In the age of “Digital India,” the Banking industry and financial sector of India is evolving faster than any other industry. The rapid advancement of technology has transformed the entire experience of banking systems. The impact of technology on the Indian banking industry is huge and revolutionary. In the last two decades, banks of India and other financial institutions have undergone a radical change that has resulted in the introduction, advancement, and improvisation of “digital banking” in India. The emerging technologies in the banking sector of India have contributed massively to the growth and advancement of this industry.
A Brief History of Technology in Banking Sector of IndiaIt was not until the late 1980s, the use of computer technology in the financial sector and the Indian banking industry was introduced. In 1991, India witnessed economic liberalization which exposed it to the world market. During this time, the government took the first few steps to introduce Information Technology to a few nationalized banks and opened up the economy to the private sector and foreign banks. Competition from these new commercial banks forced the public sector banks to move towards new banking technologies and digitization to stay relevant in the race.
ICICI Bank was the first bank to introduce internet banking, also known as online banking or digital banking, in India. However, this new way of banking gained popularity in the 2000s. After much reluctance, these new types of banking technologies and digital banking was embraced by the people of India.
Gradually, the various innovative technologies have taken over all the traditional banking activities and it offers solutions for various banking processes like money deposits, withdrawals, fund transfer, cheque clearance, account management, savings management, loan applications and, other financial products, bill payment, and so much more. In today’s age, a digitized bank provides end-to-end solutions through various types of banking technologies like mobile banking, SMS banking, internet banking, ATMs, Swift Codes, etc. Besides reducing the costs, banks have benefitted in incredible ways. Use of technology in the banking sector has resulted in paperless banking wherein a customer can avail many of the basic services 24/7. Additionally, the technology used in banking sector ensures risk management, customer satisfaction, and hassle-free experience.
Importance of The Latest Technology in Banking Sector of India
- The rapidly evolving Fintech—the technological tools that are used to support banking and financial institutions—in India is the main game changer. Additionally, the government support and relevant initiatives have opened up the economy to a brighter future and banking industry to the vast of opportunities of Block Chain Technology, Machine Learning, Artificial Intelligence, and advanced data analytics solutions. The digitization of the banking sector has certainly seen a revolution of sorts. It has a come a long way and there is still a long way to go. Consider a few benefits of technology used in banking sector highlighting the importance and significance by themselves.
- Cost-Effective: The new banking technologies offer various cost reduction opportunities for the banks. It has massively lowered the operational costs. The computers and machines can perform several calculations and tedious tasks more efficiently than humans in less money. At the same time, banks must regularly hike the salary of their employee, but these machines are a one-time investment. This has made it easier for banks to reduce the fees of various services like funds transactions. The charges of transactions through a branch is way more than the charges applied on transaction done through online banking, ATM, or mobile banking. This has enabled the bank to lower the fees and increase the rate of interest for its customers. In every way, this fetches more profits to the banks.
- Increased Customer Satisfaction: Among many other benefits of technology in banking, the most important is customer satisfaction. Various tools of FinTech has improved customer experience because of the convenience of banking anywhere and anytime. Customers can perform various banking activities via Internet banking, SMS banking, ATMs and more. Account holders can keep a check on their data at all times, they can make money transfers at much ease, filing a complaint is easier, applying for loans or opening a deposit account is simplified and determining the risks on a plethora of financial products has become effortless. With digitization, customers can expect more calculative, tailored and personalized solutions that may not be possible by the human brain.
- Online Bill Payment: Another significant benefit of banking technology is the ease of monthly bill payments. You can pay the bills through the bank or set up automatic bill payments through ECS facility (Electronic Clearing Service). This ensures a better cash control and cash flow in the account. With regular reminders and alerts of payables and receivables, it reduces the stress for the customer. At the same time, it has reduced the workload of the employees of various departments.
- Advanced Analytics: Besides record keeping, gathering information about their customer has become easier for banks. With the tools of advanced analytics, driving insights and better understanding involving a huge data is far more efficient than doing it manually. Eventually, this data can be used to improve or transform the customer experience.
- Easy Accessibility for People in Remote Areas: Technology has shrunk the world. Previously, rural areas suffered greatly. Only a limited number of banks were opened in remote areas. In worse case scenarios, villagers had to walk kilometres to reach a bank. With mobile banking, villagers can access the same tools as the urban population.
- Chatbots: Many commercial banks are adopting Chatbots especially to improve their customer support. A Chatbot is a bot that performs any automated tasks. So, these bots assist customers to resolve from simple to complicated tasks. For now, these bots help in making transactions, but the future is predicted that these bots will be useful for facilitating the customers in financial decision-making.
- Benefits to Bank Staff: Latest technology in the banking sector of India is quite a powerful tool for bank employees. Technology enables the employees to gather data in one unit which can help them learn more about customer behaviour, response, expectations and more. Also, it empowers the employees with accurate information that can be immediately accessed or searched for.
- Easy Fraud Recognition: With the help of new banking technologies, well-trained staff can easily recognize potential or existing fraudulent transactions. It might be a difficult task to identify the fraud manually. However, seeing-through the available information is not difficult with up-to-date technology and protect bank scams.
Future of Banking TechnologyThe new gen technology in the banking sector has proven to be quite transformational. It has revolutionized the way the money is handled and transacted. Remember, this is not the end. With the introduction of below-mentioned technologies, the scope is humungous and there is more change to come.
- Blockchain Technology: This technology decentralizes the information and is recorded in encrypted packets called blocks. It is expected to be initiated with the help of NITI Aayog’s (National Institution for Transforming India) IndiaChain, that is the largest blockchain network of India. When implemented in the banking sector, this technology is forecasted to improve transparency and lower the chances of scams and fraudulent transactions.
- Cloud Computing: This technology has changed the way people store and share data. It is expected to make banking activities more organized and simplified when the data will be packed up in the cloud or other automated services.
These new banking technologies continue to improve to make the banking experience more pleasurable. At the same time, the types of technology used in the banking sector continue to grow. Improved mobile and digital banking, updated ATMs, and robotic process automation are some other innovative and advanced mechanizations in the banking industry to look forward to. These trends are expected to take the banking sector by a storm, making interaction with your bank and performing banking activities a no-sweat job.