Digital
Banking in India – Banking Awareness Notes
Dear Aspirants,
Welcome
to Mentor for Bank Exams. Digital
Banking is the new paradigm that offers considerable benefits to banks in terms
of increasing productivity and profitability. It is accomplished by leveraging
state-of the-art technology infrastructure to bring about changes in internal
processes and external interfaces. In this article we cover all the important
information regarding Digital Banking in India.
Introduction:
Digital
banking refers to the digital technologies that now banks are providing instead
of traditional banking. The objective of digital banking is to provide a
standard as well as comfortable online and mobile banking services by
integrating their digital technologies. Now, for getting your balance update,
fund transfer, to deposit or withdraw cash, for passbook update you need not to
visit your branch.
For
each query, there is a machine-like CDM (Cash deposit machine), Passbook
machine, ATM etc. Digital banking is not only for customers but also for
bankers, they are using CSM (cash sorting machine) for cash-counting, Digital
lamps for cheque verification, enhanced software’s for calculations and data
storage, they use different software’s to update their all inventories of
bank-like cheque books, account-opening kit, debit-credit cards, locker details
etc.
Objectives of Digital Banking:
If financial entities
want to survive the digitalization of their industry, and even thrive by taking
full advantage of the new paradigms, they must pursue six high-priority
objectives.
- Develop consumer-centered
business models, including a digital experience that differentiates them
from the competition and that addresses new purchasing behaviors.
According to a PWC study, 30% of financial entities believe that improving
the user experience is the most important element of their digital
strategy.
- Optimize distribution. The
user’s experience needs to be increasingly multi-channel, especially when
it comes to online, mobile, and social media.
- Simplify processes and
transactions. Rather than simply moving off-line processes on-line, they
need to be re-thought from a 100% digital perspective
- Obtain relevant information.
Gaining the capability and the tools required to obtain relevant
information from Big Data will be a clear competitive advantage.
- Innovate proactively. This may
be one of the most profound changes to company culture in this industry: a
transition to proactive innovation that seeks and favors change
- Invest in security for verifying
user identity and for making data and transactions secure.
Barriers To Digital Banking
The digital
transformation of the financial industry also has its dark side, consisting of
obstacles to be overcome. So, what is stopping the banking industry from taking
full advantage of the digital revolution?
- The banks’ own complex,
traditional, centralized systems.
- The regulatory environment.
- Lack of funding.
- Cultural organization.
- Lack of talent and/or skills.
Some of the features available through online banking:-
- View balances: Checking your balance doesn’t
require much work. You simply select Account balances and take a look at
your balance and past transactions. If you have more than one account, you
can also do transfers between accounts.
- Pay bills: To pay your bills online, you
just need to add to your account the names of the companies you wish to
pay bills to. In the Pay Bills section, select Add payees, search for the
name of the company and fill in the account number for each company. You
can also sign up for the ebills service from epost, a service that sends
you a bill by email instead of a printed one by regular mail.
- Transfer funds: When you select Transfer Funds,
you’ll be asked where to transfer the money to and from, when, and the
amount.
- Set up
recurring bill payments or transfers: If
you make a regular payment every month, it might be convenient to set up
an automatic withdrawal from your account.
- Monitor CIBC
investments: If you have any CIBC investments,
you can keep an eye on those stocks or mutual funds here.
- Send and
receive an INTERAC e-Transfer: This
could be the end of the birthday cheque! You can receive transfers from
other people’s accounts, or set up transfers from your account to someone
else’s. The recipient will get an e-mail notifying them of the
transaction.
- View CIBC VISA
accounts: Always a good place to monitor
your spending. You can make your credit card payments online, right from
your account.
- Order cheques: We don’t need them much anymore
due to online banking and debit purchases, but if you still use cheques,
you can order them directly from the CIBC website.
Examples of Digital
Banking solutions that we use in day to day life:
Internet Banking
When you do your banking
activities through the internet with the help of laptop or personal computer
without visiting a bank branch. You can avail any type of banking services like
– Fund transfer, Bill payment, Check account balance, etc.
Mobile Banking
It is just similar to an
internet banking. Without the help of laptop and computer, a customer can
perform all banking activities through a mobile phone. With the help of mobile
app of a particular bank and internet, you can either transfer fund or pay your
bills, etc.
Core Banking System
(CBS)
It is a centralized
system developed by a bank which allows its customers to conduct banking
activities from anywhere and any branch of the bank. A customer can avail
banking services from any branch of the bank which is on CBS network
irrespective of a branch you have opened your account.
For
e.g.- If you have an account in SBI Bank of
Noida Sector 19 branch and you are currently staying in Lucknow. If you wish to
transfer money to someone then you can visit any SBI Bank branch of the city
(Lucknow) and can easily transfer the money.
National Electronic
Fund Transfer (NEFT)
It is a payment system
which facilitates one-to-one funds transfer. Under this facility, any customer
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.
Transaction
Limit:
There is no minimum
& maximum limit of amount.
Note: For cash-based remittance and
remittance to Nepal - the maximum amount per transaction is limited to
Rs 50,000.
Timing: At present, NEFT operates in hourly
batches - there are twelve settlements from 8 am to 7 pm on
weekdays (Monday through Friday) and six settlements from 8 am to 1 pm on
Saturdays.
Real Time Gross
Settlement (RTGS)
Under this facility, the
transfer of funds is done individually on an order by order basis (without any
delay). The RTGS system is primarily meant for large value transactions.
‘Real time’ means – The processing of
instructions at the time they are received rather than at some later
time; 'Gross Settlement' means the settlement of funds transfer
instructions occurs individually (on an instruction by instruction basis.
Transaction
Limit:
The minimum amount
is Rs. 2 lakh. There is no upper ceiling for RTGS transactions.
Timing: The RTGS service window for
customer's transactions is available to banks from 9.00 hours to 16.30 hours
on weekdays and from 9.00 hours to 14:00 hours on Saturdays
for settlement at the RBI end. However, the timings that the banks follow may
vary depending on the customer timings of the bank branches.
Indian Financial
System Code (IFSC)
It is an 11-digit
alpha-numeric code which identifies a bank-branch participating in the NEFT
& RTGS system. IFSC is used by the NEFT system to identify the originating
/ destination banks/branches and also to route the messages appropriately to
the concerned banks/branches.
Note: IFSC code
represent –
- First 4 alpha characters
indicate – bank name
- Fifth characters is - 0
- Last 6 characters indicate
– bank branch.
For e.g.- SBIN0000125 – Here – SBIN
indicates – State Bank of India. 0125 represent
the Lucknow Main Br. name.
BHARAT BILL PAYMENT SYSTEM (BBPS)
Bharat Bill Payment System
(BBPS) is an integrated bill payment system which will offer interoperable bill
payment service to customers online as well as through a network of agents on
the ground. The system will provide multiple payment modes and instant confirmation
of payment.
- With a need of bill payments
system, various organizations decided to provide a single platform to make
all these payments. So an integrated bill payment system called BBPS was
proposed for which the policy guidelines were issued by the Reserve Bank of
India on November 28, 2014.
- National Payment Corporation
(NPCI) is identified to act as Bharat Bill Payment Central Unit (BBPCU)
which will be a single authorized entity for operating the BBPS.
- The biggest advantage is that
the bill can be paid anywhere and anytime. The system will provide
multiple payment modes and instant confirmation of payment. Payments may
be made through the BBPS using cash, transfer cheques, and electronic
modes. The BBPS outlets would include banks, ATMs, business
correspondents, kiosks etc.
Aadhaar Enabled Payment System
AEPS is to further speed
track Financial Inclusion in the country; it is a bank led model which allows
online interoperable fi nancial inclusion transaction at POS (MicroATM) through
the Business correspondent of any bank using the Aadhaar authentication. The
Aadhaar enabled basic types of banking transactions are as follows:-
- Balance Enquiry
- Cash Withdrawal
- Cash Deposit
Aadhaar to Aadhaar Funds Transfer
The only inputs required
for a customer to do a transaction under this scenario are:-
- IIN (Identifying the Bank to
which the customer is associated)
- Aadhaar Number
- Fingerprint captured during
their enrolment
Unified Payment Interface
Unified Payment Interface
was officially launched by National Payments Corporation of India (NPCI), under
RBI for instant inter-bank real time transactions using android apps.
- UPI is a payment system that
allows money transfer between any two bank accounts by using a smartphone.
- UPI allows a customer to pay
directly from a bank account to different merchants, both online and
offline, without the hassle of typing credit card details, IFSC code, or
net banking/wallet passwords.
National Payments Corporation of India
National Payments
Corporation of India is an organisation for all retail payment systems in India
which aims to allow all Indian citizens to have unrestricted access to
e-payment services. It is owned by a consortium of major banks and has been
promoted by Reserve Bank of India. Its recent work of developing Unifi ed
Payments Interface aims to move India to a cashless society with only digital transactions.
It has successfully
completed the development of a domestic card payment network called RuPay,
reducing the dependency on international card schemes. The RuPay card is now
accepted at all the ATMs, Point-of-Sale terminals and most of the online
merchants in the country. More than 300 cooperative banks and the Regional
Rural Banks (RRBs) in the country have also issued RuPay ATM cards.
Bharat Interface for Money
BHIM (Bharat Interface
for Money – Bhim App) is a Mobile App developed by National Payments
Corporation of India (NPCI), based on the Unifi ed Payment Interface (UPI) to facilitate
e-payments directly through banks and as part of the 2016 Indian bank note demonetisation
and drive towards cashless transactions.
This UPI app supports all
Indian banks which use that platform, which is built over the Immediate Payment
Service infrastructure and allows the user to instantly transfer money between
the bank accounts of any two parties. It can be used on all mobile devices.
Mobile Wallet or Digital Wallet or e-Wallet
Mobile Wallet or Digital
Wallet or e-Wallet apps allow us to pay electricity bills, mobile recharge, get
movie tickets and do a lot more right from your mobile. By linking the Credit
or Debit Cards or Bank accounts with these e-Wallet apps, we can easily make a
payment using the mobile.
One can generally load
money into these digital wallets via Internet banking or via your Credit or
Debit Card. On most of these e-Wallets, there is a limit of Rs 20,000 for users
who have not submitted their KYC documents. On submission of these documents,
the limit is raised to Rs.1.00 lakh. Below are a few Mobile wallets to make
online payments -
1. Paytm
Paytm is one of the best
digital wallets to make payments. It allows you to add your Credit/ Debit cards
and link our bank account to it by use of QR code to send and receive payments easily.
PayTM mobile wallet allows us to buy movie tickets, online mobile recharge, pay
electricity bills and more from the mobile. It is available for Android, iOS,
and Windows Mobile Phone.
2. Mobikwik
Mobikwik is another
versatile and secured app that allows you to pay or transfer money using the
mobile number. It facilitates to make payments for mobile bills, shopping bills
and other payments in seconds. It is available for Android, iOS and Windows
Phone.
3. FreeCharge
FreeCharge e-Wallet
allows you to add credit and debit cards which make it easy to make payments.
It is the fastest growing digital payment platform allowing you to pay electricity
bills, mobile and DTH recharge and more. It helps make online and digital payments
securely using mobiles. FreeCharge is available for Android, iOS and Windows Phone.
4. State Bank Buddy
State Bank Buddy by State
Bank of India is the fi rst Indian mobile wallet available in 13 Indian
languages. Using this sending money, asking reminders to clear dues, instant
bill payments and more from your mobile is possible. State Bank Buddy mobile
wallet helps to do so by linking your credit or debit cards to it. It allows
you to load amount into your wallet and make payments to your contacts on phone
book. It is available for Android and iOS.
5. HDFC PayZapp
PayZapp from HDFC bank is
available to customers of all banks and allows them to make payments with just
a single click. You can make payments easily by adding credit or debit card
details. Here your card details are safe with the bank and there is no need to worry
about that. PayZapp mobile wallet does three security checks for every
transaction. It is available for Android and iOS.
6. ICICI Pockets
Pockets app is the fi rst
mobile wallet app in India that allows you to bring UPI-based payments. ICICI
developed this mobile wallet, and it helps make payments online. You can shop
anywhere, pay anyone and bank with ease. It facilitates to transfer money, book
tickets, do mobile recharge and more. With just a single click, sending and receiving
payments to and from Pocket users is possible. It is available for Android and
iOS.
7. Lime
LIME is launched by Axis
Bank providing payments, banking, and shopping facilities. It is available to
both account and non-account holders. Pay your shopping bills, mobile recharge,
buy movie tickets and more using LIME mobile e-wallet. With the credit or debit
card details, one can make payments through the mobile. It is available for
Android.
8. PhonePe
PhonePe from Flipkart
Group Company works over Unified Payment Interface. It allows you to make all
your payments securely. You can make bank to bank transfers using Virtual
Payment Address. As it is a UPI app, there is no need to add details of the
benefi ciary account. You can top up your mobile wallet by linking it to your
bank account that allows you to transact maximum up to 1 lakh rupees. It is available
on Android phones.
9. Airtel Money
Airtel Money wallet was
launched by Airtel Payments Bank. Make payments, do mobile recharge and
transfer money to any bank account using this mobile wallet. Banking and
remittance services are supported by Airtel Money. It is available on Android,
iOS and Windows Mobile Phone.
10. Ola Money
Ola Money allows you to
make payments for all your daily needs. Recharge Ola Money wallet using your
credit/debit card or net banking. Keep track of your transactions by looking at
transaction history. Paying for the Ola and other cabs also made easy using this
mobile wallet. Ola Money mobile wallet helps you to transfer money. It is
available on Android and iOS.
