How are Indian Banks Moving Towards a Digital Revolution?

Progress Over The Years

Banks, as well as customers like us, have benefitted a lot by using the newer technologies adopted by banks which made the entire experience user-friendly.

E-banking has resulted in reducing costs for banks, and at the same time, it increases their user base, which ultimately helped them generate more revenue through various channels.

Digitization has decreased human error. It is now possible to access and analyse the data anytime.

The Central Bank has overseen all these new developments taking place in banks. Commercial Banks in our country have moved towards a technology by way of Bank Mechanisation and Automation with the introduction of MICR, Electronic Funds Transfer.

MICR-based cheque processing helps banks use the technique to verify the validity and enhance the security of signed checks. Electronic Fund transfers help customers like us to transfer money from one account to another without the need to visit a bank branch.

Inter-connectivity among bank branches through the use of common software has helped in faster decision-making and access to data.

Implementation of the ATM Channel has facilitated us to do transactions anywhere in the country without visiting the branch.

Strong initiatives have been taken by the Central Bank of our country to strengthen the payment and settlement system in banks.

Present Scenario

The Indian government is increasingly supporting digital transactions.

United Payments Interface (UPI) and Bharat Interface for Money (BHIM) launched by the government was an important milestone not just for the banking system but for the entire country. Innovation and popularity of digital payments are resulting in greater digital banking transactions.

UPI is a payment method that allows the transfer of money anytime without the need to enter bank details every time we transact. UPI and BHIM are economical ways of money transfer, making us free of cash.

As we are moving towards a cashless economy, we see a rising number of ATMs in our country. Implementation of electronic payment systems such as NEFT, ECS, RTGS, Mobile banking, Debit cards, and Credit Cards have become very common with every Indian bank.

Indian banks are coming up with innovative variants of these products and show the newest features added to these products to attract more customers.

All this has not just benefitted the banks by generating more revenue but has also made our lives better by making banking very easy for us.

Challenges in the Banking Industry

1. Responsibility of User

Bank digital transactions can go wrong due to many reasons, some of which might not be the fault of customers like us. The hacking of debit cards and bank accounts takes place very frequently.

With the increased use of digital payments, we need to be protected from unauthorized banking transactions.

Today, the responsibility is on us and not the banks when banks are really in control of the payment system and are charging us for digital transactions.

2. Poor Laws

The laws on digital payments are vague. There is an urgent need to legally back digital payments in our country, not only to ensure the safety of customers’ money but also for the safety of these companies themselves.

• Increasing the Customer Base: Increasing internet penetration is the only possible solution to reduce the digital divide and increase digital transactions in our country.
  
  The increase in digital transactions in rural India would help boost not just the banking system but the entire economy. Awareness among people needs to be increased.
  
  
• Awareness and Education: Customers who stay in rural India need to be made aware of the advantages of digital banking. There is still a belief in most parts of our country that online banking is not a safe mode of banking.
  
  If people are educated about digital banking, then their reliance on conventional banking will gradually come down.

Benefits Of Digitalization

Since methods of banking have become more digitalized, banks are focusing on creating a more efficient service for us, producing more methods of advancement in a more user-friendly front-end service.

Through this mode of banking, paying bills online is done much faster and better since all our information is tracked through our banking applications.

Digital banking also helps us to check our account history and transactions anywhere, which ultimately satisfies customers like us since we are keeping track of our daily transactions.

You may also want to read 10 Digital Banking Features You Need to Know About

Role of Artificial Intelligence and Data Analytics

Artificial Intelligence is continuously contributing to the banking industry to deliver a greater level of value to us, decrease risks, and give better opportunities as the financial engines of our modern economy.

It is helping in coming up with innovations and transforming the way clients are serviced. Artificial Intelligence is working on giving personalized support, better customer experience, and cost-saving.

Better performance, higher profitability, and reduction in risk are the main goals that the banking and financial sectors are trying to achieve.

In this data-driven world, performance is dependent on those big data technologies which can store and manage data in real-time.

Banks also have to mandatorily lend loans at a lower interest rate to priority sectors like agriculture, housing, and education. Data Analytics has played an essential role in reducing cost, product development, and increasing the client base for the banks.

Conclusion

Indian Banks are slowly and steadily moving toward the digital revolution. In order to compete with other commercial banks, they are introducing innovative features in their offering and are trying to make the overall customer experience much more simple and flexible.

Disclaimer: This blog is solely for educational purposes. The securities/investments quoted here are not recommendatory.