Banking Technology in India

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Dr.S.Balamurugan, M.Com.,M.Phil.,Ph.D.,

Vice-Principal and Head,

PG and Research Department of Commerce,

C.P.A College, Bodinayakanur.

DEFINITION

• "banking" means the accepting, for the purpose of lending or. investment, of deposits of money from the public, repayable on demand or. otherwise, and withdrawal by cheque, draft, order or other wise

E-BANKING

• E-Banking or Electronic Banking is a major innovation in the field of Banking.
• Earlier Banking was conducted in a very traditional manner, there were no such innovations.

• Information revolution led to the evolution of internet , which lead to E-Commerce continued by evolution of E-Banking.

Advantages

• 1.Convenience
• 2.Transfer service
• 3.Monitoring service
• 4.Online bills payment
• 5.Quality service
• 6.High liquidity
• 7.Low cost banking service
• 8. 24 x 7

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Disadvantages

1.Security issues

2.Lack of direct contact between customer and banking officer

3.Transaction problem

4.Long procedure to access e-banking

5.Training and development

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Core Banking

• Core banking is a back-end system that connects multiple branches of the same bank together to deliver operations like loan management, withdrawals, deposits and payments in real-time.

INTERNET BANKING

• A system of banking in which customers can view their account details, pay bills, and transfer money by means of the internet.
• The remote delivery of new and traditional banking products and services through electronic delivery channels

Advantages of E-banking

• Convenience: E-banking provides great convenience to customers for performing various financial transactions. People can easily access their bank accounts anytime just sitting at their homes without visiting their bank.
• Faster Service: It provides speedy service as peoples do no need to stand in queues for paying their bills or transferring funds. Funds get transferred instantly from one account to another in less time using online payment systems.

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• Higher Interest Rate: Online banking services provide higher interest rates to customers. It has reduced the operational cost of banks which helps them in providing better interest rates on deposits of customers.
• Quality Service: Internet banking has improved the service quality to customers. It is efficient, safe and easy to do payments using online banking. Customers are able to monitor all transactions related to their accounts using e-banking apps. 
• 24×7 Facility: E-banking services are available to customers at all times that are 24 hours a day and on all 7 days during a week. Customers can have access to banking products and services from anywhere at any point of time.
• Liquidity: It provides better liquidity of funds to customers. They can easily withdraw money from ATM machines at any time and from anywhere.

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Disadvantages of E-banking

• Insecurity: E-banking services face various insecurity issues resulting from hacking done by online hackers. Customers may lose their credentials while doing payments and may cause huge financial loss.

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• High Start-up Cost: It requires huge expenditure for installing various hardware components, software, computers, modem, and internet network. Banking organizations need large expenditures for starting internet banking services.

• Lack of Personal Contact between Customer and Banker: Online banking faces a barrier of direct interaction between clients and banks. Customers interacts with bank using their websites online. Sometimes customers are not able to resolve their issues by connecting with the bank virtually. 
• Transaction Problems: Many times banking servers are down thereby leading to transaction failure. Customers face difficulty in doing payments online which causes inconvenience.
• Training and Development: Banks need to provide training to their staff for providing better online service to their customers. It requires huge amount of investment for maintaining qualified and trained staff.

Money Transfer - online

• NEFT - National Electronics Fund Transfer
• All NEFT settlements are made in a batch-wise format. Money can be sent using this system to all NEFT-enabled banks in India on an individual basis.
• Requisites To initiate a NEFT transfer,
• Bank IFSC Code (Indian Financial System Code)
• bank account number,
• bank branch and
• account holder name

RTGS –Real Time Gross Settlement

• The term real-time gross settlement (RTGS) refers to a instantaneous transfer of money and/or securities. RTGS is the continuous process of settling payments on an individual order basis
• Requisites To initiate a RTGS transfer,
• Bank IFSC Code (Indian Financial System Code)
• bank account number,
• bank branch and
• account holder name

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IMPS (Immediate Payment Service)

• IMPS provides robust & real time fund transfer which offers an instant, 24X7, interbank electronic fund transfer service that could be accessed on multiple channels like Mobile, Internet, ATM, SMS. IMPS is an emphatic service which allow transferring of funds instantly within banks across India which is not only safe but also economical.
• Requisits.
• Remitter (Sender)
• Beneficiary (Receiver)
• Banks
• National Financial Switch - NPCI

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Debit card

•  A debit card is a payment card that lets you make secure and easy purchases online and in person by drawing money directly from your checking account.

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• Advantages of a Debit Card
• Convenient to Use �Debit Cards are extremely simple to use. Since the payment is deducted directly from your bank account, a place where the money already exists, it can be done instantly. It is much quicker than having to wait for a credit transaction to go through or having to worry about having an adequate amount of cash in the account, to cover your expenses. Debit Cards make transactions fast, easy and convenient to use.
• Works as an Emergency Fund �Debit Cards have the ability to give you cash. They double up as ATM cards and allow you to withdraw money from an ATM. Therefore, working as an emergency fund for you. In addition to the ATM use, a majority of stores offer cash back options at checkout. You can shop conveniently and reasonably using your Debit Card.

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Credit Card

A credit card is a payment card issued to users (cardholders) to enable the cardholder to pay a merchant for goods and services based on the cardholder's accrued debt The card issuer creates a revolving account and grants a line of credit to the cardholder, from which the cardholder can borrow money for payment to a merchant or as a cash advance.

benefits of using a Credit Card

• 1. Buy on credit:
• �What makes a credit card attractive is the credit limit allowed to the cardholder. You can buy anything within that limit and pay later. Your monthly budget will not affect, even if you buy items of high value on credit. One among the most important benefits of credit card is you can convert the total amount of your purchases into low-cost EMIs to enable you to repay it easily over a period of time. This has helped revolutionize the shopping experience.
• 2. Most accepted method of payment:
• �You can travel anywhere, without carrying much money if you have this card. Being the most accepted method of payment, you can use a credit card to pay anything.

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• 3. Interest-free cash withdrawals:�There are a few credit cards that allow you to withdraw money up to a certain limit in case of emergency, with no interest charged up to 45 to 50 days. You can make use of it in times of financial emergency.
• 4. Unlimited reward points:�These cards come with reward points when you use them. For instance, IDFC FIRST Bank credit cards offer unlimited and never-expiring reward points, which are easily redeemable.
• 5. Insurance coverage:�You get personal accident coverage, as well as comprehensive travel insurance coverage and this is one of the significant benefits of credit cards, which make them attractive.

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Advanced Self-Service Capabilities

• Deposits
• Withdrawel
• Self-registration
• Remote account opening
• Loan origination
• Buying insurance, and more.
• any time, from anywhere

Services at ATM

• Cash Withdrawal The most popular service on our ATMs enables customers to withdraw up to a daily limit of Rs. 40,000/- (limit on Classic Debit Card. Higher value cards permit daily withdrawal limits of up to Rs. 1 lakh per day)
• Fast Cash A service which enables you to withdraw your preferred amounts with just a touch. The options in the denomination of 100, 200, 500, 1000, 2000, 3000, 5000, 10,000 are available.
• Use PIN generation menu to create new PIN/Green PIN.
• Pin Change Use this service to change your password at regular intervals.
• Balance Enquiry Expecting an inflow of funds in your account? Use this service to check the current available balance in your account. This service is also available on the main option screen after swiping your card. You can also ‘Go Green' by selecting the view option as the balance is displayed on the screen else get a transaction receipt by selecting print.
• Ministatement Keep track of the transactions in your account by availing this service. Mini-statement gives you an insight into the last 10 transactions in your account.

• Trust Donation Make a donation to your favourite charity. For example, (a) Vaishno Devi (b) Shirdi Saibaba (c) Gurudwara Takht Saheb, Nanded (d) Tirupati (e) Sri Jagannath Temple, Puri (f) Palani, Tamil Nadu (g) Kanchi Kamakoti Petam, Tamil Nadu (h) Ramakrishna Mission, Kolkata (i) Mantralaya, Andhra Pradesh (j) Kashi Vishwanath, Banaras (k) Tulja Bhavani, Mumbai (l) Mahalakshmi, Mumbai and many more.
• Bill payment Use our ATMs to pay your utility bills viz. Bangalore/Hubli/Chamundeshwari Electricity Supply Company, Karnataka and Chattisgarh State Electricity Board.
• Mobile Banking Registration Register/Deregister your mobile banking application using our ATMs.
• Register/link your Aadhar with your account using our ATMs.
• You can register/up-date your mobile number with your account using our ATMs.
• Inter-mobile Mobile Payment System You can register for the IMPS service at all our ATMs. This service allows you to transfer money to any other person with a registered IMPS number instantly.

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 Point of Sale Terminal 

• A POS machine is the most advanced payment accepting machine. It accepts all kinds of credit and debit card payments and issues receipts along with maintaining transactions. The POS machines have evolved with time and now are more user friendly and advanced.

Card-less ATM service

Cardless banking allows customers to withdraw cash, pay bills, request for cheque book, make balance inquiry, and request for a mini statement.

What needed

1. mobile number,
2. one-time PIN (OTP)
3. PIN,

Instant Payments

Key Characteristics

• 24/7/365
• Happen within seconds
• Real-time notifications
• Anywhere from any device
• Option for merchant payment
• Frictions less interface

UPI -Unified Payments Interface

• Unified Payments Interface is an instant real-time payment system developed by National Payments Corporation of India. The interface facilitates inter-bank peer-to-peer and person-to-merchant transactions.

Benefits of UPI

• Complaints can be raised through the�mobile app directly
• Pay or request money instantly 24x7 even on bank holidays
• Fund transfer or bill payment is completely free of cost
• All bank accounts can be accessed using a single UPI app
• Payment can be made directly through the VPA (Virtual Payment Address)
• Neither the payee nor the beneficiary is required to share bank details
• No need to provide ATM card/account details while making transactions

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Biometric Technology

customers simply scan their fingerprint to gain access to their bank account online, giving them a more secure banking experience. Only the person with the correct fingerprint is allowed access to the account, adding another layer of protection for those who choose to do their banking online.��Unlike PINs or passwords, biometric identifiers are impossible to lose or forget, and much more difficult to hack.��

Instant Payments

• Mobile banking�Financial institutions include biometrics in their mobile apps to let customers safely transfer funds or access their banking accounts while on the go.
• Digital on boarding�Biometric authentication allows banks to simplify and speed up due diligence and KYC processes to mitigate risks and ensure excellent on boarding experiences.
• ATM transactions�Banks can implement biometric identifiers like fingerprint scanners in ATMs to make sure that only authorized customers can use ATM services.

Biometric Technology - Applications

Contactless payment

• Contactless payment was made possible by the introduction of Near Field Communication tech. NFC is an upgrade of RFID technology – a chip that enables short-range communication between compatible devices. These devices can be anything from a card to a tag to a smartphone.

Pros - Contactless payment

Ease of use�Quicker transactions and shorter queues at the checkout are the most significant advantages of contactless payment. You also don’t have the hassle of punching in your PIN.        �

Safer transactions�Tap-to-pay technology is more reliable and secure than other forms of payment. The chip technology protects you against any fraudulent purchases through encryption and dynamic data technologies.

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The flexibility of payment devices�Say goodbye to bulky wallets once you go cashless. Your NFC-enabled smartphone is all you need to make your payments.     �

 Loyalty benefits�Most loyalty programs offered by stores are in sync with the tap-to-pay smartphone that you use for payments. They automatically confer discounts and loyalty points at the time of payment. Some banks also offer cash back and incentives when you use the contactless payment feature.

Cons - Contactless payment

Limited acceptance�Retailers are slowly facilitating contactless payments, but the consumers continue to remain dissatisfied with the spotty coverage.

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Low transaction limit�As per RBI ruling, contactless payments carry a capping limit of INR 5000* per contactless transaction in India. For higher  value transactions, entering a PIN becomes necessary to protect against fraud. � 

Technical limitations�Consumers face certain technical barriers in case of mobile contactless payments. The mobile tap-to-pay system needs you to have an NFC compliant smartphone. �

Limited international availability�Mobile Contactless payment devices may not work internationally. Despite similar technology, some mobile wallets used for contactless payments do not get accepted abroad.

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 Security concerns�Since the transaction with a contactless card does not need any PIN authorisation, there is a fear of fraudulent purchases in the event of it being lost or stolen 

Chatbot – Artificial intelligence

• A bank chatbot is an AI-enabled conversational interface to interact with customers and provide help. It either uses artificial intelligence or simple if/then statements to recognize words or phrases and respond accordingly.
• Chatbots in banking are incredibly powerful and can manage smart communications on behalf of the bank. With a banking bot, it’s possible to handle millions of users simultaneously and enhance their experience.

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