Why digital banking is vital in present scenario in India?

Updated on Aug. 15, 2022, 8:16 a.m.

Banking segment in India is not new it has made its presence in the last 100 years and if we look at most of the banks located in India, they are having a proud existence of more than 80 plus years. Furthermore, most of the banks have also completed their Centenary Celebrations in style.

The route of digital movement is not new to the banking sector and the presence of Digital Banking was felt in the western world way back in the 80’s.

The devastation caused by the Covid-19 has affected the banking segment, where in people have switched to the online mode of payments. However, the advent of Digital Banking in India started in the middle of 90’s when a leading bank started offering one to its customers. This Indian Government’s vision of the Cashless economy has been fulfilled to a greater extent due to the rise of Digital Banking.

Residents of Vondarakuppe, a village located in Ramanagara District of Karnataka have adopted Cashless System. The first village going towards the Digital Banking in India is Dhasai a small village, located 150 kilometres from Mumbai. Harisal in Amravati is the first Digital Village to be created and this took place immediately after Demonetisation drive led by the Prime Minister Shri Narendra Modi.

Let us analyse the need to have the approach of Digital Banking in the present scenario.

AN UNEXPECTED SHIFT

Let us go before the onslaught of Covid 19, the banks were not interested in Digital Banking and some of them were slowly pushing their esteemed customers to have Digital Banking. After the pandemic began the bank followed the directions given by the Central Government stating that all people irrespective of their background, occupation, class and family history will be brought under Digital Banking sphere.

This drive was undertaken by the Private and Nationalised banks in India and camps and training were conducted on a large scale. A new breed of customer evolved like the illiterate and digitally challenged ones, who never knew of any online concepts. This pandemic made the process faster and made Digital Banking technique a must in the present scenarios.

As per the details received from RBI officials, payments began to increase by 34%, as people found difficult to reach banks and make payments offline during 2020 and 2021.

As per the details received from Digital Security Association of India (DSAI), traditional banking known as the brick-and-mortar banking is here to stay and India is fine tuned to legacy of the traditional banking, the future is good for electronic delivery channels and it will come up, however it will not replace the traditional form of banking.

BENEFITS OF DIGITAL BANKING

  • This enabled customers to do banking transactions from their houses, like Disabled and Senior Citizens, tired of waiting in lines to do their transactions.
  • This service is available 24 hours in a day and 7 days in a week making it a runaway hit in many parts of the world.
  • You can set up the automatic payment facilities for regular payment towards the utility services like Gas, Power and Credit Cards without the hassle of remembering due dates.
  • Digital Banking is a runaway hit in many parts of the globe, in remote areas and villages. The interest of the rural populace is protected.
  • This prevents the risk associated with counterfeit cash resources.
  • Digital Banking prevents the circulation of the black money in the economy and keep track of the movement of the funds.

VITALITY OF CYBER SECURITY

The need of the hour is to have a strong cyber security policy in the coming years and despite the strict guidelines given by the RBI, most of the banks in India are yet to bring the cybercrime insurance seriously. The situation has gone out of control, where in duplicate message and alerts are getting created in and around us and many fake SMS are getting circulated.  In addition to this, fake QR codes, OTP, and flashy messages like your Income Tax amount is getting credit to your account, please enter the account details.

All these details and message are very menacing and slowly getting the better of us. Other emerging trends in the present scenario are the Data is stolen at our outsourced vendor points for the creation of bank related data, swapping the SIM cards with the duplicates. Furthermore, the banks must also be equipped in order to face these dangers with its vibrant customer centric and compliance policies.

FUTURE OF DIGITAL BANKING

Digital Banking is one of the major components of any banking establishment in India and become the core component as the year passes. Banks are encouraging the customers to have more Digital Transactions as it avoids the crowds and it is less expensive.  Another reason doing the rounds is due to lot of frauds taking place in offline banking areas, Handling the cash is a risky and expensive affair and this can take a heavy toll on the customer and the banks in India.

MUSHROOMING OF ONLINE SHOPPING

The growth and development of the Online Shopping websites like Amazon, Flipkart, Myntra and others have stimulated the need to have Digital Banking. After getting launched these online websites will create their own clients and have mouth watery promotions and does encourage customers to do digital transactions.

Due to the influx of many online platforms and websites, the offline way of shopping and the window shopping has gone out of the window in India. People are flocking to the online website just like bees getting attracted to flowers and this will pose a serious threat to the offline ones.

The usage of debit and credit cards in Online shopping has seen fourfold rise, as compared to earlier times, where in the people used to make payments upon the receipt of the goods and services. This has forced the banks to come up with amazing offers on the swiping on the credit cards to get the wow of the customer. All accounts are enabled to have Fund transfers in the form of NEFT, IMPS, UPI and RTGS.

DIGITAL BANKING PRODUCTS

There are many components of the Digital Banking segment and this encourages the customers to access the banking services using the Online Platforms around the world. This will replace the banks physical presence with evergreen online presence and prevent customers from visiting the branch, except in emergency and unavoidable situations.

Some of the products of Digital Banking are given below as follows:

  • E-Statements: One can log in to the website and download the E-statements for the specified period.
  • Funds Transfer: Using various ways like the RTGS and NEFT and IMPS, the conventional methods of using the Cheques and Demand Drafts have been removed.
  • Bill Payment Services: This is a unique service, where in the user can set up the Direct Debits in favour of the payment of utility services like Gas, Electricity and others.
  • Account Opening Services: One can undertake various activities like raising the loans, open new fixed deposit accounts to have a regular flow of money from one account to another.
  • UPI (Unified Payments Interface):  This is a major payment window where in user makes use of the Virtual Payment Address and transfer the money without entering account details. The money can be transferred using apps like BHIM, Google Pay and Phone Pe. Furthermore, the UPI is done easily and without any charges incurred.

BEST BANKS OFFERING DIGITAL BANKING

There are various banks in India involved in offering quality Digital Banking to the customers and they are given below:

HOW CAN I DO DIGITAL BANKING?

You can do the Digital Banking by opening a Savings Account by visiting a branch and upload your Aadhar Card, Pan Card and Passport Size Photos. After this the bank will verify all the documents and issue a welcome kit and some of the stipulations are given below like:

  • Above 18 years of age.
  • Must be a citizen of India.
  • Valid Passport Size Photograph.
  • Specimen Signature of the User.
  • Should have Aadhar and Pan Card.
  • No Criminal Proceedings against the Person.
  • Should complete KYC (Know Your Customer) details and this must be done within 12 months of opening the account.

To be honest, it will take some time for the Physical Banking to be replaced with the Digital Banking because customers in India are very emotional and stereotype. They love human interactions for vital activity like taking Loans, Negotiating for Loans, Direct Debits and other complex works. Customers will look for seamless and personalised Digital Banking Services in the years to come.

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