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The digital banking in India-A myth, mystery and MID-WAY

Article · January 2018

DOI: 10.5958/2319-1422.2018.00014.0

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 ISSN: 2319-1422 Vol 7, Issue 5 September, 2018 Impact Factor SJIF 2017 = 3.845

SAARJ Journal on
Banking & Insurance
Research (SJBIR)

( Dou b l e B li n d Ref e r e e d & Re vi e we d I n te r n a ti on a l J ou r n a l )

DOI MUNBER: 10.5958/2319-1422.2018.00014.0

THE DIGITAL BANKING IN INDIA – A MYTH, MYSTERY AND MID-
WAY
Dr Vijayendra S Gupta*
*Associate Professor,
Sangam University, Bhilwara,
Rajasthan- INDIA.
Email id: [email protected]
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______________________________________________________________________________
ABSTRACT
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The buzzword in India today is creating a cashless future. The traditional banking industry is
thus facing the impact of digital technology. Meanwhile, India today offers a unique architecture
for digital banking which is not available in the US or China. Everything is moving faster -
trends, novelties, news, products, markets, etc. Linearity is dead. Markets are now complex,
internet-driven, adaptive systems. The innovations have brought efficiencies creating a better
customer experience through best pricing, speed and convenience. With a brand that represents
salience and trust, bankers and banks are a one-stop shop. Researcher will explore and analyse
available literature to find issues and challenges and suggest some logical strategies from
content available on articles, news and research articles. The goal is to make banking cheaper,
more efficient and easier to access for all of the country‟s citizens. Digital banking offers yet
another advantage: it allows people and business owners to obtain credit. However, e-wallets
such as Paytm, Free charge and MobiKwik have been around for a couple of years and enjoyed
a bull run soon after Modi invalidated Rs 500 and Rs 1,000 currency notes. However, things are,
rapidly transforming in the digital era. It is as important that the banks remain as transparent,
as their customers remain authentic. The main objective behind integrating banking services
with technology is, undoubtedly, convenience.

KEYWORDS: New Product and Services, Digital Banking, challenges

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INTRODUCTION
The world has changed and continues to change rapidly. The convergence of telecom, media and
computing has changed the way we work, play and live. Going back in time, we first had the
physical networks - roads, rail, electricity, and water. These networks connected cities and towns
and were the life and blood of our economies. An analogy to these physical networks is the
countless wireless networks. Wireless networks connect people, phone, tablets, etc. Radio and
television networks relay music, video, news, etc. Telecom networks connect satellites and close
geographies. Information networks now relay more and more content and knowledge. Basically
everything is becoming connected. It‟s actually implemented a three-part digital banking strategy
called the JAM Trinity – the J is for Jan Dhan Yojana, a program that offers basic savings
accounts with small credit lines to the unbanked, the A is for Adhaar, a biometric-enabled
authentication system and the M is for mobile, which is the primary mechanism for access.
MONUMENTAL DAY FOR MILLIONS OF PEOPLE
April 11, 2016 was a monumental day for millions of people living in India. On that Monday, the
government launched its Unified Payment Interface (UPI), a digital banking system that allows
people to easily transfer money to and from a bank account or to others via a smart-phone. While
this kind of money transferring was available to people before that date, it wasn‟t accessible to
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everyone. Now, with UPI, nearly everyone in the country can open a bank account, save money
and make transactions. The goal is to make banking cheaper, more efficient and easier to access
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for all of the country‟s citizens. Digital banking offers yet another advantage: it allows people
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and business owners to obtain credit.

Credit and debit cards have been the most used cashless payment systems in India for over a
decade. Internet banking solutions such as NEFT (national electronic funds transfer) and RTGS
(real time gross settlement) for corporate customers are in place. There are offline payment
methods, eliminating internet security and malware threats. With UPI, money can be transferred
from one bank account to another without an intermediary and the money stays in the
consumer‟s account until the transaction is complete. Paying through digital wallets needs a third
party linking the payer and the payee.

Source: http://ficci.in/sector/3/Add_docs/Financial-Foresights-April-2017.pdf

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The successful producers and marketers have to move from a product-centric approach to a
customer-centric approach. This involves identifying potential customers, determining their
needs and value to the company by interacting with customers to learn about them. Products and
services have to be tailor-made for individual customers. The mantra is, “Listen, understand, and
change.” The secular shift in technology, mobility, social computing and analytics have led to
changing consumer behaviour. Some have understood and acted to adapt to this change.
Amazon, Apple, Face book, Google and Netflix have created market value of over US $1
trillion. They could do that as they leveraged change and in the process transformed customer
expectations, created new operating models and blew a few mature companies out of the water.
In contrast, some others such as Nokia, Motorola, Borders, Barnes and Noble, Blockbusters and
HMV slept! Banking apps and digital cash solutions are all the rage in India now. Ever since the
demonetisation was announced on November 8, almost every bank and solutions provider has
either upgraded existing digital devices or lined up new solutions to take advantage of the
opportunity that has come their way.
It‟s micro payments that offer the most promise and the most explosive growth, says Phil Gomm,
banking and financial services practice leader at Capgemini, a global consulting company. He
points out that micro payment revenues are growing at a 225% compound annual growth rate
and it could become a $5 billion market for the country‟s telecoms by 2020. “People can use
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their phones to pay for very low valued payments to local merchants and then those local
merchants can receive money and put it right into their bank accounts,” says Gomm.
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However, e-wallets such as Paytm, Free charge and MobiKwik have been around for a couple of
years and enjoyed a bull run soon after Modi invalidated Rs 500 and Rs 1,000 currency notes.
The Reserve Bank of India has said the enhanced limit on e-wallet and prepaid instruments – Rs
20,000 per month – will continue until comprehensive guidelines come in. Banks, with the help
of the NPCI, are also going strong on USSD-based transactions. USSD is a payment system that
can be used on mobile phones without internet connection.
The goal of banks and mobile wallet solution providers now is to broaden the acceptance of
digital payment offerings. Although India has 107 crore mobile phone subscribers, only about 30
crore of them – 28% – have smart phones. The government is also taking steps to promote digital
payments as it seeks to curb black money. It is pushing BHIM (Bharat Interface for Money), a
mobile payment app based that on UPI (Unified Payment Interface) for banks and USSD
(Unstructured Supplementary Service Data) modes of e-payment. It can be activated with
fingerprints and the government is looking to integrate Aadhaar with the BHIM app, making the
12- digit identification number a universal payment ID. The National
Payments Corporation of India, the nodal agency for all retail payment systems in the country, is
working with Visa and MasterCard to develop a common QR code to facilitate cashless
transactions in shops. Following are some offers by government of India;

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Source:http://economictimes.indiatimes.com/small-biz/money/how-banking-apps-and-digital-
cash-solutions-are-all-the-rage-in-india/articleshow/56695168.cms
CHALLENGES TO DIGITAL BANKING:
Here are 6 Challenges to the digital banking and suggested ways for how to overcome them are
discussed.
1. Attaining app perfection: There is an immense feeling of power and reassurance while
accessing a Smartphone application. Smartphone are more personal in nature, progressing to
biometric verification, even for actions such as unlocking the screen. Taking this into
account, developing applications related to a business becomes crucial in order to retain
customers. With banking and financial applications increasingly offering the comfort and
luxury of monitoring expenses at any time from any place, organizations that do not tap into
this area will certainly lose out on many individuals that will deem the corporation outdated.
However, most applications are often ridden with bugs and face severe performance issues.
They remain difficult to navigate, at times, and frequently crash. This can be detrimental to
the company‟s progress as it would represent poor quality.
2. Technology Upgrades: Five years ago, Smartphone wee only just becoming popular. Today,
the functionality largely defines the device that is owned. Those who travel frequently on
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business depend on Apple and Android tablets, those who work as freelancers depend on
high quality cameras and digital notebooks, while those who work the 9-to-5 routine prefer
robust laptops and high-performance desktops. In addition, we have products like Amazon
Echo thrown in the mix, for daily alerts and to perk up the overall lifestyle. Knowing which
audience to target is only the half of it; understanding who would use what device under
which circumstances is equally important. This means a serious amount of investment for
banking and financial entities in digital capabilities and formulating effective digital
strategies.
3. Cyber Crime: Most banking and financial applications are subject to cyber-attacks the most.
The reason is obvious, what with money being the unquestionable objective. Fraudsters have
been known to be innovative in their endeavors to siphon funds, either as large amounts in a
gun-shot, or minuscule amounts from thousands of accounts, over a long period of time. If
not money directly, there is always the threat of data being compromised.
4. Spearheading with Innovation: Spearheading the marketplace by offering innovative
services is not just desired, but also required in order to stay ahead of the curve and attract a
wide customer base. Especially with a large base of young users, it becomes important to
distinguish your company in the ever-growing and competitive marketplace. However,
companies are often hesitant to take the leap, as they are aware that things can horribly
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backfire and cause instant backlash from irate customers.

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5. Sustainability: Post successful innovation and implementation, the next pressing challenge
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to tackle effectively is sustenance. An organization‟s sustainability as a leader is possible

only through synergy. Only when the users acknowledge the value of the product or service
will the organizational value skyrocket to success and remain there. In this context, the power
of social media is often overlooked. While consistently good reviews uplift the organization
to a better status, consistently bad reviews can destroy even an entire empire.
6. Delivering Quality at Speed: In the rush of wanting to deliver products and services at an
accelerated speed, companies often tend to compromise on the quality. The issue with quality
is that there is no such thing as a small bug; a bug is a bug. There have been several instances
of organizations knowingly turning a blind-eye to defects in products and software even
before the item hit the market.
THE WAYS TO OVERCOME:
1. Quality Assurance professionals are trained to inspect, assess, and assure the quality of the
software. They become involved in the process early on in the software lifecycle and ensure that
applications are delivered with premium quality. In the case of a performance issue despite the
rigorous testing, they will be able to tend immediately to the problem and fix the bugs instantly.
2. Software testing plays a key role in ensuring device compatibility with the software, and
makes the entity more user-friendly. This invariably leads to more breathing room for exploring
the devices that will be able to carry the company‟s customized software better. This typically
saves the corporation millions of dollars and organizations can, subsequently, spend their efforts
on figuring out an apt digital strategy.
3. Security testing will sniff out the possible points of vulnerabilities that hackers may take
advantage of, and offer the appropriate solution. Security testing demands a thorough
understanding of the banking system and offers an in-depth knowledge of the internal
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architecture. Quality Assurance professionals that have expertise over the banking domain are
the ones that would best tackle cyber-crime.
4. Software testing can ensure that all the major bugs are tackled as they rise, and thorough
analysis is conducted in order to have preventive measures. This will give innovative companies
in their respective industries a boost, so that they can continue to explore how to better delight
their customer-base.
5. Understanding and leveraging the power of social media, while necessary, can be ridden with
issues. Trolls, malwares, and tweets about performance issues can all wreak havoc if not
effectively and immediately managed. Software testing personnel can spot real problems and
immediately fix the issues, thereby containing the issue. This greatly helps sustain brand image
in the long-run.
6. Robust software testing ensures that the product or software hits the market well in time. By
closely analyzing possible software issues right from the requirements gathering stage, quality
assurance experts ensure time to market.
Source: http://www.cigniti.com/blog/6-challenges-digital-banks-e-wallets-2017-overcome/
SUMMING UP:
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Banking and financial services have always been extremely formal in nature, and for good
reason. However, things are, rapidly transforming in the digital era. It is as important that the
Members Copy, Not for Commercial Sale
www.IndianJournals.com

banks remain as transparent, as their customers remain authentic. The main objective behind
integrating banking services with technology is, undoubtedly, convenience. Technology has now
become familiar to most individuals, to an extent that it influences their lifestyle. It, then,
becomes vital for businesses to distinguish themselves in the digital space with unique offerings.
The new masters have created the ability to use the networks and information that they create
around their customers, products and services to produce a highly personalized customer
experience. Digital experience is far more personalised.
REFERENCES
 http://economictimes.indiatimes.com/topic/Digital-banking
 http://www.tfci.com/digibank2016/
 https://www.yesbank.in/digital-banking
 http://indiainbusiness.nic.in/newdesign/upload/Productivity-in-indian-banking-2016-digital-
and-beyond-new-horizons-in-indian-banking.pdf
 http://economictimes.indiatimes.com/small-biz/money/how-banking-apps-and-digital-cash-
solutions-are-all-the-rage-in-india/articleshow/56695168.cms
 http://www.cigniti.com/blog/6-challenges-digital-banks-e-wallets-2017-overcome/
 http://www.business-standard.com/article/opinion/aditya-puri-digital-banking-in-a-digital-
india-116032700601_1.html
 http://ficci.in/sector/3/Add_docs/Financial-Foresights-April-2017.pdf

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