What is Digital Banking, its benefits and future?

Updated On : May 2021

Digital Banking, the automation of traditional banking services, is the key to customer engagement, better profitability, and control. It redefined banking by substituting a bank’s physical presence with an online presence and doing away with the customer’s need to visit a branch.

Digital banking enables customers to transact through different secured digital channels while the bank takes care of data security, related risk mitigation, and regulatory aspects. This is done by integrating online and mobile banking services with the latest digital technologies like analytics, social media, innovative payment solutions, and mobile technology and exceeding customer expectations, convenience, and experience.

The evolution of Digital Banking

Technology brought unimaginable changes to the banking industry all over the world in the last 20 years. Internet and mobile access reached the remotest corners linking up people and organizations across the world. This transformed\customer’s expectations and the way organizations functioned.

With mobile connectivity and related infrastructure fintech technology companies entered the banking sector and launched a variety of customer convenient products. To keep up, banks had to re-engineer their process and products to retain their customers. This led to the introduction of Automated Teller Machines (ATMs), the beginning of digital banking.

The next stage was to meet the new level of customer expectations. This pushed banks to come out with better innovations, products, and services. By the end of the 20th century, banks were offering 24 x7 services to customers with the help of technology. Today, customer carry their anytime anywhere banking facility with them, on their smartphones without even involving the banking staff.

With digital banking, all records are maintained in digital form, data is interpreted to useful information by applying analytical methods, better customer engagement is offered and more business generated through customer-specific interaction. All this leads to improved operating efficiency and better income for the bank.

The Indian Government’s vision of a cashless economy has been hastened by making internet access throughout the nation with online banking being the need of the hour due to Covid 19.

Benefits of Digital Banking

Digital banking aims to make life easier for the customers of a bank. Some of its benefits are

• The convenience of banking from the comforts of home
• 24*7 availability of access to banking functions
• Paperless banking
• Enables set up of automatic payments for regular utility bills
• Facilitates online payments for online shopping etc
• Extends banking services to remote areas
• Reduces the risk of counterfeit currency with digital fund transfers
• Strengthens privacy and security for customers
• Allows misplaced credit cards to reported and blocked instantly
• Restricts the circulation of black money
• Lowers the minting demands of currency

Digital Banking in India

In India, to move on from physical verification for KYC, video-based verification may be introduced by the market regulator for a better process. Digital savings accounts are also being offered by several banks. These accounts are similar to the basic savings account, offering full banking facilities to users without having to maintain a minimum balance, with a virtual debit card convertible to a physical debit card.

Some of the best zero balance digital savings bank account in India

• Axis Bank ASAP
• Digisavings – DBS
• Kotak 811
• Pockets and Insta Save FC Account – ICICI Bank
• Indus Online Savings Account – IndusInd

Future of Digital Banking

Research says, to be a fully digital bank, a bank must have

• The option to order currency
• Customizable standing options
• Card blocking feature
• Innovation toward safety vaults
• Accounts linked to tax exemptions status
• Integration with stock market investment channels
• Financial management analytics
• Grouping of accounts of different banks
• Easily accessible assistance

It will be some time before physical branch banking can be replaced fully with digital banking. Customers prefer human interaction for important decisions like taking a loan or negotiating the terms for it. However, digital banking is proving to be handy for recurring banking essential functions. With time being a crucial factor for customers, as well as services, the digitally savvy customer will always look for personalized and seamless digital services provided at their time.