What is Digital Banking?
In simple words, Digital banking refers to the use of online and mobile banking to access various banking and financial activities. There are lot of digital channels such as, mobile apps, internet banking that allows customers to access and manage their banking services like bank accounts, make payments, transfer funds, apply for loans and many more.
Digital banking involves high levels of process automation and web-based services and may include APIs enabling cross-institutional service composition to deliver banking products and provide transactions. It provides the ability for users to access financial data through desktop, mobile and ATM services.
A digital bank represents a virtual process that includes online banking, mobile banking, and beyond.
History
The advent of ATMs and cards in the 1960s led the earliest form of digital banking. However, the internet emerged in the 1980s which led to digital networks; the Internet had become widely available and online banking started in 1990s.
While the improvement of broadband and e-commerce systems in the early 2000s led to modern digital banking. More interestingly, the smartphones began to use for making transactions that go beyond ATM machines.
Most of the consumers now a days use their smartphones as their preferred method for digital banking.
What Digital Banking includes?
There are many platforms or say type of digital banking services are used. These includes:
- Internet Banking
- Mobile Banking
- Unified Payment Interface (UPI)
- Mobile wallets and UPI apps; such as Paytm, Gpay.
Thus, digital banking offers wide range of services like account management (opening of current, saving and term deposit account), fund transfer, ATM services, bill payments etc.
Benefits of Digital Banking
- Improve Business Efficiency: Digital platforms improve interaction with customers and deliver their needs more quickly. Apart from that, they also provide methods for making internal functions more efficient. Traditional bank processing was slow. IT integration between branch and back-office personnel has increased business efficiency.
- Increased Accuracy: There were more chances of error in traditional banking that was mainly on paper processing. Digital methods lead to more accurate accounting and financial accuracy.
- Enhanced Security: Although there is risk of cyber threats, yet financial institution can benefit from extra layers of security to protect data.
- Cost & Time Savings: Traditional Banking involves more labour, paper, office space, and more time, energy and storage cost consuming. Digital platforms can reduce costs through the synergies of more qualitative data and a faster response to market changes.
- Improved Competitiveness: Digital solutions have made banks to manage marketing lists, to reach broader markets and build closer relationships with consumers. CRM platforms, by tracking customer history can provide quick access to email and other forms of online communication. Digital banks now offer 24*7 customer support through digital channels.
- Greater convenience & Accessibility: Digital banking has allowed customers to manage financial needs 24*7 at home. It has provided greater agility to the customers.
- Ease of payments: Digital banking methods have made doing the payment much easier in much little time.
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