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ToggleDigital banking is done online via digital platforms, and it eliminates paperwork. Various banking services, such as moving cash deposits, account management, bill payments, fund transfers and withdrawals, investments, and loan applications and management are digitalized.
Today, most customers have smartphones and other gadgets, giving them easy access to online services. Digital banking is the process of digitalization of banking activities and services that were previously available only in the branches.
It substitutes a traditional bank’s branch network with an online presence, making it more convenient for users to execute transactions.
The history of these banks dates to 1993 when Temenos AG banking software system provider was founded. In 1994, Microsoft Money made bank accounts accessible for regular households.
During 1997 and 1998, digital-only banks were launched in Canada and the United States of America (USA).
Do you know what is digital banking and neo banking? Often, there is confusion between the two because of their similarities.
Both digital and neo banks allow you to deposit, withdraw, transfer, and borrow funds, and perform other banking transactions. However, the basic difference between a neo bank and a digital bank is their presence.
Neo banks are independent entities without any association with a traditional bank and have a complete online presence only.
On the other hand, digital banks are generally backed by financial institutions and offer banking services and products via online banking and mobile applications.
Traditional banks | Digital banks | |
Presence | Physical presence via branch network | Online presence |
Transaction time | Time-consuming as customers need to visit the branch | Quick and easy |
Accessibility | Transactions can be done only during bank working hours | Transactions can be done anytime and anywhere at customers’ convenience |
Costs | Higher overhead costs due to branch network | Reduced overheads as there are no physical branches |
Digital banking in India offers several features and benefits. Some of the key aspects are as follows:
You may avail of banking services from any place at any time at your convenience. With high-quality and advanced technological solutions, you can enjoy a fast and simple banking experience.
Moreover, most online platforms offer similar services at no additional charges.
The banking sector is highly competitive, and every bank tries to offer unique solutions to gain an advantage over its competitors.
Several platforms offer various personal financial planning features like loan and premium calculators, software and tools for budgeting, forecasting, and tax planning.
You may execute all financial transactions via your bank’s mobile application using a smartphone or tablet on the go.
You may access your bank services and products 24 hours a day, seven days a week, making it easy to do banking at your convenience.
Traditionally, if you wanted to pay someone, you would either issue a check or visit the nearest branch. You had to fill out the deposit slip and wait in a queue, making it inconvenient and a time-consuming process.
But now, you can make digital payments to anyone at any time via UPI, which is a real-time payment mechanism developed by the National Payment Corporation of India (NPCI).
Funds can be transferred via virtual payment address (VPA), mobile number, bank account number and IFSC, QR code, or Aadhar number. Some of the popular UPI apps are Google Pay, PhonePe, and BHIM.
Digital wallets are also known as virtual wallets and allow you to pay money via your smartphone. With these virtual wallets, you no longer need to carry cash while traveling or when you go shopping.
Post-demonetization, millions of people started using online wallets like JioMoney, Paytm, and MobiKwik for payments.
Digital reward and loyalty programs enable product promotion and customer engagement. These digital programs offer a cost-efficient and measurable reward for customer acquisition and retention.
Financial institutions allow you to earn points on your monthly activities, which can be redeemed for various products, services, and vouchers.
You can also conveniently bank without an active Internet connection. Services like phone banking, SMS alerts, and missed calls allow you to access your bank’s products even if you have no Internet connectivity.
Generally, such services are available free of cost and all transactions are cashless.
You pay several bills each month, which include electricity, gas, mobile, credit card, and much more. Additionally, you may have equated monthly installments (EMIs) on your home, car, personal, or other loans and insurance premiums to pay.
It is possible that you may miss out on one or more of these payment due dates. However, you can avoid this by linking the various bill and loan payments to your bank account for a direct debit facility on or before their due date.
Most financial institutions offer cash back offers and discounts on your purchases and spending.
Some banks may also offer coupons that can be used for rebates and discounts while making some purchases.
A beneficial feature of digital bank accounts is that you receive real-time notifications of your transactions.
Although sometimes such notifications may seem annoying, they can help prevent fraud. Financial institutions send notifications when:
In case of any suspicious activity, an immediate alert can be helpful, and you can avoid any severe consequences resulting from a lack of awareness.
Such services simplify your life and give you a comfortable and hassle-free user experience.
A dedicated digital relationship manager is available for your services and takes care of all your financial needs and banking requirements.
You may use these remote services not only during banking hours but also during non-working hours. With the help of the relationship manager, you can execute any transaction, resolve your queries, and enjoy other benefits from the comfort of your home.
Although a complete replacement of traditional physical bank branches may be in the distant future, digital banks are convenient for regular and essential transactions.
Even banks are adopting this model as they are faced with stiff competition, lower margins on deposits, and evolving customer requirements.
As India moves towards its dream of becoming a cashless economy amidst increased internet penetration, financial institutions are investing huge amounts for technological upgrades, upskilling employees, and providing innovative solutions to gain a competitive advantage.
Priyanka Rao is a content strategist for Jupiter.Money, and specializes in writing on topics related to finance, banking, budgeting, salary & wages, and other financial matters. She has a passion for creating engaging content that resonates with audiences across various digital platforms. In her free time, Priyanka enjoys traveling and reading, which allows her to gain new perspectives and inspiration for her work. With a keen eye for detail and a creative mindset, Priyanka is committed to creating content that connects well with her readers, enhancing their digital experiences.
View all postsColin D'Souza is currently the Vice President of Banking Programs and Strategy at Jupiter Money, where he oversees the development and execution of key banking initiatives. With a strong background in retail banking, sales, and strategy, Colin brings extensive experience in driving business growth and enhancing customer engagement across various financial products and services. Before joining Jupiter, Colin was the Head of Corporate Salary Business at IDFC First Bank, having previously served as the Zonal Business Head for Retail Liabilities & Branch Banking. His leadership at IDFC First Bank focused on expanding the bank’s retail banking footprint and optimizing branch operations. Prior to that, he held senior roles at Citibank India, where he was Vice President and Regional Sales Head, responsible for the sales and distribution of consumer assets and liabilities, including services for high-net-worth individuals (HNI) and ultra-high-net-worth individuals (UHNI), as well as current accounts. Colin also served as Vice President and Regional Sales Manager at HSBC, leading retail liability acquisitions and driving business development for investment and insurance products. Earlier in his career, he managed a cluster of branches at CitiFinancial, where he was responsible for credit, risk, and P&L management. He holds a Post Graduate Diploma in Management from the Institute of Management Education and Research (IMER), adding a solid academic foundation to his professional expertise in banking and strategy.
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