Reasons for implementing the Digital Banking

Priyanka Bajpayee

24 Aug, 2020

Digital Banking is the banking where the banking facilities are available online i.e. the banking services are performed through digital banking by discontinuing the paper works. In today’s scenario, Digital Banking has changed the way of banking as through Digital Banking the transactions can be done through higher speed and ease.

Digital Banking helps the financial organization to improve its customer services. Digital Banking has removed the traditional banking activities and has moved online. Earlier, the services were only available to customers when they visit their respective banks.

Reasons for implementing the Digital Banking

The change in the preference of the customers from offline services to online and mobile banking services has resulted in the adaption of Digital Banking. Initially, many financial organizations and Banks struggled in adapting the online banking experiences, but due to the increasing demand of the customers, the banks could not afford to wait to invest in digital transformation. As the customers were switching the banks for availing the digital banking facility. Digital Banking allows the customers to enjoy a perfect online facility of paperless banking, where it is not required to keep track of the transactions.

How Digital Banking can be done?

Digital Banking can be done through

• Laptop and Computers,
• Mobile phone,
• Tablet etc.

Digital Banking in Banking Industry

Digital Banking is playing a vital role in the banking industry. Below mentioned are the reasons why digital banking is important-

• Helps in reducing the cost
• Increases revenue
• Improved Customer experience
• Exploring the new technologies

Digital Banking is helping the bank in full digitalization of all the activities and programs. To improve customer experience, digital banking relies on big data and analytics and improved new technologies. Further, to explore the benefits of the new technologies in the banking sector i.e. Open APIs, Blockchain full digitization is required. Digital banking provides a quick and simple process adaptation in the banking sector.

Various advantages of Digital Banking

1. Transfer of funds

The most important advantage of implementing the Digital Banking is the transfer of funds. Funds transfer facility removes the hassle of issuing cheques or Demand Drafts. Through Digital Transfer the funds can be transferred by anyone at any time. Funds transfer can be done via-IMPS (Immediate Payment Services), NEFT (National Electronic Fund Transfer) and RTGS(Real-time Gross settlement). Mobile Banking application is the best application for fast and easy transfer of funds.

• Easy access of accounts and details

Through implementing the Digital Banking customers can easily access the account and details. Additionally, the customer can download the bank statements and get a printout for any duration at any time without visiting a bank branch. Through, internet banking services you can access whenever you want. Through Digital banking now it is very easy for the customer to keep track of his/her transactions and to get any account-related information within seconds. For maintaining the security of the accounts, the banks also send the message alert once the money has been deducted from the account of the customer.

• Withdrawal of Cash

A person can easily withdraw the amount with the help of a Debit card without visiting the bank and withdrawal slip formalities. With ATMs, every far and near-cash can be withdrawn at any time and anywhere.

• Bill Payment

Now, Bill payment is very easy through digital banking. Bill payment of the mobile bills, electricity bills, Gas bills, etc. can be done very easily. Recharge of prepaid phones can also be done through google pay, Paytm or directly through the account. Additionally, the Auto-debit facility allows you to pay the respective amount automatically on the respective date.

• Meeting the customer’s expectation

With the increase in competition and globalization, every bank is prioritizing the digital banking facility for meeting the needs of the customers. Banks are satisfying the Modern legacy system by creating Digital capability by focusing on the core aspects of the banking sector. Digital banking includes-Internet Banking, Virtual Banking, and E-Banking.

• Mobile Banking

The major revolution of implementing the Digital Banking was the internet. The second revolution of it involves mobile Banking. Digital Banking has taken off in a big way after smartphone presence in the market. Now, Smart Mobile phones allow customers to carry out bank transactions without visiting the banks. Through Mobile Banking a person can transfer funds, invest in Fixed Deposits and can also pay the bills… even while traveling also. Most of the banks have their mobile applications for their customers, such as Mobile Banking App and Pay Zap, Paytm, Google Pay and others.

• Issuance and Stop cheques facility

Digital Banking has provided a facility to the customer that he can apply for the issuance of the cheque even without visiting the respective banks. Further, it also happens that it may need to stop cheques for some reason – like you got the amount wrong, or the beneficiary was not the one you wanted or deficit of amount. (Mostly in case of a business)With the help of Digital now it is very easy to stop cheques. A person can simply log in and with a simple click, he/she can update the cheque processing.

Risk Factors involved in the Digital Banking

No doubt implementing the Digital Banking is providing various opportunities for improving the efficiency and for creating a full-fledged digital service, it also leads to certain risk factors which are mentioned below-

• A complex process to understand and execute
• Difficult in retaining the customer’s trust
• Risk management obligations
• Various legacy platforms which are difficult for common people to understand

Conclusion

Implementing the Digital Banking is playing a very vital role which has become an integral part of the Banking Business. It has changed the way of working of banks and how the customers interact with the banks. Now more and more people are connected with each other through digital platforms.