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Recent trends in banking include the growth of digital services like online banking, mobile banking, UPI payments, and digital-only banks. Digitization began in the 1980s with basic functions moving online, and accelerated in the 1990s with the adoption of core banking solutions and the entry of private banks. Now, technologies like blockchain, AI chatbots, and fintech companies are further transforming banking. Overall, these trends are making banking more convenient and accessible through innovations, though change also presents challenges.

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65 views3 pages

IT Act PDF

Recent trends in banking include the growth of digital services like online banking, mobile banking, UPI payments, and digital-only banks. Digitization began in the 1980s with basic functions moving online, and accelerated in the 1990s with the adoption of core banking solutions and the entry of private banks. Now, technologies like blockchain, AI chatbots, and fintech companies are further transforming banking. Overall, these trends are making banking more convenient and accessible through innovations, though change also presents challenges.

Uploaded by

vibhu
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We take content rights seriously. If you suspect this is your content, claim it here.
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RECENT TRENDS IN BANKING

RTGS – Real Time Gross Settlement


RTGS was introduced in India in March 2004. It is a system through which a bank receives
instruction in the form of electronic for transferring the funds from one bank account to the other bank
accounts.
As the name suggests, the transfer of funds between the accounts takes place in ‘real time’. The RTGS
system is kept running and maintained by the RBI.
So, it is operated by the RBI who provides it the faster and efficient way to transfer the funds while
facilitating the various financial operations.
Thus, the money send under this system is instantaneous and the beneficiary gets the money within
two hours.

E-cheques
This technology has been developed in the US which will replace the conventional paper cheques in
India. Thus, to include this method of E-cheque and make it mandatory, a negotiable instruments act
has been included in the amendment.

Electronic Clearing Service


ECS is an electronic system that is used to make the payments and receipts that are in bulk. The
payments need to be similar in nature which can be smaller in amount and repetitive in nature.
Thus, this facility is specifically beneficial to government agencies and companies that make or
receive large bulk payments.

EFT – Electoral Funds Transfer


This is a system to transfer the money from one’s bank account to other accounts.
So, in this system, the concerning party that wants to make the payment instructs the bank and make a
cash payment or authorizes the bank to transfer the funds directly.
So, the sender should provide the bank with the complete details like the name of the receiver,
account type, account number of the respective bank, city name, branch name, and other details to the
bank.
Thus it will ensure that the amount reaches the beneficiaries account quickly and correctly.

ATM – Automatic Teller Machine


This is the most popular method in India to withdraw the money. The customers can enable this
service to withdraw the money 24 by 7.
It allows the customers to perform all day to day bank activities without interacting with any humans.
Furthermore, these facilities are also used for the payment of funds, utility bills, etc.
The other trends in the banking sector include a point of sale terminal, telebanking, and electronic
data interchange.

Digitization
With the rapid growth of technology, digital services became an indispensable part of banking
operations as these institutions needed to keep up with the changes and introduce innovations that
made services convenient. In India, the initial phase of digitization began in the 1980s when
information technology was used to perform basic functions like customer service, bookkeeping, etc.
Gradually core banking solutions were also adopted to improve customer experience. The main shift
came during the 1990s when liberalization opened the Indian market to the global world. Private and
international banks which came into operation boosted technological changes in the banking sector.
Features like online banking, IMPS (Immediate Payment Service), RTGS (Real Time Gross
Settlement), telebanking enabled customers to avail banking facilities from anywhere.

Mobile Banking
Almost a decade back, even though digital services came into the picture, it was only done through
desktop computers which means the customer must be at home or at a place with a computer and
internet connection. But the vast penetration of smartphones created a need among customers to avail
banking services on their mobile phones. Cheap data charges also contributed towards the increase in
usage of mobile banking.

Unified Payment Interface (UPI)


UPI is a trend that emerged in the last couple of years and it is revolutionizing the way we pay and
receive money. Transactions can be done within seconds using this interface. Goggle Pay and BHIM
(Government of India) are two major interfaces among numerous other services that enable easy
payment even if you are out of physical cash.

Blockchain
Blockchain is a robust technology that is still in the development phase. Security is a major factor as
far as digital services are concerned. Despite technical advances, fraud practices are still a challenge
in the digital domain. Blockchain is the answer to these challenges. Like the way in which it operates,
there is no scope for any malpractices in it. The technology works on computer science, data
structures and cryptography.

Artificial Intelligence (AI) Robots


Many private and nationalized banks have started to make use of chatbots or Artificial Intelligence
(AI) robots for assistance in customer support. The practice is still in its initial stage but will definitely
evolve and make the entrance to the general public in the near future. Chatbots are one of the
emerging trends that are estimated to grow.

Fintech Companies
Fintech or financial technology is indeed a disrupting force in the sector. Due to the changing
landscapes in the Indian financial sector, many companies have emerged to be a significant part of
this ecosystem. Fintech companies specialise in developing technology solutions that help companies
to manage the financial aspects of their business, like new softwares, applications, processes as well
as business models. Investments made on Fintech companies have increased drastically in the past
decade making it a multi-billion dollar industry globally.

Digital-only Banks
Digital-only banks operate only through IT platforms which can be accessed using mobile phones,
laptops or tablets. Digital-only banks operate in a paperless and branchless model and seem to
overtake the traditional system of banks in the future. These banks provide high-speed banking
facility at a low transaction charge. These virtual banks are an ideal choice for the current fast-paced
world.

All these recent trends will reshape the banking and finance industry by bringing revolutionary
changes in the traditional models. This shift is not devoid of challenges, but the customers are quite
open to innovations and the government is also showing great support for these trends.

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