potential or existing fraudulent transactions. This may not be easy for humans to judge. With digitization, compliance to standards and regulations is easier and maintaining the security of the data is in fact, a lot easier.
These are only a few aspects of digital banking in India. Nonetheless, the change is coming in the banking sectors. Technology is the key to innovate and transform the banks. Meanwhile, modern people are looking for easy and convenient “mobile” and “digital-only” solutions that can suit their fast-lane lifestyle. Hence, it can be concluded that digital banking is indeed, the future.