Digital Banking and it’s Foray into Banking Sector

Financial Inclusion

Meaning of digital banking

Traditional financial services are being automated by digital banking. Customers of a bank can access banking services and products online or through an electronic platform thanks to digital banking. Digital banking refers to the digitization of all banking processes and the replacement of the bank’s physical location with an ongoing online presence, which does away with the requirement for customers to visit a branch.

The advantages of digital banking

It should go without saying that moving toward a more technologically advanced method of doing things has much more advantages than disadvantages. The goal of digital banking, another technological byproduct, is to simplify life for bank clients. The advantages of digital banking include:

Digital banking makes it possible for customers to conduct banking operations from the convenience of their homes, whether they are elderly people who are sick of standing in line, working-class professionals who are swamped with work, or regular people who don’t want to go to the bank’s branch to run a single errand. Convenience is another benefit.

To add to the convenience, digital banking gives customers access to digital financial services in India around-the-clock.

The overemphasis on paper in conventional banking was one of its main flaws. With the rise of digital banking as a service, banking has gone paperless. To check on records, a user can connect into their account at any time.

With the use of digital banking, a user may set up digital payments services for recurring expenses including credit card, phone, and utility bills. The consumer is no longer need to consciously try to recall the due dates. The consumer has the option to receive notifications of impending payments and past-due balances.

Differences between online and digital banking

Online banking and digital banking are phrases that are sometimes used interchangeably. There is a thin boundary between the terms’ meanings, though.

Daily necessities like examining transactions, checking balances, and moving money are all covered by online banking. This is the bank’s primary business, which has been moved online with the aid of internet banking. A means to an end is online banking.

Digital banking, though, is a goal unto itself. The goal of digital banking is to digitise all bank operations, whether they are core or non-core. In essence, the main goal of digital banking is the customer onboarding process, followed by account servicing and account closure. The goal of digital banking is to eliminate the need for consumers to visit a bank office physically so that they may do their banking business wherever it is most convenient for them. Online banking is thus a part of the larger category known as digital banking.

The drawbacks of digital banking

Is banking online secure? Most readers will be shocked to learn that internet banking is actually safer than traditional branch banking, in contrast to prevalent belief that it raises security risks. Banking institutions are heavily investing in their security measures, despite the fact that digital banking forums are vulnerable to hacks and vulnerabilities including phishing, pharming, identity theft, and keylogging. When thinking about a service like digital banking, security is of utmost importance. More so than jeopardising customer data and resources, financial organisations cannot afford unfavourable PR. If security were to be breached, banks would lose a key selling point. You would be entitled to get the adequate amount of your bank balance in the unlikely event that banks really lost your money to a hacker for the simple reason that your money is secure. As a result, banks must make significant investments to increase the security of digital banking platforms in order to avoid significant public responsibility and negative publicity.

A user of digital banking must, however, do their bit by adhering to particular procedures that serve as a safeguard:

  • Follow instructions to change your passwords frequently and to keep them private.
  • To access digital banking, stay away from public networks and devices; if you must, remember to erase the cache and browser data. It’s best practise to prevent the browser from saving your login and password for your bank accounts.
  • Confidential information is never requested by banks, so don’t provide it to anyone who does.
  • A padlock must display next to the website address if the URL does not start with “https”. A security certificate is the lock. When the website is protected with an SSL certificate, the address bar becomes green, which is further confirmation of the website’s security. Use the bank’s URL instead of any other links, and avoid doing so. Banks often utilise SSL encryption with a minimum of 128 bits.

Digital Banking in India

In India, when did digital banking begin?

Digital banking in India began to take shape in the late 1990s, and ICICI Bank was the first to offer the service to its retail customers. Only in 1999 did digital banking become widely used due to decreased internet fees, more online awareness, and growing internet trust. Banks began offering a wider range of products online only once the internet advanced and the cost of operating it decreased.

How can I engage in digital banking?

Anyone in India who wants to conduct digital banking must first create a checking or savings account with a bank. You may accomplish this by physically going to the branch or using the online account opening features on bank websites, which just need you to upload a few papers from the comfort of your home.

Most banks will provide you your digital bank details after you have an account set up with them, allowing you to conduct transactions easily around-the-clock. If your credentials are not included in the welcome kit, you may always contact your bank to request free access to online banking.

India requires the following requirements for opening a digital banking account:

  • possess a minimum age of 18
  • Within a year of creating the digital bank account, you must complete KYC, or paper-based verification of information, for both your PAN and your Aadhaar card. If the standard broken, the person would no longer be able to create future digital bank accounts using the same Aadhaar and PAN.
  • In order to enhance the procedure from a digital standpoint, the market regulator may eventually permit video-based verification in addition to physical verification for KYC.

The future of online banking

According to a study on prerequisites for a fully digital bank, the following are essential for the success of any bank aiming to become totally digital.

  • option to purchase money
  • customizable choices for standing
  • Accounts connected to the status of tax exemptions Card blocking feature
  • New developments in safety vaults
  • integration with investment channels for the stock market
  • Analytics for financial management
  • allowing the combining of accounts from several banks
  • Assistance is readily available.

Bottomline

Right now, it seems like a pipe dream to think that digital banking can ever fully replace traditional physical branch banking. For recurrent, necessary banking tasks, digital banking is useful. Customers, however, prefer human connection when making more significant and unpredictable decisions, such when applying for a loan or discussing the conditions of the loan.