Digital banking refers to the banking on your fingertips, concluding all the financial transactions entirely online without using paper documents used in Stone Age 🙂 like demand drafts, pay-in slips, or cheques. It just not gives you an access but to execute all banking operations online also an overview of your financials without having to visit a branch. With that it allows users to conduct almost all standard banking tasks whenever they want, without any restriction.
Its fascinating that Digital Banking Systems are highly versatile which enables them to expand services much faster and to enhance customer satisfaction to the highest level of cost-effectiveness while maintaining security and flexibility, digital banking relies on a high level of process automation which is web-based services and APIs also the blockchain technology.
In a nutshell, the modern banking system creates real-time data streams and accelerates critical analytics to enable fully digital customer journeys.
Something trending these days.. Neobanks?
Neobanks is a term given to the “Banks of the Future” because they are entirely operate online with no physical branches. Neobanks, commonly referred to as “digital banks” are quickly establishing themselves as an acceptable substitute for traditional banks.
Currently, Neobanks in India rely on their partner banks to provide their services. This is because the RBI has not yet given a green flag to banks to become completely digital yet.
When it comes to the benefits for the customers, Neobanks often provide exciting offers such as higher interest rates and a number of additional advantages that are not available with traditional banks.
& hence Neobanks are spreading quickly in India. The expansion of the Indian digital banking platform market is anticipated to be a consequence of the Neobanks establishment in the country responsible for an increased demand for digital banking platforms.
Growth of Digital Banking in India
After the COVID-19 pandemic outbreak, the demand for online banking platforms in India experienced phenomenal development. Customers and businesses quickly migrated to digital banking platforms, as a result, greatly accelerating market growth.
While the use of technologies like cloud computing and machine learning gained traction during this time. It became a blessing in disguise for India’s growth in adapting digital banking platforms.
With digital payments rising to their peak during the pandemic, the market for digital banking platforms in India got a huge boost. Further accompanied the efforts of the Indian government to transition the country to a cashless society.
A push from Government programmes like Digital India play a crucial role in taking internet connectivity to further parts of India, resulting in helping more people to join hands for the growth of digital banking platforms.
What adds to it is India’s growing smartphone industry, the mobile banking segment holds the biggest market share. Mobile banking is expanding across the nation as a result of the demands of new generation clients, who value quick satisfaction and want one-click solutions for everything, including payments and other banking services.
As a result, the market for digital banking platforms in India is quickly expanding too.
Since it’s easier said than done, we still need to fight the constraints obvious within the digital banking landscape such as strong worries about data security, along with the dangers of cyber-attacks and fraudulent activity.
What is Digital Banking Unit (DBU)?
It is a specialized fixed point business unit or hub that consists of minimum digital infrastructure for delivering and servicing existing financial products and services digitally. The services are available in both self-service and assisted modes to give customers cost-effective and convenient access to digital experience in an effective, paperless, secure, and connected environment with the majority of services being available.
The action is in accordance with the initiative of Digital Banking by Nirmala Sitharaman, the Finance Minister. The plans are to establish DBUs in 75 districts to mark India’s independence’s 75th Anniversary. This has been officially confirmed by the Indian Banks’ Association (IBA) stating that 75 digital banking units (DBUs) will be operational by July 2022 across all state-run institutions, ten banks in the private sector, and one small finance bank.
Benefits of Digital Banking
Addressing cyber security problems such as the need to secure consumer data is now being tackled as a result of the developments in digital banking. Consumer data can be stored in an encoded format, strengthening data security.
The customers now have the ability to quickly modify their security preferences and transaction caps which can also help in minimizing financial fraud at the consumer’s level.
With the daily currency exchange, there was a possibility of acquiring fake currency and counterfeit notes in the past but now as money transactions are made digitally, digital banking eliminates that possibility as well
Customization of Customer Service
Artificial Intelligence (AI) and Machine Learning (ML) based customization can be made possible by digital banking software. Now banks can provide customers with significant financial solutions, interactive tools, and educational tools to enhance their experience.
In addition, digital banks currently offer a number of services traditional banks simply can’t, such as the ability to buy gold, cryptocurrencies, and stocks straight from the banking app.
The majority of banking functions can now be used by consumers while they are at home, at work, or even on the go. Virtue digital banking. Money transfer, online bill payments and investments are now made easier, quicker and safer. Alongside the services that once required lengthy delays are now swift and time-free. Through the digitization of banks, rural India has benefited the most.
The search for the nearest bank and long-distance commutes are over. People can now access banking features with the push of a button.
Great Profits & Lower Operational Cost
Banks operating costs have been significantly cut by digital banking as they require minimum physical infrastructure and human resources. Thus banks are now able to offer better interest rates on deposits while also charging lesser costs for services. Furthermore, digital banks can also sell their products and services to younger, tech-savvy generations online, which has also contributed to the revenue increase.
Bridging the Gap Towards Digital Banking:
Education & Accessibility
Many people can’t take advantage of digital banking services due to a lack of internet connectivity and technical education. Furthermore, many parts of India still continue to have extremely low literacy rates. This is a serious obstacle to the widespread adoption of digital banking throughout the country.
Fear of Online Frauds
There are several unfounded fears that people have about using the internet for banking services. Cases of fraud are frequently exaggerated, which adds to the fear factor, causing a number of uneducated consumers to be afraid to use digital banking.
Adopting New Technology
For banks looking to achieve full digital transformation in a shorter amount of time, increasing investment in technological integration, prioritizing cyber security, continuously working toward digital upskilling of existing talent, and continuously innovating and building digital products for customers are essential.
Collaboration with companies that specialize in providing digital financial services, such as Fintechs and NeoBanks, will help ensure banks embrace digital technology quickly. This will further help the development of an interconnected, sustainable, and future-proof digital environment.
RPA (Robotic Process Automation)
RPA can assist in automating some monotonous finance and accounting operations, allowing operational staff to concentrate on less repetitive but more important activities. They can understand human language much better and manage more complex operations when paired with AI, machine learning, deep learning, and natural language processing skills.
India is a technologically advanced country. We are adapting to new technologies and at the same time, we are continuously innovating new technologies. All financial institutions today have placed a high focus on Digital Transformation. Digitalization is no longer an option but an experience which is today’s consumer demands. Rather a need for businesses and banks due to declining deposit margins, more competition, and changing customer mindsets. As a result, the future of digital banking in India is bright, and we may expect new innovations in banking services in the near future.