3.1. To study radical change from 'conventional banking to convenience banking' in India. 3.2. To study the Influence of technology in banking to the rest of the economy.
3.3. Recent Trend in banking due Digitization, possible constraints in future and its measures
4.Analysis on Digitalization in Banking Sector
Banks have benefitted in several ways by adopting newer technologies. E-banking has resulted in reducing costs drastically and has helped generate revenue through various channels. As per last available information, the cost of a bank transaction on Branch Banking is estimated to be in a range of Rs.70 to Rs.75 while it is around Rs.15 to Rs.16 on ATM, Rs.2 or less on Online Banking and Rs.1 or less on Mobile Banking. The number of customer base has also increased because of the convenience in 'Anywhere Banking'. Digitization has reduced human error. It is possible to access and analyze the data anytime enabling a strong reporting system.
4.1 Customer Service: Banking is backbone of any economy. The success of an economy is supported by a strong banking system and similarly banks are more successful when the economy does well. For banks to be successful, it is imperative to increase their customer base, retain their existing customer and offer customers the products and services which are most beneficial to them. In today‘s technology savvy customer base, it is very important for banks to adapt the latest technology, such that banks are able to catch up with the pace with which customer preferences changes. Adaption of newer technology is also critical to challenge competitor banks and other institutions in offering products and services in the market place. While we focus this article on the current and future technology trends that impact banking and financial services, let us quickly glance through the technology developments adapted in the Indian Banking thus far.
4.2 Growing Applications of Biometric Technology: Banks are focusing on increasing the adoption of biometric technology to give better services to the customers. Biometric access is considered as a safer way to transact and with finger prints, facial recognition technologies, and other associated technologies security landscape is now being redefined. However, the availability of biometric technologies and integration of Aadhaar cards has essentially digitized the customer inclusion process in a secure and streamlined manner.
4.3 Electronic Fund Transfer: NEFT National Electronic Fund transfer mechanism assist fund transfer from one bank to other through RBI server and settlement occurs on net basis. Every day,
Recent reforms in Taxation, Real estate & Banking sectors in India Impact Factor SJIF 2016-6.177
RBI system enables 3 sessions of electronic clearing and after the completion of each session; the net amount will be settled among banks through their current accounts maintained with RBI. NEFT settlement happens within 24 hours and there is no limit for amount transacted. The condition here is that, the two branches of bank must be Core Banking Solution enabled.
4.4Mobile Banking : It refers to conduct of banking operations on mobile. The services under mobile banking involves, making enquiry about bank balance and last few transactions, viewing details of bank account, order demand draft and so on. It is a service provided by a bank or other financial institution that allows customers to conduct financial transactions via mobile device like mobile phone or tablet. Mobile banking uses software called an app for this purpose. This facility is available on a 24 hour basis and some banks impose restrictions on which accounts can be accessed and limits the amount of transaction.
4.5Concern for Safety and Security: Incidences of password theft, account hacking, and many other criminal activities have raised alarm in both customers and banks. The need for security and safety of online transactions has never been more important. Therefore, banks are focusing on implementing technologies that are hack proof and give multi layered security to the transactions. Cyber risk management in the business environment is one of the complex issues being faced by the banks, requiring incorporating sophisticated techniques and new skills and capabilities to be embedded in the people.
4.6Investment in IT security framework : As digital channels are preferred by the customers, banks need to be more apprehensive about IT security. With increasing risk of cyber threats, banks are confronting a phenomenal challenge of data breaches and are therefore strengthening their security and authentication systems. They secure access strategies by means of biometrics and tokenization. Banks need to persistently reinforce their internal systems and incorporate enhanced safety measures such as multilayered authentication and internal control processes, without haggling on client comfort.
4.7Automated teller machine growth: The total number of automated teller machines (ATMs) installed in India by various banks as of end June 2012 was 99,218. The new private sector banks in India have the most ATMs, followed by off-site ATMs belonging to SBI and its subsidiaries and then by nationalized banks and foreign banks, while on-site is highest for the nationalized banks of India
4.8Government Initiatives: Under Pradhan Mantri Jan Dhan Yojana (PMJDY), the total number of accounts opened since January 2015 increased 135 per cent to 295.2 million as of August 16, 2017.Finance Minister Mr Arun Jaitley has proposed various measures to quicken India's transition to a cashless economy, including a ban on cash transactions over Rs 200,000, tax incentives for creation of a cashless infrastructure, promoting greater usage of non-cash modes of payments, and making Aadhaar-based payments more widespread.
The government and the regulator have undertaken several measures to strengthen the Indian banking sector.
1. The Reserve Bank of India (RBI) has proactively instructed banks to increase their levels of provision on the loans provided to the telecom sector as a prudent measure, which will help to shore up provisions for future recognition of any non-performing assets arising out of the sector. 2. The Ministry of Labour and Employment has successfully opened around 3,840,863 bank
accounts as on December 26, 2016, for workers especially in the unorganised sector, as part of its campaign to promote and ensure cashless transfer of wages to workers.
3. The 'Digital India' campaign has the potential to transform the Indian banking industry. Highlighting the progress of 'Digital India', more than 12,000 rural post office branches have been linked into payment banking.
Recent reforms in Taxation, Real estate & Banking sectors in India Impact Factor SJIF 2016-6.177
4.9Artificial Intelligence-From sci-fi to reality: Artificial intelligence (AI) has the potential to transform both front office and back office operations with its self-improving programs—at ICICI Bank, for example, software robots have been deployed in over 200 business process functions, reducing the response time to customers by up to 60%. AI has already proven itself in providing seamless differentiated customer experience on digital channels, and security measures with its integration within the banking infrastructure. Intelligent digital assistants are commonplace, and these self-learning programs keep getting better with every interaction.
4.10Growth in Deposits over the past few years: During FY06–17, deposits grew at a CAGR of 12.03 per cent and reached 1.54 trillion by FY171.Strong growth in savings amid rising disposable income levels are the major factors influencing deposit growth. Access to banking system has also improved over the years due to persistent government efforts to promote banking-technology and promote expansion in unbanked and non-metropolitan regions. At the same time India‘s banking sector has remained stable despite global upheavals, thereby retaining public confidence over the years. Deposits under Pradhan Mantri Jan Dhan Yojana (PMJDY), have also increased. As on November 9, 2016, US$ 6,971.68 million were deposited, while 255.1 million accounts were opened
5. Recommendations: Financial sector reforms assisted impressive development of Indian banking