Digital Banking a Complete Guide
15 Dec 2022
Table of Content
What is Digital Banking?
Digital banking is a financial banking technology, value tapping on product simplicity and personalised customer experience with the help of the Internet. Digital banking is modelled on digitally first incumbent banking. It capitalizes seamless digital payment systems, manages accounts, offers easy reach to financial products like loan management, bill payment and more through mobile and other electronic devices.
Digital banking in India is making fast progress and innovation and the banking sector is lapping this innovative technology with the latest advancements. Looping in tech-savvy developers, new products are being featured with continuous refinement and a special focus on customer insights. Thus, the benefits of digital banking are driving greater customer attention, let us look into the benefits of digital banking.
Benefits of Digital Banking
The future of digital banking is fraught with many disruptions that largely focus on hyper-personalisation, leveraging technology for customer comfort.
- Personalization: Where traditional banking makes an effort to always look after customer needs, digital banking platforms focuses on specific pain points of customers with help from technology. The digital banking platform is prioritizing each case and rapidly launching solutions.
- Speeding innovation: Agile platforms are supported with high-end coding that leverages the Application Programming Interface (API) affecting customers directly. Digital banking services are decreasing customer wait time, focusing on speedy execution.
- Maximizing services with a competitive edge: Understanding consumer preferences through data insights from digital banking trends. Assessment of new products and performance, maintaining a cutting edge over the competition.
- Regulations that create trust:Digital banking in India heavily relies on trust and regulatory compliance, the adherence to ethics governed by law-binding operations increases trust from stakeholders and scales the bank over competitors.
Digital Banking Products & Services
The products and services in digital banking are more enhanced and accessible for the user. Popular digital banking products and services include:
- Internet banking:This electronic digital banking service for customers to meet various banking and non-banking needs through the internet.
- Mobile Banking: This digital payment system offers greater ease when working on financial and non-financial transactions. Most banks have launched mobile applications allowing all the facilities of net banking with more user-friendly features.
- ATM: Digital banking in India took off with Automated Teller Machines (ATM). From cash withdrawal to depositing funds, changing the pin of the debit card and a list of other facilities, banks allow limited free transactions from ATMs.
- Debit cards:Among digital banking services debit cards are owned by individuals having bank accounts. This is a cashless digital banking instrument.
- Standing Instructions: You can instruct the bank to make automated withdrawals for paying bills, loan EMIs, insurance payments etc.
- Point-of-Sale Transfer Terminals: This digital banking system allows direct purchases through a debit/ credit card for paying instantly for any purchase.
Types of Digital Banking Payments
Digital banking has enabled various digital payment systems that make it easier for customers to manage funds digitally. Check the various digital banking types that you may or may not be using.
- Credit Cards:This digital payment system is given by the bank to eligible customers. This payment system allows users to borrow funds when they need them. It comes with a preapproved credit limit. The amount is billed on a monthly EMI basis and is cleared on a due date.
- Debit cards:This is a digital payment system that every bank gives to their customers for free. Customers can pay through a debit card.
- Smart cards: This digital payment system is a credit/ debit card with a microprocessor holding personal customer information that enables online payment. The card has the facility to unload and reload payments.
- E-wallets:This digital payment system acts like a physical wallet only keeping your money and card stored in a virtual safe. You can keep adding money to the wallet.
- Net banking:Net banking allows direct access to your digital banking account. You can enter your username and password and make payments through this digital payment system.
Also Read - How to Address Digital Banking Risk
Future of Digital Banking
Legacy banking is moving towards digital operational transformation. Embracing cloud-native technologies, apps will be powered by advanced banking and financial capabilities. The future of digital banking is set for wider cloud compatibility and greater adaptivity inclusive of the hinterland through digitally innovative AI tools that would enable banking through personal connections.
Digital Banking Industry Trends
The importance of digital banking made a significant increase during COVID times. UPI transactions saw a massive boost showing the impact of digital baking on the country. With an emphasis on greater accessibility to Smart Phones, countrywide digital baking seems to be a reachable target.
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Disclaimer
The contents of this article/infographic/picture/video are meant solely for information purposes and do not necessarily reflect the views of Bank of Baroda. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. Bank of Baroda and/ or its Affiliates and its subsidiaries make no representation as to the accuracy; completeness or reliability of any information contained herein or otherwise provided and hereby disclaim any liability with regard to the same. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject Bank of Baroda or its affiliates to any licensing or registration requirements. Bank of Baroda shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.
Advantages and Challenges of Digital Banking
Digital Banking is online banking backed by an internet connection. Traditional banks are getting a breather, as a large part of customer traffic is being managed by digital banking apps and net banking. Customers can easily access their accounts and payments through digital devices like smartphones, tabs, laptops, desktops and ATMs. The benefits of digital banking became more conspicuous during the COVID pandemic period when physical branches could not be approached due to social distancing that confined people to their homes. The popularity of digital wallets, bank apps and contactless and cashless payments gained traction as more and more people realised the advantages of digital banking.
How to Address Digital Banking Risk
Banks had attracted several customers to their digital platforms in the last half of the century, even before the pandemic. However, concerns and hesitation from customers regarding risks in digital banking were obstructing this transformational journey. COVID-19 accelerated the adoption of Digitech. Digital banking products and services are now flourishing both in payment and lending domain. On one hand, we see openness to adoption, on the other hand, with increasing growth, increase in various systems and technology risk comes into play. Keeping these concerns in view, we will discuss common risk in bank’s digital domain and actions taken by banks to mitigate these risks underpinning customers’ confidence. Let us take you through the risk and its management practices followed by banks in digital banking procedures.
