What is digital banking?
In my own words digital banking is the platform that is established in the 21st century as a new mean of conducting banking activities with the help of an electronic device through an internet connection. That means, that use the used of advance electronic devices that help customers to do transactions without visiting the bank, used as a mean of indirect banking for customers. It really helps the customer to be able to transact anywhere and at any time that is more convenience to them.
Digital Is the new form of advancement with the use of the latest technology and electronic devices mostly connected to internet for performance of work to be carried out in accurate manner.
Banking: Are the business conducted or offered by the bank to the customers, so as to get banking services with banking activities. That includes, transferring of money, making payments or bill and checking of bank account details.
That include the paperless usage in payment system:
- Electronic includes: national electronic fund transfer, POS or payment gateway, ATMS, Mobile phone based system
- Large value payment: e-cheque system, real time gross settlement
- Card based: ATM cards ( debit or credit) cards, prepaid/ smart cards/ wallets
The means or ways used mostly in digital banking
As the banks have established different means to reach to their customers as of today’s world without visiting the banks.
Automated Teller Machine[ATM]: is an electronic device as to be used for financial transaction by the banks to its customers such as withdrawing of cash, checking of bank account balance, changing of PIN, and also printing of the customers passbook
Mobile banking: is the use of mobile device with the internet connection or even offline means in doing the transactions or banking services. That requires a customer to install the bank’s application for the usage of banking services. That will enable the customer get access to his or her account with full personal details, even able to make different payments and cash transfers.
National Electronic Funds Transfer (NEFT): NEFT is a countrywide payment system that enables one to one transfer. It helps a person to electronically transfer funds from one bank of any bank to a customer’s account of a different bank within the country. By the use of NEFT has made for the bank uses a simple mean in making transfer of fund.
Unified payment interface (UPI): as it is the most recent practice for financial transaction interface. UPI enables to transfer money by use of mobile device at any time anywhere. It helps in acquiring different customers’ accounts by the use of a single mobile application combining different backing features and one click two element authentication. As UPI is used by every bank using different operating systems e.g. Window, IOS, Android etc.
Debit or Credit cards: With the use of cards enables cashless buying. That means it doesn’t require to have physical money. The debit card is the card that is directly connected to personal saving account of a customer whereby when any purchase made by customer will directly be deducted from the bank account. Credit card is the card the links to the borrowed money from the bank with the charge of interest in the loan, which can enable a customer to make purchase by using the card.
Mobile wallet: is the use of mobile application that enables someone to make payment through the phone that can be done online or offline mode. That involves the scan of QR code to make the payment be done within a short period of time. It has really made for people’s life be easier without carry excessive amount of physical cash with. For example of application like paytm, paypal, google pay, amazon pay, Samsung pay.
Importance of using digital banking practices
Saves time in so many ways: As digital banking introduced has reduces wastage of time in the banks and for people also. That doesn’t require someone to visit the bank for the purpose of withdrawing or fund transfer that can be done in digital form within few minutes and save more time for other operations in the bank.
Saves costs: More cost are likely to been reduced or cut off. For example a person will not take transport to visit the bank with the help of mobile phone the person can contact the bank. The work is likely to be done without the usage of papers that makes it paperless that involves use of digital devices and internet directly.
More convenience: It can be done anywhere at any time that is more convenience to its user within a short period of time for making payments or checking of bank account information.
More accuracy in work: Since the work is done digital more errors are been reduced by the bank or customers. That makes the work to be done with minimum errors and more accurate since everything is been displayed.
Provides opportunities to people: This is mostly to the IT technicians that design good websites or applications that can be used in banking activities.
Less carrying of physical cash: This involves going cashless with the use of debit/ credit cards or mobile wallet.
Introduced the usage of new advance technology: As today’s world is getting advance new technology is been used in digital banking practice that’s making it more advance e.g. scan QR Code.
More awareness is made to people: With the use of social media or reaching out to the remote area, that the bank creates more awareness and influence to the public on how to use digital banking for banking activities.
It’s now more advantageous: due to the lockdown that it’s hard for the people to reach to the bank. As most transactions are done online or using digital wallet when going for shopping.
Challenges in digital banking practises in Asia
Lets use India as a good example in Asia
Illiteracy rate in India: As India is a developing country, the country is still facing illiteracy rate. That there are some people who are not aware about the use of digital banking or don’t even have bank accounts. Though there is still education provide to the people to create more awareness and its practices of digital banking.
Security risks in personal information: Maybe through the gateway or website used that may not be secured. So it’s easy the customer’s account details can be hacked without knowing.
Poor network infrastructure or low internet connection: As in the remote areas still faces the network challenge. There are people who are still using the old form of technology that don’t even have smart phones.
Fear factor: There are some of the people who are scared that their money can be stole if the use digital banking. It’s hard to convince them to use digital banking maybe they don’t trust the websites or application due to the scams that have being occurring.
Technical problems occurs: If the will be no internet or digital device then that means no digital banking. For example if the servers’ of the bank has some problems that means there will be no connection for bank activities.
It’s costly: This involves the installation of the bank serves and proper or good network infrastructure that is needed. Also the paying of trained technicians who work for the bank.
Digital banking practices in India has widely increased in the country and it has made easier for the people to be able to operate their bank accounts at any time anywhere, without any limit of the money that payment can be done. The increased access to Internet has made acquiring loans from banks very easy. Today customers can compare different loan offering at different rates from banks and choose the most suitable. Also, It has been a solution to many problems that most people were facing in the last years. That digital banking has minimized the problem with the use of internet and digital devices in the current years that has be things to be done virtually without physical presence of individual or bank in operating the bank accounts