Technology Driven Banking Services

TECHNOLOGY DRIVEN
BANKING SERVICES
TECHNOLOGY DRIVEN BANKING
SERVICES
 WHY do we need technology in banking?
 Changing landscape of market place which has made
adoption of technology in banking essential.
 WHAT is technology driven banking?

 Itcan be broadly considered as an initiative in which
technological/digital platform is used for rendering any
banking or related services to the user.
Technology in banking
Innovative Risk
Management
Complex Credit
Calculations
Global Operations g y
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Pervasive Branch
in ga
Network
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Mass Transaction
& Items Processing
Multi-channel : presence & role of technology
CATEGORIZING FINANCIAL
TRANSACTIONS THROUGH
TECHNOLOGY
E-commerce
E-Finance E-money
E-banking –
providing banking
Other financial
products &
services- as Prepaid payment
services through e-
insurance, mutual mechanisms
channels as net,
fund, broking etc.
mobile banking
etc.
BENEFITS OF E- BANKING FOR BANKS
Customer
Resource
service &
efficiency
satisfaction
Cost reduction Customer base
Benefits
PAYMENT & SETTLEMENT SYSTEM IN
INDIA
 The committee on Payment and Settlement Systems
(CPSS) was created by BIS.
 The primary objective is to promote the safety and
efficiency of payment, clearing, settlement and related
arrangements, thereby supporting financial stability and
the wider economy.
 RBI is a member of CPSS.
PAYMENT & SETTLEMENT SYSTEM IN
INDIA
Payment Payment
system system
Paper based- High
Large value – RTGS,
value clearing,
High value clearing
Cheques
Retail payment-
Electronic – RTGS, Cheque, NEFT,
ECS, NEFT, IMPS ECS,IMPS, cards,
internet/mobile
based
ELECTRONIC CLEARING SERVICE (ECS)
 Electronic Clearing System (ECS) is an electronic method
of fund transfer from one bank account to another.
 It is generally used for bulk transfers performed by
institutions for making payments like dividend, interest,
salary, pension, etc.
 ECS can also be used to pay bills and other charges such
as payments to utility companies such as telephone,
electricity, water, or for making equated monthly
installments payments on loans as well as SIP investments.
 ECS service is free of charge provided by banks to clients.
Types of
ECS
ECS- ECS-
Credit Debit
ECS –Credit:
• ECS credit is used for allowing credit to a large number of beneficiaries by

raising a single debit to the customer’s account, such as dividend, interest or
salary payment.
• The ECS user helps to save on administrative machinery for printing,
dispatch and reconciliation.
• Provides the ability to make payment and ensure that the beneficiaries
account gets credited on a designated date.
ECS Debit:
 ECS debit is used for raising debits to a number of
accounts of consumers or account holders for affording a
single credit to a particular institution.
 E.g.: In cases such as utility payments like electricity
bills and telephone bills.
 E.g. EMIs, SIPs etc.
QUICK EXERCISE:
 If you are a bank manager……..
 What is your likely customer segment for ECS?
 Which set of customers should be prime target for ECS?
 How should you target them and convince them that

‘ECS’ is really a good service & why you should do it
when it is free of charge?
NATIONAL ELECTRONIC FUNDS
TRANSFER (NEFT)
 National Electronic Funds Transfer (NEFT) is a nation-
wide payment system facilitating one-to-one funds transfer.
 Under this Scheme, individuals, firms and corporates can
electronically transfer funds from any bank branch to any
individual, firm or corporate having an account with any
other bank branch in the country through NEFT.
 From 16th-dec-19, NEFT is now available for 24/7. As such
there is no limit to the amount that can be transferred
through NEFT.
 For every NEFT transaction, IFSC (Indian Financial
System Code) has to be shared of the beneficiary's bank
branch.
NATIONAL ELECTRONIC FUNDS
TRANSFER (NEFT)
REAL TIME GROSS SETTLEMENT (RTGS)
 RTGS is a system where there is continuous and real-time settlement
of fund-transfers, individually on a transaction by transaction basis
(without netting).
 'Real Time' means the processing of instructions at the time they are
received.
 'Gross Settlement' means that the settlement of funds transfer
instructions occurs individually.
 RTGS system is owned & operated by RBI.
 RTGS is not a 24x7 system in branch mode. The RTGS service

window for customer transactions is available on working day as per
bank timings.
 It is announced by RBI that from Dec-2020, RTGS is available for
24X7 for online mode.
 The minimum amount to be transferred through RTGS is Rs 2 lakh.
IMMEDIATE PAYMENT SERVICE (IMPS)
 Immediate Payment Service (IMPS) is a service
provided by banks to ensure real-time interbank funds
transfer.
 Funds can be transferred on any day of the week
including holidays and weekends using IMPS for 24/7.
 Generally, the transaction limit for IMPS transfer is set
to be Rs.2 lakh. Though it can differ from bank to bank.
 Transactions such as Transfer funds, Receive payments,
Make merchant payments, Perform mobile banking
transactions etc.
PLASTIC MONEY & E-MONEY
Types of e-
money
Other payment
Credit cards Debit cards channels &
products
CREDIT CARDS
 A credit card is a plastic card issued by banks /financial
institutions.
 Which allows the holder of card to pay for goods/services on
credit granted by banks/financial institutions.
 It has pre-approved credit limit.
 It can also be termed as ‘form of short term, revolving credit

to the cardholder’.
 Generally, bank grants credit period of 45 days on credit
afterwards, it charges around 2.5 %/month on entire remaining
outstanding.
 Bank charge commission of around 2% from merchant.
SETTLEMENT PROCESS THROUGH
CREDIT CARD NETWORK
CREDIT CARD NETWORK
CREDIT CARD NETWORK
CREDIT CARDS
 So, what is ‘RuPay’ ?
 How does it work?
 How is it different from others cards?

DEBIT CARD
 A debit card is;
 The card that enables the holder to pay for goods/
services
 Through debit card transaction the money gets deducted
directly from a consumer's bank account to pay for a
purchase immediately.
 Benefits:
 Payment convenience and safety
 Wide acceptance….etc.
DIFFERENCE BETWEEN DEBIT CARD &
CREDIT CARD
Features Credit card Debit card
Payment terms Deferred Immediate debit to

customer’s bank a/c
Credit Around 45 days credit No credit
Risk Default risk, fraud risk Risk minimized
Profit margin for Higher profit margin Low profit margin

banks
OTHER PAYMENT
CHANNELS/PRODUCTS
 ATM (Automated Teller Machines) :
 Majorly used for cash withdrawal purpose
 Some sundry bank work such as balance inquiry, Cheque
deposit etc.
• Benefits: convenient & easy, 24/7
 Great alternative to typical bank branch
 Mobile banking:
• Mobile app- based banking
• Online fund transfer, balance check, statement, payments to
merchants can be done.
• Tool for financial inclusion
• Benefits: convenient & easy, 24/7
BLOCKCHAIN TECHNOLOGY IN
BANKING
 Blockchain is digital ledger for record keeping where
transactions are recorded.
 Blockchain can be considered as part of Distributed
Ledger Technology (DLT).
 Whenever new transaction is there, the record of the
same is added to every participant’s ledger. So that all
parties can verify at the same time.
 Biggest advantage: Blockchain technology or a system
records the information (Financial transactions or
otherwise) in such a way that it makes it very
challenging to create fraud or hack or to create back date
entries in the system.
BANKING
 Group of 15 banks are joining force to create Indian
Banks' Blockchain Infrastructure Company Private
Limited (IBBIC).
 This entity would take care of processing of various
trade finance transactions, Letter of Credit etc.
 The system will ensure reduction in paperwork,
prevention of frauds, verification of documents,
authentication of transactions in much faster as well
secure way.
 Global banks like Wells Fargo, Citi, JPMorgan etc. are
already using blockchain technology.
BANKING
Challenges
&
Opportunities

Technology Driven Banking Services

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TECHNOLOGY DRIVEN

 WHAT is technology driven banking?

Cost reduction Customer base

• ECS credit is used for allowing credit to a large number of beneficiaries by

 What is your likely customer segment for ECS?

 Which set of customers should be prime target for ECS?

 How should you target them and convince them that

 RTGS is not a 24x7 system in branch mode. The RTGS service

 It can also be termed as ‘form of short term, revolving credit

 How is it different from others cards?

Features Credit card Debit card

Payment terms Deferred Immediate debit to

Credit Around 45 days credit No credit

Risk Default risk, fraud risk Risk minimized

Profit margin for Higher profit margin Low profit margin

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