India is a predominantly cash-based economy, which has seen considerable improvements in the form of Bank branches and ATMs that have been digitized. These upgrades and new technologies have successfully improved user experience while simultaneously allowing banks to optimize their resources without impacting their efficiency.
The installation of Cash Recycling Machines and the RBI’s ICCW mandate on ATMs is seen as a game-changer for the payment system, with an estimated 50,000 ATMs/CRMs deployed in the current fiscal year. To further promote the accessibility of banking services, Prime Minister Mr. Narendra Modi recently inaugurated 75 Digital Banking Units.
The digital revolution has now revolutionized how we do business and interact with the world. Technology has enabled us to do more in less time, from online shopping to digital banking. In India, digital banking is set to transform the banking landscape, offering customers more convenience, faster transactions, and enhanced security.
With the Reserve Bank of India (RBI) introducing new regulations, banks can now offer customers a wide range of digital banking services. Customers can now easily manage their finances from online bill payments to mobile wallets.
By leveraging technology, banks can also reduce costs and improve customer service. As a result, digital banking units are becoming an integral part of banking operations in India. This article will discuss how digital banking units transform India’s banking sector and the benefits customers can enjoy.
What is Digital Banking?
Digital banking uses technology-enabled services by banks that facilitate customers to perform banking transactions remotely, anytime, and anywhere. Digital banking includes internet banking, mobile banking, electronic money transfer, and other technology-enabled services.
Customers can perform various banking activities using their computers or mobile devices, including fund transfers, bill payments, and asset management. Digital banking makes banking more convenient and accessible, enabling customers to meet their banking needs anytime and anywhere.
The Digital Revolution in India
For many years, financial institutions relied on a traditional, branch-based model to serve their customers. Customers would visit a branch to conduct their banking transactions. However, with the advent of technology, banks could reach out to customers through multiple channels, including mobile and the internet.
Today, Indians are increasingly using digital banking channels for their transactions. Traditional banking services such as savings, deposits, and loans have been completely revamped with the advent of technology. Customers can now apply for a loan online, get their account balance and transaction details, and even make payments through their mobile phones or computers.
Digital Banking Regulations in India
The RBI has issued guidelines and regulations for digital banking services in India. Banks can now offer a wide range of digital banking services and can tie up with third-party service providers for these.
Digital banking services can also be provided to unlisted entities, such as small and medium enterprises (SMEs), contractors, and farmers.
Customers can now digitally transfer funds for various purposes, including paying bills, buying shares, and completing forex transactions. They can also digitally store their cash, gold, and other valuables to earn interest.
Digital Banking Services
– Account and transaction details: Customers can access their account details on their computers or mobile devices, including account balance and transaction history.
– Bill payments: With digital banking services, customers can pay their various bills, such as electricity, water, and telecom bills, directly from their bank accounts.
– Funds transfer: Customers can transfer funds digitally to other bank accounts and make online money transfers. They can also send money to non-bank account holders.
– Shopping: Customers can purchase goods and services online using their digital accounts.
– Investments: Digital banking customers can invest in various financial assets, such as mutual funds, stocks, bonds, and gold.
– Remittance: Digital banking customers can electronically transfer funds to their overseas relatives and friends.
Digital Banking Units
A digital banking unit is a nodal center that coordinates with the bank’s IT and business teams to offer digital banking services. Usually, a single digital banking unit caters to multiple branches and provides standard services, such as internet banking, mobile banking, electronic funds, account opening, and other services.
The digital banking unit is responsible for client maintenance, transaction services, and product development. It hosts the website, provides customer support, and manages the data, such as account details, transaction logs, etc.
Benefits of Digital Banking Units for Customers
DBUs provide secure and connected digital banking facilities, allowing customers to access banking services cost-effectively, paperlessly, and conveniently. The self-service model will be available, but manual assistance will be available during certain times of the day to aid those from rural, semi-urban, tier III & below areas, senior citizens, or customers with little or no digital experience. This will increase digital payment awareness amongst a wider group of people.
For customers who are adept at digital banking, these DBUs will provide a more convenient and faster digital experience that is secure. This will be especially beneficial to those in remote areas with low banking penetration as the cost of operating & maintaining bank branches will be significantly reduced.
Banks Leveraging Digital Banking Units
Banks can leverage digital banking units to provide customers with a wide range of services, such as fund transfers, online bill payments, fund transfers, cash management, etc. Digital banking units also allow banks to extend their branchless banking services, thereby extending banking services to customers who are yet to be banked.
Banks can also partner with fintech companies to provide their customers with innovative and value-added digital banking services. Digital banking units also help banks reduce their costs and improve customer service.
How Digital Banking Units are Transforming Banking in India
Digital banking units are transforming the banking landscape in India by providing customers with more convenience, faster transactions, and enhanced security. Digital banking services allow customers to perform their banking transactions anytime, anywhere. They can even complete their transactions while on the go.
Digital banking units are also helping banks extend their branchless banking services to customers yet to be banked. Digital banking is improving financial inclusion in India by reaching out to unbanked and underbanked sections of the population. It is also helping in the growth of digital payment methods, such as credit/debit cards, UPI, and wallets.
Challenges of Digital Banking Units
Digital banking units face a few challenges: low trust, inadequate customer support, and customer awareness about digital banking services. Due to a lack of confidence in digital banking services, customers prefer visiting the bank branch for their transactions.
Banks have been trying to address this issue by providing more digital banking services and conducting skilling workshops for their customers. Digital banking units also need more human resources and infrastructure to provide customers with adequate support. Banks are now trying to overcome this challenge by upgrading their systems, hiring more staff members, and training their employees.
Digital banking units are transforming the Indian banking sector by offering customers financial services digitally and securely. People who do not have access to the internet or smart devices can conduct paperless banking transactions at DBUs.
Additionally, digital banking units offer educational resources and tools to help customers better understand and manage their accounts. By making banking services more accessible and convenient, particularly among underserved and disadvantaged communities, DBUs can help enhance financial inclusion in India.