Chapter 1: INTRODUCTION

1.1: INTRODUCTION TO DIGITAL BANKING

The introduction of digital banking has revolutionized the banking sector and modified the
whole procedure of simple bank transfers. It has facilitated the customers assisting them to
check their account details, pay online bills and transfer money from one account to the other
in a faster way. This has helped the end user to enjoy a methodical financial life. Though the
world has embraced the hassle free online banking, yet it cannot replace its brick and mortar
counterparts.

The invention of ATMs and credit cards paved the way for the digitization of the banks. The
commercial evolution of the internet in the early 1990s completely overhauled the banking
sector introducing the world to the online banking services. This is when traditional street-
side banks started considering ideas to deliver restricted online bank services to cut down the
cost of operations.

When these efforts proved beneficial and were acknowledged by all, numerous banks ideate
to create their own cyber presence with newly designed website featuring the various services
like opening new accounts online, necessary form download and processing loans. This has
equally affected the hiring process for the professionals in the banking sector. Apart from the
banking examinations that one need to qualify, career in the banking for fresher’s requires
technology experts.

MEANING

Digital banking, also known as internet banking, e-banking or virtual banking, is an

electronic payment system that enables customers of a bank or other financial institution to
conduct a range of financial transactions through the financial institution's website. The
online banking system will typically connect to or be part of the core banking system
operated by a bank and is in contrast to branch banking which was the traditional way
customers accessed banking services Most people in the banking industry agree that digital
banking is the wave of the future Indeed, many would contend that it’s already here Yet
there’s not all that much agreement regarding what “digital banking” really means.

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1.2: Objectives of the Project

1) To provide an overview of the Banking sector.

2) To study about some of the major players in Banking sector which has good investment
prospects.

3) To identify the growth drivers of the Banking sector.

4) To identify the top line and bottom-line of the companies selected under Banking sector
and the factors that affect them.

5) To justify the current investment in the chosen securities.

6) To recommend increase/decrease of investment in a particular security.

7) The main objective of project is to do fundamental analysis of banks.

To study the present scenario of banks through its net interest income and net interest margin.
This report will help the investors to know about the current growth prospects of Indian
economy and Banking sector.
They will get to understand various factors affecting banking sector and their impact on the
growth of banking sector. This report will help them in comparing the above mentioned five
banks.

HYPOTHESIS

1. Age and income has no significant impact on the Banking preference decision.

2. Occupation and gender are independent of the customers banking investment decision.

3. There is an immense need to focus on product innovation and customers need based policies for
market expansion.

4. SBI is the most trusted and preferred brand among other Banking companies.

5. Politics is not involved in decision of the customers towards their Banking preference..

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1.3: Scope of the study

Banking has a growth rate of 70% to 80% while as other sector has a maximum 12% to 15% of
growth rate. This growth potential attracted me to enter in this sector and in my research study

I had tried to analyze the Controlling system of the Banking sector. My study is basically based on the
ways Banks are controlled by the Higher Authorities and consumers opinion on the controlling of the
Banks in which they find their Money is safe with, Also to know the most trusted Bank.

Basic financial planning is the most elementary part of personal finance. It consists of the plans,
activities and actions of a person in his regular day to day money use: cash management, checking
account, credit/debit cards, personal balance, budget, income and expense statement, etc.

Financial planning will provide the tools and processes to carry out these tasks in a tidy and
systematic way.

A big boom has been witnessed in Banking Industry in recent times. A large number of new players
have entered the market and are vying to gain market share in this rapidly improving market.

The study deals with Banking industry controlling tactics in focus and the various segments that it
caters to. The study then goes on to evaluate and analyse the findings so as to present a clear picture
of preference of the customers in Banking sector.

1.4: SIGNIFICANCE OF THE STUDY

SIGNIFICANCE TO THE INDUSTRY:

This is a limited study which takes into consideration the case study. This data can be explorated to
take in the trends across the industry. The significance for the industry lies in studying these trends
that emerge from the study. It is a rapidly changing and evolving sector. People are only beginning to
wake up to its vast possibilities. A study like this can attempt to guide the future of the industry based
on current trends.

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SIGNIFICANE FOR THE RESEARCHER :

To facilitate and provide all the useful information of the student, the company, the Banking industry
and also provide bank controlling ways, and to know the perception of the customers regarding Safety
of their in Banks.

1.5: Limitations of the Study:

1) This study has been conducted purely to understand fundamental analysis.

2) The study is restricted to five companies based on Fundamental Analysis.

3) The study is limited to only private and public sector banks.

4) Detailed study of the topic was not possible due to limited size of the project.

5) There was a constraint with regard to time allocation for the research study.

6) Suggestions and conclusions are based on the data of last two financial years.

1.7: Research Methodology

The project is on equity research analysis of the sectors. Hence study has to be done on the
basis of information and news available about the sectors i.e. secondary data by various
modes. This research has completed by doing Fundamental analysis of the companies.
Secondary data was collected from the internet, company websites.

However the main source of information is Annual Report issued by the companies and also
quarterly reports of the current year showing their performances in current market scenario.
Firstly data was analyzed on the basis of the industry.
The industry i.e. financial services sector were focused on and its performance and relation
with the Indian economy was monitored and then specific stocks were chosen to be invested
in depending upon the fundamentals of the company stocks. These stocks were individually

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analyzed and then measured whether it would give maximum returns if invested in. , Primary
data collection is done through collecting data from samples by collecting response through
google forms. For preparing this project.

Secondary data collection was been used. While preparing this project, daily stock market prices were
been tracked and also the annual reports of the company analyzed were taken into consideration for
evaluation of company performance. Company websites were a major source for collecting the annual
reports of the company. Internet was a major source of information while preparing the project as
most of the data collected was gathered from various websites. The knowledge thus gained from
preliminary study forms the basis for future detailed descriptive research. Also database of website
www.acekp.in was a major source of information in terms of collecting data

Chapter 2: DIGITAL BANK

It is a bank built with a vision to reach out to customers through digital augmentation. It is
build specifically to offer the customer the service of their choice through the access of their
choice. It believes wholeheartedly that, in order to do that and because the customer now has
so many different methods to access, that the bank therefore has to be designed and created
upon a digital core infrastructure. The digital core is a consistent enterprise wide, cleansed
data store that is accessible internally and externally through strata of access layers. In other
words, the start point of a digital bank is to be IP-enabled at its core.
The digital bank then creates outreach through access. That access can be both physical and
digital, but it’s outreach to the digital core on the basis of providing customer choice. In other
words, the customer may visit a branch, call the contact centre, and make a comment on
twitter or Facebook, or touch the bank’s mortgage offers via a google search. Because the
bank has a digital core, it will be aware of all these access points and touches, and will
respond accordingly and consistently. For example, if the customer has researched mortgage
deals online last night, checked the latest interest rates on the app in the morning and walks
into the branch at lunchtime, the bank will be ready with their mortgage specialists at hand –
possibly through a video link to a small branch – to provide the advice needed for the
customer to make the decision over the mortgage and its term.
The digital bank has an organisation that is geared to digital. The main form of customer
outreach is through social media on the network, via video to advisors, and focused upon
being at the point of relevance to the customer in their daily life. It focuses upon augmenting

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the customers’ life through digital outreach, but recognises that the real magic is when the
customer engages directly with human contact. The human contact through the network, the
telephone or face-to-face is seeing as the magical touch point. All others are purely geared
towards removing friction through digital enhancement.
The digital bank will have an innate knowledge of the customer. They will leverage data as a
competitive differentiation, and see a single view of the customer as the ultimate view. They
will know that data association and predictive, proactive, proximity-based service is the place
they will win.
They do not see digital as an adjunct or addition, but as core. They have re-engineered their bank to
be 100% customer-aligned through that digital core. That’s a real digital bank

2.1: FEATURES

Online banking facilities typically have many features and capabilities in common, but also
have some that are application specific. The common features fall broadly into several
categories:

 A bank customer can perform non-transactional tasks through online banking,

including –
o Viewing account balances
o Viewing recent transactions
o Downloading bank statements, for example in PDF format
o Viewing images of paid cheques
o Ordering cheque books
o Download periodic account statements
o Downloading applications for M-banking, E-banking etc.
 Bank customers can transact banking tasks through online banking, including –
o Funds transfers between the customer's linked accounts
o Paying third parties, including bill payments (see, e.g., BPAY) and third party
fund transfers (see, e.g., FAST)
o Investment purchase or sale
o Loan applications and transactions, such as repayments of enrollments
o Credit card applications
o Register utility billers and make bill payments

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  Financial institution administration
 Management of multiple users having varying levels of authority
 Transaction approval process

Some financial institutions offer special internet banking services, for example:

 Personal financial management support, such as importing data into personal

accounting software. Some online banking platforms support account aggregation to
allow the customers to monitor all of their accounts in one place whether they are
with their main bank or with other institutions.

2.2: BENEFITS OF DIGITAL BANK

The digitization of banking has brought the joy of luxurious banking from anywhere,
anytime. It has grace our lives with the following advantages:

Banking made easier:

If you have an internet connection, you can bank from anywhere anytime. Except when the
website is down for maintenance, the online services are available round the clock throughout
the year. Customer support team is there to take up your issue when the internet is not
available. You will have the summary of your account displaying your account balances real-
time. Banking is made easier, faster and more efficient through the internet. Consumers can
always keep a check on their account balances through this mode of banking. Even if you
need to change your contact details or your mailing address then you can do it through few
clicks, making it effortless.

High interest rates:

When a bank is going full online with its services, then the reduction in infrastructure and
overhead cost leads to an increase in the interest rates on your savings account and also lower
loan and mortgage rates.

Advanced websites:

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The banks that have chosen to go online with their services ( which comprises of all the
banks- national and international, public and private) have well-developed sturdy services
with added features that includes financial planning tools, loan calculators, premium
calculators, tools for analyzing investments, budgeting and forecasting tools, tax preparation
and tax paying platforms online.

Mobility of services:

Virtual banking is now available on mobile. Banks are developing responsive mobile
websites so that it can be easily accessed via smartphones or tabs on the go. Money can be
transferred and bills can be paid through these mobile websites.

Eco-friendly:

This can be categorized as the environment-friendly initiative. Digital banking saves paper
discarding the need for office space, construction, and vehicular movement. Thus giving their
customers a pollution free experience

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2.3: DRAWBACKS OF DIGITAL BANKING

Though online banking has bestowed us with heaps of benefits but it has a flipside to it as
well. They are as follows:

Personal relationship with the Bank is not established:

The traditional brick and mortar bank interacts with the customer developing a mutual bond.
Acquainting with the professionals working in the bank in your area can be beneficial during
the time you apply for a loan or if you require any special service. They might help you to
deal with the issues of service charges or cutting down on the fees. In case of business loans,
especially this bond will help you to get the required capital.

Issues with transactions:

When you have to deal with a complex transaction, it is better to sit and resolve it face to
face. International transactions also have many concerns that need to be looked after. It is
advisable that in these cases you should sit and consult with your bank official to resolve the
issues. Making them online might lead to link failure hampering the mode of transfer.

Security issues:

Identity theft is an issue to consider these days. If robust encryption software is not in place
then all your confidential account information will be available in the web posing serious
threats to your finances.

2.4: DIGITAL OPPORTUNITY

The shift to digital technology creates a wealth of opportunities

Creating high-value digital services:

Customer behaviours and expectations have changed radically over the last decade. The trend
towards Digital is visible across the board, with the banking industry at the forefront.
Customers want to access banking services anytime and anywhere, using the channel of their
choice. As mobile devices become mainstream and Gen Y and Gen Z'ers join the ranks of the

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consumer market, the phenomenon is gaining ground every day. The number of banking-
related digital interactions is estimated at close to 300 per customer, and 70% of these transits
over a mobile device. What's more, a "digital" service is not one-size-fits-all. Customers are
looking for highly personalized and customized services, and the digital relationship must
directly contribute to retaining their loyalty.

Digitizing services frees up real time to spend with customers:

Naturally when customers change the way they do business, employees also need to change
to keep step. They want to make digital technology work for them, relieving them of low-
value tasks in order to focus on the building the customer relationship. Paperless banking
services through digital media frees up to 7% of financial advisors' time which can be
devoted more wisely to customers.

Improving operational efficiency and reducing costs:

In addition to time savings, financial institutions can generate can save up to dozens of
millions of euros through reduced printing and more efficient archiving. Switching to digital
can help compensate for the lower margins observed in the banking world in recent years.

2.5:CHALLENGES IN DIGITAL JOURNEY

Taking up these opportunities also creates major challenges for financial institutions:

Winning or retaining customers' trust:

Trust is naturally the cornerstone of any relationship. It is the essential prerequisite for
widespread adoption of digital banking by customers, who must be sure that their identity
will not be stolen, that fraudulent payments will not be made from their accounts, and that
electronically-signed bank contracts retain the same legal value and validity as hard-copy
contracts.

Manage risk and meet regulatory requirements:

To fulfill risk management obligations, banks must protect themselves from cyber-attacks
and combat financial fraud and all forms of money laundering. They must also comply with
increasingly stringent regulations (e.g. the Payment Services Directive 2).

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Drive innovation:
To stay ahead of the GAFAs and FinTechs who are shaking up the ecosystem with their own
payment solutions, banks must leverage new technologies (cloud and mobile technologies,
biometrics).

Optimize user experience:

Today's users are accustomed to streamlined, intuitive customer journeys. In the digital
world, the customer experience can definitively swing the balance between two products.
Mobile banking must be exceptionally simple and seamless to persuade some customers to
make the change from the card payments they have been accustomed to for years and which
they trust.

2.6: CHANGING DIGITAL SCENARIO

Digital innovation is a ‘must-have’

The current digital universe positions customers at the centre, imposing new paradigms.
Today’s customers stay connected through a range of digital platforms including the
internet, social media and mobile devices These evolving customer requirements are
gradually changing the dynamics of the market and disrupting existing business models,
forcing companies to re-think and re-invent their traditional business strategies and stay
relevant in the market place.

The global Banking and Financial Services Industry (BFSI) has witnessed significant
disruptions, prompting players to use technology and technology-enabled platforms as
pillars of their strategies. There has been an exponential surge in banking activity as
reflected in the strong growth of the worldwide non cash payment volumes by 8.3 per cent
y-o-y to USD389.7 billion in 2014.

The growth has been consistently strong across different regions, pushing banks
worldwide to respond with out of the box ’measures. Further, the regulatory policy push
for financial inclusion, and

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intense competition from existing and new players are some of the key factors
contributing to the need for cost savings and cross selling among BFSI players .We believe
the ‘banks of future’ shall have to adapt to these mega-trends in order to remain
competitive, enhance customer experience and create value for their investors and
stakeholders.

Ever-changing customer demands and fast-paced technological advancements play an

increasingly vital role in a bank’s overall strategy. According to a survey conducted by the
KPMG US in 2014, changing customer preferences and technology figure among the top
drivers of transformation programmes for banks (figure1).

Shifting demographics
Reducing pressure on profit margin
Foreign competiton
Industry consolidation
Increasing global footprint
Government policy enforcement agenda
Balance growth with shrinking budgets and…
Changing global environment
Domestic competition
Coping with changes in technology
Change in customer buying patterns and…

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

Implementing a digital strategy has also emerged as one of the topmost priorities for the
period up to 2020 according to a survey of 208 bank executives conducted by the
Economic Intelligence Unit (EIU) in 2015. One of the key reasons cited in the survey was
the expected competition from the non-banking technology players to create a robust
digital strategy to face any potential disruptions from these players.

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During the last couple of years, digitalisation has also been facilitated by improving the
technology infrastructure and environment - both in India and globally The number of
mobile and internet users has grown multi-fold across the globe with India being no
exception. Between 2000 and 2015, the global internet penetration grew from 6.5 per cent
to 43 per cent; while in India it grew from less than a per cent to 30 per cent. With 375
million internet users as of November 2015, India remains one of the biggest markets
worldwide (figures 2 and 3).

Figure 2:Individuals using the internet

90
80
70
60
50
40
30
20
10
0
Developed World Developing Least Developed
Countries

Source: ICT Fact and Figures, International Telecomumunications Union, May 2015

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Figure 3:Mobile broadband subscriptio
100

90

80

70

60

50

40

30

20

10

0
Developed World Developing Least Developed
Countries

Source: ICT Fact and Figures, International Telecomumunications Union, May 2015

Since May 2015,although India has more than a billion mobile subscribers (approximately 77
per cent penetration) which is second only to China, the number of mobile internet
subscribers lags far behind the number of subscribers in many of the developing countries
with 83.2 million subscribers translating into a penetration level of 6.5 per cent. However, a
low penetration coupled with strong growth in the mobile and internet subscribers in India
presents significant potential for banks to use these channels extensively to extend their
wings in the Fintech space.
In the banking sector, digitalisation spans across a number of
customer outreach channels. On one hand, there are some components which provide
alternative channels for customers to approach banks and for banks to approach existing and
potential customers (such as mobile banking, social media and
wearable technology). On the other hand, some components of digitalisation include a few
platforms which either make the existing processes efficient (such as cloud and
contactless/biometric technology) or provide a platform to facilitate new
services (such as P2P digital lending platforms and personal finance management).

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 Chapter 3: GLOBAL DIGITAL LANDSCAPE

What are the new hot beds for banks globally?

Digital disruption is gradually changing the way banking has been done in past few decades.
World over, banks are moving towards ‘branchless banking’ and the ‘all-digital’ banking
system is becoming popular among banks as well as customers. From the back-end operations
to client-facing services ,banking players across the globe are digitising the complete banking
value chain.

We believe the future is about creating a multi-faceted seamless customer experience. To

provide a seamless experience to their clients, banks are moving from the multi-channel to the
omni channel approach, integrating disparate digital and physical channels into a unified
customer journey.

This helps customer complete a transaction using multiple platforms, without a hitch. In
today’s world, no banking channel can afford to operate in silos. The customers are expecting
not only a chance to choose a channel to execute a transaction but also an option to switch

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devices/channels any time during a transaction and yet receive the same experience and
service.The omni channel model helps enhance customer loyalty and satisfaction. As per the
survey, ‘Customer Loyalty in Retail Banking: Global Edition 2014,’ conducted by Bain & Co.
in 2014, the Net Promoter Score (NPS) for omni channel users was 22 percentage points
higher than the physical-only channel users and 16 percentage points higher than the digital-
only users.

We believe banking technology is taking a leap towards digital innovation. Banks constantly
introduce new services and technologies to improve connectivity, automate processes and
provide unexplored services to their customers. Some digital initiatives were adopted a
decade back and are quite mature while some are at a nascent stage and banks are still
analysing their viability and usability.

3.1: MOBILE BANKING

Mobile banking is a service provided by a bank or other financial institution that allows its
customers to conduct a range of financial transactions remotely using a mobile device such as
a mobile phone or tablet, and using software, usually called an app, provided by the financial
institution for the purpose. Mobile banking is usually available on a 24-hour basis. Some
financial institutions have restrictions on which accounts may be accessed through mobile
banking, as well as a limit on the amount that can be transacted
The types of financial transactions which a customer may transact through mobile banking
include obtaining account balances and list of latest transactions, electronic bill payments,
and funds transfers between a customer's or another's accounts. Some also enable copies of
statements to be downloaded and sometimes printed at the customer's premises; and some
banks charge a fee for mailing hardcopies of bank statements.

 Growth in mobile banking is the highest in Asian countries. China and India record
the highest banking application users at 73 and 59 percent respectively. Whereas in
Europe and the U.S banking application users are 38 and 39 percent respectively.
Mobile banking users in the U.S are expected to grow by 157 percent CAGR by 2018.

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  Australian banks are among the most innovative in the mobile banking space and
investing in next-gen technologies like augmented reality, biometrics etc.

KEY EXAMPLES
 A leading Australian bank’s mobile banking app provides a range of services like tap
and pay; lock, block and limit payment, execute card less transactions at their ATMs
and transfer money by just bumping two phone together.
 Mobile apps of a few banks provide innovation authorization process. For example
the fingerprint scanning functionality unlocks the mobile banking applications with a
fingerprint scan and provides access to online banking”

The differentiation in mobile banking has been a difficult area and sustained differentiation is
almost impossible. Many banks are adopting ‘Mobile First ’strategy, which provides a
relatively better competitive advantage

Basic or the must-have services in mobile banking apps include:

• Account balance inquiry
• Transaction history
• Funds transfer
• Bill payments
• Search for ATMs
Fund transfer and balance enquiry comprise the most basic and must
have service

Advanced features are present in a few banks and are good-to-have

features:
• Display net balance
• Maintain payee details

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• Future dated payments
• Credit card balance display
Advance features include managing recipients , scheduling payment
etc.

Differentiator features are present in a few banks and these features

makes them stand apart from their competitors:
• Image capture for deposit and payments
• Social Media banking Apps
• Cloud Storage
• Mobile marketing
• Real time alerts
App using facebook connection for payments ,remote deposit , ect.

3.2: INTERNET BANKING

PLAYS A MAJOR ROLE IN DIGITAL BANKING

Internet Banking refers to the banking services provided by the banks over the internet. Some
of these services include paying of bills, funds transfer, viewing account statement, etc.
Banks also deliver their latest products and services over the internet. Internet banking is
performed through a computer system or similar devices that can connect to the banking site
via the internet. Nowadays, you can also use internet banking on your mobile phones using a
Wi-Fi or 3G connection. With the ease of availability of cyber cafes in the cities, it has
become quite popular.

Banking is now no more limited in going and visiting the bank in person for various purposes
like depositing and withdrawing money, requesting for account statement, stop a payment,
etc. You can do all these tasks and many more using the online services offered by the banks.
You can also keep a track of your account transactions and balance all the time. Now getting
passbooks updated to know the total account balance is a matter of past.

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INTERNET BANKING IN INDIA

The Reserve Bank of India constituted a working group on Internet Banking. The group
divided the internet banking products in India into 3 types based on the levels of access
granted. They are:

Information Only System:

General purpose information like interest rates, branch location, bank products and their
features, loan and deposit calculations are provided in the bankswebsite. There exist facilities
for downloading various types of application forms. The communication is normally done
through e-mail. There is no interaction between the customer and bank's application system.
No identification of the customer is done. In this system, there is no possibility of any
unauthorized person getting into production systems of the bank through internet.

Electronic Information Transfer System:

The system provides customer- specific information in the form of account balances,
transaction details, and statement of accounts. The information is still largely of the 'read only
format. Identification and authentication of the customer is through password. The
information is fetched from the bank's application system either in batch mode or off-line The
application systems cannot directly access through the internet.

Fully Electronic Transactional System:

This system allows bi-directional capabilities. Transactions can be submitted by the customer
for online update. This system requires high degree of security and control. In this
environment, web server and application systems are linked over secure infrastructure. It
comprises technology covering computerization, networking and security, inter-bank
payment gateway and legal infrastructure.

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INTERNET BANKING SERVICES
Bill payment service:
You can facilitate payment of electricity and telephone bills, mobile phone, credit card and
insurance premium bills as each bank has tie-ups with various utility companies, service
providers and insurance companies, across the country. To pay your bills, all you need to do
is complete a simple one-time registration for each biller. You can also set up standing
instructions online to pay your recurring bills, automatically. Generally, the bank does not
charge customers for online bill payment.

Fund transfer:
You can transfer any amount from one account to another of the same or any another bank.
Customers can send money anywhere in India. Once you login to your account, you need to
mention the payee's account number, his bank and the branch. The transfer will take place in
a day or so, whereas in a traditional method, it takes about three working days. ICICI Bank
says that online bill payment service and fund transfer facility have been their most popular
online services
Credit card customers:
With Internet banking, customers can not only pay their credit card bills online but also get a
loan on their cards. If you lose your credit card, you can report lost card online.

Railway pass:
This is something that would interest all the aam janta. Indian Railways has tied up with
ICICI bank and you can now make your railway pass for local trains online. The pass will be
delivered to you at your doorstep. But the facility is limited to Mumbai, Thane, Nashik, Surat
and Pune.

Investing through Internet banking:

You can now open an FD online through funds transfer. Now investors with interlinked
demat account and bank account can easily trade in the stock market and the amount will be
automatically debited from their respective bank accounts and the shares will be credited
in their demat account. Moreover, some banks even give you the facility to purchase mutual
funds directly from the online banking system. Nowadays, most leading banks offer both
online banking and demat account. However if you have your demat account with

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independent share brokers, then you need to sign a special form, which will link your two
accounts.

Recharging your prepaid phone:

Now just top-up your prepaid mobile cards by logging in to Internet banking. By just
selecting your operator's name, entering your mobile number and the amount for recharge,
your phone is again back in action within few minutes

Shopping:
With a range of all kind of products, you can shop online and the payment is also
made conveniently through your account. You can also buy railway and air tickets through
internet banking

Advantages of Internet Banking:

Internet Banking has several advantages over traditional one which makes operating an
account simple and convenient. It allows you to conduct various transactions using the bank's
website and offers several advantages. Some of the advantages of internet banking are:
 Online account is simple to open and easy to operate.
 It is quite convenient as you can easily pay your bills, can transfer funds between
accounts, etc. Now you do not have to stand in a queue to pay off your bills; also you do
not have to keep receipts of all the bills as you can now easily view your transactions.
 It is available all the time, i.e. 24x7. You can perform your tasks from anywhere and at
any time; even in night when the bank is closed or on holidays. The only thing you need
to have is an active internet connection.
 It is fast and efficient. Funds get transferred from one account to the other very fast. You
can also manage several accounts easily through internet banking.
 Through Internet banking, you can keep an eye on your transactions and account balance
all the time. This facility also keeps your account safe. This means that by the ease of
monitoring your account at anytime, you can get to know about any fraudulent activity
or threat to your account before it can pose your account to severe damage.

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  It also acts as a great medium for the banks to endorse their products and services. The
services include loans, investment options, and many others.

Disadvantages of Internet Banking:

Though there are many advantages of internet banking, but nothing comes without
disadvantages and everything has its pros and cons; same is with internet banking. It also has
some disadvantages which must be taken care of. The disadvantages of online banking
include the following:

 Understanding the usage of internet banking might be difficult for a beginner at the first
go. Though there are some sites which offer a demo on how to access online accounts,
but not all banks offer this facility. So, a person who is new, might face some difficulty.
 You cannot have access to online banking if you don’t have an internet connection; thus
without the availability of internet access, it may not be useful.
 Security of transactions is a big issue. Your account information might get hacked by
unauthorized people over the internet.
 Password security is a must. After receiving your password, do change it and memorize
it otherwise your account may be misused by someone who gets to know your password
inadvertently.
 You cannot use it, in case, the bank’s server is down.
 Another issue is that sometimes it becomes difficult to note whether your transaction
was successful or not. It may be due to the loss of net connectivity in between, or due to
a slow connection, or the bank’s server is down.

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3.3:SOCIAL MEDIA SERVICE AND ANALYTICS

The use of social media has been increasing manifold. Several banks today are connected to
customers through various social media platforms. They are leveraging these platforms
strategically to market their products and services, understand customer’s behaviour and
forecast business needs.

• As of January 2015, there are two billion active social media accounts of which 1.6 billion
are accessed via mobile.

• An average social media user spends nearly two hours and 25 minutes per day on social
networks and micro blogging websites. Thus, making it a potential platform to build strong
customer connections.

KEY EXAMPLES

• Kabbage, an online financing technology based in Atlanta, reviews loan applications

leveraging social media analytics, cloud-based technology and shipping history. It
looks into correlations between shipping trends or Twitter followers for loan
application review.

• F.Banking by Bradesco A banking application for Bradesco customers to access

account information, make money transfers, payments and mobile credit recharge, and
request personal credit limit through Facebook.

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WEARABLE TECHNOLOGY

Since 2014, wearable gadgets have become popular among users for banking services,
healthcare and fitness. Banks are coming up with innovative apps that can display account
statements on smart glasses and enable payment transfers through smart watches. Many
global BFSI companies have tested financial apps on Google Glass.

• Smart wearable devices are expected to approach 13million by 2018 10 times higher
than 2013 estimates

• Google Glass annual sales forecast for 2018 is more than 21 million units.

KEY EXAMPLES

• App Bradesco para glass by Bradesco: Through the application, the user can locate
agencies, ATMs of Bradesco and receive directions and coordinates by Google Maps.

• Cash Tank by Wespac: The bank has launched an app Cash Tank through which a user
can see his/her full account, at a glance.

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 3.4: DIGITAL WALLET

Digital wallets have unfolded a new dimension in the payments landscape. They can be used
to make purchases (online/in store), redeem coupons/loyalty points, execute P2P/P2B
payments, transfers and store identity cards digitally. Digital wallets are used for money
transfers, banking transactions, shopping, and bill payments and ticketing

• Growth in the mobile wallet market is estimated at nearly 30 per cent CAGR in the next five
years from 2015-2019.
• Digital wallets are more frequently used for small ticket transactions. Nearly 70 per cent
transactions executed in the U.S. are less than USD30, as per a survey conducted in 2014
Digital Wallet Usage Study, Thrive Analytics .
•Consumers are frequently using digital wallets for routine transactions.

PAYTM
Paytm, owned by One97 Communications, is a digital payments platform that allows you
to transfer cash into the integrated wallet via online banking, debit cards, and credit cards,
or even by depositing cash via select banks and partners. Using the money in the Paytm
wallet, you can pay for a number of goods without using cash.

 Paytm Wallet can be used to buy goods and avail services online & offline
 Paytm Wallet can be recharged via netbanking and debit & credit cards
 Your Paytm Wallet can have up to Rs. 10,000; do KYC for higher limit

UBER
It develops, markets and operates the Uber mobile "app", which allows consumers with
smartphones to submit a trip request, which the software program then automatically sends
to the Uber driver nearest to the consumer, alerting the driver to the location of the
customer.

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KEY EXAMPLES

• A large technology player partnered with companies across the mobile, financial,
and retail ecosystems to launch a mobile wallet in 2011 which offers features like tap
to pay in the store, online purchase tracking, low balance alerts, loyalty points and
offers price comparison, etc.
• A US-based bank launched a mobile wallet in 2015 which provides a complete omni
channel experience with in-store,in-app and online purchase options.

CLOUD

Banks are adopting cloud technology to implement virtualised banking and leverage big data
in a more cost effective manner. Cloud computing offers scalable and cheaper application
portability across multiple devices instead of using in house servers and databases. The cloud
is leveraged for CRM, data storage, application development, email, back-end services and
virtual desks. Banks are also offering cloud services to consumers as an option to store
banking-related documents.

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• According to a survey conducted by the Cloud Security Alliance, 61per cent of banks state-
that the cloud is in the formative stages within their organisation. Approximately 40 per cent
have plans for hybrid models, i.e. a mix of in-house IT, private, and public clouds, and 18 per
cent have plans to use private clouds. Another survey by Temenos in 2015survey states that 89
per cent of BFSI have at least one application in the cloud in contrast to 57 per cent in 2009.

• Cloud has stronger presence in the APAC ,region with 41per cent bank
working on cloud strategy comparedto 35 per cent and 28 per cent in EMEA and
Americas, respectively.

• Cloud computing is expected to add EUR250 billion to the European GDP

2020, according to a research conducted by International Data Corporation and
European commission.

KEY EXAMPLES

• A leading U.K. bank’s cloud enables users to upload documents and use custom tags
to sort and manage them.They have separate cloud for storing personal documents and
business documents.

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• BBVA, Atom Bank and Starling Bank are early adopters of cloud technology and
are building business models to take advantage of big data and cloud for more
scalable and cheaper solutions.

3.5 : BLOCKCHAIN TECHNOLOGY

Blockchain is expected to revolutionise the back-end operations in the financial services
sector, especially the global payment landscape. Banks and new start-ups are exploring the
opportunities to leverage blockchain across various business segments - syndicated loans,
trade finance, crowd-funding platforms, bonds and the private placement market. The initial
phase of block chain technology adoption aimed at introducing automation in majorly paper
centric and contractdriven workflows, like clearing and settlement, transfers and trading
activities.

• By end of 2019, spending in blockchain technology is expected to reach USD400 million

a manifold increase from USD30million in 2014 and USD75million in 2015.

• In September 2015, R3, a NY-based Fintech firm, initiated a collaborative effort to

explore opportunities in Blockchain and encourage adoption across the financial
services sector. The consortium currently has 42 top-tier banks from across the globe.

KEY EXAMPLES
• Nasdaq has launched Linq system, a platform based on distributed ledger
technology in December 2015, which facilitates issuance, cataloguing and
recording of share transfer transactions to private investors without involving
middlemen like clearing firms.
• Crowdaura, a UK-based crowd funding firm, uses block chain technology for
trade, issuance, settlement and administration activities.

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Automated Teller Machine (ATM):

ATM is designed to perform the most important function of bank. It is operated by plastic
card with its special features. The plastic card is replacing cheque, personal attendance of the
customer, banking hours restrictions and paper based verification. There are debit cards.
ATMs used as spring board for Electronic Fund Transfer. ATM itself can provide
information about customers account and also receive instructions from customers - ATM
cardholders. An ATM is an Electronic Fund Transfer terminal capable of handling cash
deposits, transfer between accounts, balance enquiries, cash withdrawals and pay bills. It may
be on-line or 0ff-line. The on-line ATN enables the customer to avail banking facilities from
anywhere. In off-line the facilities are confined to that particular ATM assigned. Any
customer possessing ATM card issued by the Shared Payment Network System can go to
any ATM linked to Shared Payment Networks and perform his transactions.
Credit Cards/Debit Cards:
The Credit Card holder is empowered to spend wherever and whenever he wants with his
Credit Card within the limits fixed by his bank. Credit Card is a post paid card. Debit Card,
on the other hand, is a prepaid card with some stored value. Every time a person uses this
card, the Internet Banking house gets money transferred to its account from the bank of the
buyer. The buyers account is debited with the exact amount of purchases. An individual has
to open an account with the issuing bank which gives debit card with a Personal
Identification Number (PIN). When he makes a purchase, he enters his PIN on shops PIN
pad. When the card is slurped through the electronic terminal, it dials the acquiring bank
system - either Master Card or VISA that validates the PIN and finds out from the issuing
bank whether to accept or decline the transactions. The customer can never overspend
because the system rejects any transaction which exceeds the balance in his account. The

29
bank never faces a default because the amount spent is debited immediately from the
customers account.
Smart Card:
Banks are adding chips to their current magnetic stripe cards to enhance security and offer
new service, called Smart Cards. Smart Cards allow thousands of times of information
storable on magnetic stripe cards. In addition, these cards are highly secure, more reliable and
perform multiple functions. They hold a large amount of personal information, from medical
and health history to personal banking and personal preference

3.6:GLOBAL CHALLENGE: DIGITAL ADOPTION IS NOT AN EASY

GAME

With all the benefits that banks have derived from digital transformation, a few challenges
also exist. Digital adoption is facing pressure from both external and internal forces. We
categorise these challenges broadly under four main heads: People, Technology, Regulatory
and Process. These challenges are pushing banks to constantly modify their digital strategy.

PEOPLE:
To compete with the tech giants and challengers, banks require that their employees have
strong technology skill sets. The scope for technology opportunities is vast; it includes data
analytics, big data, digital marketing, social media usage and analytics and customer analytics
There are medium to high digital skills gap among the banks globally, as per a study conducted
by Oliver Wyman in 2014. Due to a lack of strategy around digital training for up-skilling
employees, banks are not able to innovate quickly and have started facing challenges from
start-ups, tech giants and other sectors .Besides there should be a mind-set among employees
to usher in digital innovation in day-to-day customer service and product offerings. However,
in many cases, banks are still to introduce a culture supporting innovation and digitalisation.

TECHNOLOGY:
Integration of the customer-facing digital offerings with back-end operations and processes
are imperative to help ensure the success of a digital strategy. Technology infrastructure is one
of the important enablers for a successful digital transformation. It is important for banks to
upgrade their systems to implement new technologies. There are still few banks who have

30
not yet upgraded their systems from legacy processes to the new infrastructure which is
required for integrating front end digitisation to back end operations. Some of the
programming languages (such as COBOL) that were used few decades ago, are still being
used by the banks. Banks are also maintaining multiple customer-facing systems which cause
duplications in the processes and also make the process inflexible, expensive and time
consuming.

UNIX
Unix (often spelled "UNIX," especially as an official trademark) is an operating
system that originated at Bell Labs in 1969 as an interactive time-sharing system
Ken Thompson and Dennis Ritchie are considered the inventors of Unix. The name
(pronounced YEW- nihks ) was a pun based on an earlier system, Multics. In 1974
Unix became the first operating system written in the C language. Unix has evolved
as a kind of large freeware product, with many extensions and new ideas provided in
a variety of versions of Unix by different companies, universities, and individuals.

LINUX
The Linux open source operating system, or Linux OS, is a freely distributable,
cross-platform operating system based on Unix that can be installed on PCs, laptops,
netbooks, mobile and tablet devices, video game consoles, servers, supercomputers
and more.
The Linux OS is frequently packaged as a Linux distribution for both desktop and
server use, and includes the Linux kernel (the core of the operating system) as well
as supporting tools and libraries. Popular Linux OS distributions include Debian,
Ubuntu, Fedora, Red Hat and openSUSE

FINACLE
Finacle is a core banking product developed by Indian corporation Infosys that provides
universal banking functionality to banks. In August 2015, Finacle became part of EdgeVerve
Systems Limited. Finacle is used by banks across 84 countries that serve over 450 million
customers Finacle has a strong focus on product strategy and a global market
presence.Further, the digital transformation programmes affect banks internal processes during
the transition period and disrupts the business as usual. During the trial and testing phase, and

31
sometimes during final implementation, technical glitches hamper seamless offerings and
create negative publicity. In late 2015, a major Australian bank upgraded its online platforms
to provide a similar look for all the digital banking platforms. However, after the
implementation there was a major technical glitch due to which customers faced challenges
while accessing their bank accounts. Customers also went to the bank’s Facebook page to
convey their dissatisfaction. This often proves to be a reputational risk.

DATA SECURITY

Data security is one of the highest concerns for any banking player today. With the increase in
digitalisation and ease of banking services, a new threat that banks are exposed to is cyber
crime. These crimes are not only for monetary gains but also for the valuable information of
individuals or institutions. The threats could be from inside or outside the organisation. In the
last few years ,banks in U.S. and U.K. have witnessed various cases of cyber threats.

REGULATORY CHALLENGES
For banks to implement advanced technologies, government support is inevitable.
However, banks are currently over-burdened by regulatory pressure. The compliance
measures adopted by them to meet the growing regulatory requirements are eating
away the capital investments budgets set aside for digital transformation. Adoption of
Basel 3, for example, requires huge capital/recapitalisation .Where legacy banks are
facing challenges and pressure from regulators, start-up firms, P2P players and
Fintech are enjoying incentives like tax holidays etc. which further adds to the
competition faced by banks from the challengers in the market. Regulators are also
restricting the transaction size for certain digital payment services, for instance
contactless in U.K. is capped under GBP 30 and in India under INR 2,000. Further
adoption of technology such as cloud computing also face regulatory compliance
around data confidentiality. In Europe, banks have to comply with the Union’s
General Data Protection Regulation while moving to the cloud.

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BANKING IN INDIA
MOVING TOWARDS ‘DIGITALISATION’

The Indian banking landscape has witnessed significant transformational changes during
the last two decades - from the entry of private players to increased regulatory
surveillance to changing customer channels to implementing technology. All these
changes have made the banking system more efficient, agile and resilient. The landscape
in India is further changing which is evident from the emergence of payment banks and
the changing focus of traditional banks towards the digital side of things. India has seen
significant growth in both the number of smart phone users and internet users over the
past few years. Globally, India is ranked third in terms of number of smart phone users
after US and China. Also, the number of internet users in India surpassed the population
of the US in the second half of 2015 and India is ranked second on this parameter only
after China. We believe that the digitalisation of banking operations is another
transformational change which could potentially affect the business models of the banks
operating in India. The digitalisation efforts of banks in India have been further
facilitated by improvements in various aspects and favourable demographics. The
government has a focus on digital India and intends to move towards a cashless economy
It has plans to provide universal access to mobile connectivity, information for all, and
public internet access programmes. The government is also focused on promoting e-
governance. All these initiative are expected to boost the digitalisation efforts across
sectors.

As an outcome of this trend towards digitalisation, several industries face disruptions

from tech-savvy firms including banks. In the banking sector ,legacy banks have
started to see competition from new players not only from banking but

33
Also from other technology-focused industries . The payment licenses have been
granted to telecom companies, security market entities, postal service provider,
bottom of pyramid players, payment service providers, technology companies, and
NBFCs. The traditional banks are thus being forced to embrace the ongoing digital
change. Payments is an area which is experiencing innovative disruption. With the
entry of new payment banks, the landscape is changing and payment solutions are
being upgraded constantly to provide cost effective and scalable digital solutions
Licenses have been awarded for 11 payment banks, 40 prepaid payment instrument
issuers, and over 10 payment aggregators to operate in India.
Although there are multiple digitalisation channels used by banks in India, these
channels are at different stages of maturity. The following figure depicts the
maturity pattern of various digital offerings.
Payment banks will appoint their merchants and users would be able to pay them
electronically. This means, you could soon be using your mobile to transfer funds to a retail
store or at a restaurant.

COLLABORATE, INTEGRATE, AUTOMATE

Digitalisation shall continue to be perceived both as an opportunity as well as a challenge. For

banks, execution will be key in the future. This is a playing field where the winner shall be

34
decided based upon path breaking innovation, flexibility to adapt and successful
implementation of ideas .We expect banks to re-define their digital journey and fuse the silos
created by various channels, such as mobile, data analytics, cloud etc. into a ‘consolidated
digital plan. They need to come with strategic plans to educate and incentivise their customers
to move to digital channels .Implementation of a digital strategy will be the highest priority
for the banks by 2020 with 46 per cent of respondents, in favour of the digital strategy, as per a
survey conducted in 2014 by banking software vendor Temenos.

From India’s perspective, We believe that a combination of growing smart phone

adoption and internet penetration, increased access to banking products, and a focus on
facilitating frictionless commerce through electronic payments will drive a truly
inclusive ‘Digital India’ that transforms the livelihoods of millions of customers and
small businesses .Banks in India have implemented digital initiatives in a fragmented
manner and in silos from their peers. Now that the banking sector in India is getting
competitive with payments and small bank licenses, it will bring the unbanked masses

• We expect to see more alignments within and outside the organisation. Experience and
competencies of a single player might not be the winning factor. Banks may consider
collaborating with peer banks, start-ups, retailers and telecom companies to increase their
market shares. The concept of shared economics will emerge where banks will collaborate
and share in-house software and technological solutions to make the processes more robust.
• In the coming years ,we foresee banks creating a complete digital ecosystem by bringing in
the integration of processes ,people and technology. Open Application Programming
Interfaces (APIs) and simplified digital architectural designs may emerge for a seamless
connection between interfaces, services and applications (apps), driving an uninterrupted flow
of digital content.

• Another development is likely to be the introduction to robotics, automation and self-

learning algorithms in order to limit human involvement and up-skill machines to offer self
under the ambit of formal banking and also expedite financial inclusion. What needs to be
ensured is that banking and payments players work in sync with regulators aiding this journey
to digitalisation.

Going forward, banks are expected to follow CIA approach; i.e.

35
(a) collaborate instead of compete with the challengers;
(b) integrate and realign all their processes and systems; and
(c) automate their processes and push their customers towards more self-servicing,
intuitive and robotic channels .servicing channels. This will involve initial
investments which will be capitalised in the long run in the form of reduced operating
expenses, especially staff and rental costs.

The first phase of the digital journey of the banking sector has been to explore and
invest in the pockets of digital disruptions.
Innovation has now become ‘business as usual’. Going forward, banks will need to
collaborate, integrate and automate to take their digital journeys, to the next level.

36
 Chapter 4: Data Interpretation and analysis

HDFC Bank exec: This is how future of digital banking looks like

The digital revolution is upon us and touches every aspect of our lives,including banking.
Nitin Chugh, Country Head - Digital Banking, tells NazimKhan and Santosh Nair how
technology is changing the face of banking.

How banking may look like in future

The two-three most promising areas where digital advances could revolutionise the customer
experience are artificial intelligence, chatbots and personalization. Internet of Things is
another area where some form of banking transactions could take place. Connected devices,
equipped with biometric capabilities, could help enable transaction banking. Service offerings
that combine these technologies could make banking very different from what it is today. For
instance, you could have a device -- say your mobile phone -- from where AI gathers
information of your spending habits or preferences or location, makes sense of the
information and drives banking decisions.

For instance, in a pilot project (after taking customers' consent), we undertook a trial where
we would match a customer's phone location using triangulation with the location of the ATM
where his debit card is being used for a transaction. If the customer's phone was found far
away from the ATM, the system would decline the transaction, with the assumption being that
the customer normally carries his/her mobile phone to the ATM. Such hyper-localization can
be tested in several areas: security, transactions, marketing.

Imagine a future where a customer has browsed through a website/app for booking a movie
ticket, and then proceeded to go to the mall where the cinema was located. If the customer has
reached early, the system knows the customer has free time. The cinema may have a tie-up
with its neighbouring coffee shop and sends him a message with a customized offer to spend
time there! A number of technologies would have come together to make this possible.

37
Will digital make physical bank branches obsolete?
The role of the branch is likely to undergo a change. So branches will continue
to exist in order to take customers through the digital process. We are making
our branches digitally-enabled. So whatever you can do online, you can go to a
branch and do with the help of the relationship manager.

Digital initiatives that HDFC Bank is undertaking

Our bank has undertaken several initiatives to change the way the relationship works between
the bank and customers. We have undertaken steps on lending, payments, transactions,
communication, data analyses as well as in-house, in terms of training our employees to
understand how banking works in the digital world. All of these offerings are meant to ease
the way the customer interacts with the bank.

We have been closely monitoring trends that have emerged in the fintech (financial
technologies) and startup space to keep looking for ideas how we can improve our offerings.
We are working with a lot of fintech startups to bring in solutions that we can offer to our
customers.

The impact of these initiatives is showing. Ten years ago, the share of Internet and mobile
banking transactions [as apercentage of total transactions] stood at 13 percent. In FY13, it
stood at 44 percent, in FY14, it was 55 percent. In FY15, the number was at 63 percent. Last
fiscal, it has gone up to 71 percent. The share of branch transactions today has gone down to
11 percent.

Last year, we launched the 10-second personal loan where pre-approved customers get funds
credited into the bank accounts within 10 seconds of filling up their applications digitally.
That was setting a benchmark of digital. We also introduced a recharge-on-missed-call feature
that allows our customers to recharge their prepaid mobile phones on the go.

The impact of Unified Payments Interface

The Unified Payments Interface is a great step towards democratising payments. A lot of
large payments, government payments, e-tendering, contracts have become digital. But UPI
will allow everyone to participate and come into the digital economy.

38
Since UPI is based on IMPS, it will encourage a lot of fintech companies to build several
solutions on top of the interface.

DIGITAL BANKING INITIATIVE BY MAJOR INDIAN

BANKS

ICICI Bank
 ‘ICICI Pocket’, a Visa powered pre-paid E-wallet that even non-bank customers can
use to recharge mobile ,send money, shop, pay bill, book movie tickets, or split
expenses and gift.
 ‘Your Bank’ Facebook app allows customers to view saving accounts details on
Facebook, as also order cheque book, upgrade debit card, share and track expenses
with groups of friends.
 ‘iWish’, an online flexible recurring deposit scheme that allows customers to share
their savings goals with family and friends to raise funds. For iWish, ICICI Bankhas
tied up with ‘smartyPig’, a US tech firm, which also has a partnership with BBVA for
the compass app.
 ‘ICICI Bank Pay – Payment services using Twitter’ – allows customers to recharge
prepaid mobile , check account balance, and view recent transaction using Twitter.

HDFC bank
 ‘WatchBanking’, a mobile banking app available on Apple Watch that allows a
customer to view account detail,recharge mobile and DTH connection, locate banks
ATMs and branches, and request cheque book .’Chillr’, a mobile app that offers 24/7
money transfer to anyone in one’s phone book.
 Boasts of over 75 plus transactions on the HDFC mobile banking app. HDFC has the
highest (34%) market share in mobile banking transaction in India .
 First Indian bank to offer ‘Hindi language app for mobile banking’- Hindi is India’s
national language and the native language of 41% of India’s population.
 PayZapp, a complete payment solution allowing customers to shop on mobile through
partner apps, buy movies tickets,music and groceries, send money, recharge mobile.

39
Induslnd bank

 Induslnd has launched a plethora of Mobile Banking products including IndusMobile

App, Mobile SMS, Cash-On-Mobile, and Indus Alerts. Online banking service
include Indus Net and Indus Bill Pay.

Kotak Mahindra Bank

 ‘Hashtag Banking’, Customers can tweet to @KotakBankLtd to check account

balance ,mobile and DTH recharge , order book, transaction history, cheque book
request,ect.
 ‘JiFi’, a new age digital account which offer high convenience through hashtag
banking ,access to mobile banking and offers app, free NEFT through Net Banking ,
and other digital services.
 ‘Kaypay’, a money transfer service which allows users to connect Facebook , Google
+ friend list and contact list and pay them without asking them their account details.
 ‘Date with Digital’, an internal digital awareness program.

State Bank of India

 ‘State Bank FreedoM’, Mobile banking app providing a wide range of banking
services and non-banking services such as booking airlines,railways,bus,movietickets
and buying goods/services.
 ‘sbilNTOUCH’, foray into digital banking through Account Opening Kiosk(AOK),
Debit Card Printing Kiosks, Interactive Smart Tables ,Interactive Digital Screens, etc.
 ‘Mobile Wallet ‘, services which includes tie ups with around 900 retialers in India.

40
DIGITAL TRANSFORMATION IN BANKING: MAKING PROGRESS AND
HITTING ROADBLOCKS

One third of banking executives participating in a study said that marketing owns the end-to-end
customer relationship, but only 14% feel that marketing should own their institution's digital
strategy.
By John Choi, Director of U.S. Operations at Liferay

As financial institutions look at how best to adapt their current practices to meet the needs of
customers across an expanding array of digital channels, banking executives look for insights
to inform their digital transformation strategies. A research study among digital strategy and
marketing leaders in the banking industry sheds light on some of the key challenges and
opportunities for making effective strides toward delivering more personal and omnichannel
customer experiences.

Digital transformation must begin with a cultural transformation within an organization,

according to the study, in order to best lay the foundation for critical cross-department
cooperation. This cooperation, freeing needed data and capabilities from departmental silos,
is required to achieve seamless omnichannel service at each point along the customer
lifecycle.

With 87% of the financial institution respondents saying that technology is intrinsic to digital
transformation and must be considered in tandem with strategy, it’s a natural fit for CIOs to
lead the way in vetting and implementing the technical platforms and solutions that will form
the backbone of an organization’s digital strategy. However, this is not to say that the IT and
more technical teams should lead digital transformation initiatives alone. When asked which
business unit should own digital strategy, only 2% of respondents named IT — instead, 32%
wanted to see executive level ownership (the C-suite), with a plurality of 41% preferring a
cross-departmental digital team.

41
42
The wide championing of departmental cooperation by respondents seems to stem from the
fact that siloing is perceived as the root of obstacles slowing down digital maturation. When
asked about these roadblocks, 56% citied a limited availability of IT resources, 44%
mentioned fragmented data resources, and 41% pointed to not having a single view of the
customer. Asked what is the biggest barrier to addressing the full customer lifecycle, 46% of
respondents acknowledged the fact that different business units own different parts of the
lifecycle – far and away the most common response.

Taken together, these answers form a picture of financial institutions as being held back from
their goals of providing high-quality customer experiences throughout the lifecycle, from
acquisition to retention to winning brand advocates. Siloing and a lack of proper technology

43
are the culprits often preventing the cross-functional team collaboration that would best serve
the customer.

The good news for financial institutions is that the race to implement digital transformations
ahead of competitors is a marathon, and most are currently finding themselves in the middle
of the pack. When asked “Where is your company in its digital transformation,” 49% of
respondents said they were roughly halfway there, while 37% said they were only currently
beginning to roll out a strategy. Still, a financial organization that can establish a culture free
of silos – and carry out effective digital transformation quickly and successfully – will
certainly earn itself an effective competitive advantage and be able to deliver a differentiated
level of customer experience.

Financial institution CIOs should apply their technology expertise and play a significant role
in guiding digital transformation, but no one department can (or should try to) control the
entirety of a business’s digital applications. Creating and empowering a cross-departmental
digital team is an effective method for escaping silos and delivering a digital experience to
banking customers that is unified across platforms and the full customer lifecycle. This will
require consolidation and easy access to data from multiple departments in order to produce
these consistent experiences, and all departments – not just IT or marketing – should have an
active role to play.

By incorporating advice from other industry leaders and fostering a company culture ready to
embrace cooperation alongside new technology, financial institutions can best execute the
digital transformations necessary to keep pace and potentially stand out in their industry.

DELIVERING MORE WITH LESS: 5 FUNDAMENTALS OF A

DIGITAL BANKING EXPERIENCE

Many banks and credit unions are slow to admit how wide the disconnects in digital banking
channels has become. Here's how to overcome that gap.
By Craig Dunham, VP/General Manager of Financial Services at Seismic

44
The banking industry is at an inflection point, with traditional institutions competing not only
with each other, but also fintech challengers. In this hyper-dynamic environment, the ability
to operate a traditional banking model has become more difficult than even many financial
institutions are willing to admit.

For instance, 74% of banking executives in a KPMG survey believe that their digital
capabilities are “above average,” and yet 57% of respondents said their institutions were only
either in the evaluation or planning stage of upgrading or replacing their legacy IT systems.
Contrast this with the fact that 53% of Millennials in the same KPMG study say their current
banks’ offerings are identical to other providers, and 73% say they would consider banking
with tech companies like Google or Apple. Nevertheless, three in five banking executives
don’t view fintech forces as threatening. Go figure.

Since big digital investments and major tech makeovers can take upwards of three years, the
divide between consumers and traditional banking providers will likely get worse before it
gets any better. This could create a massive vacuum where even more new entrants can step
in… trigger a potential mass exodus of customers.
Traditional banking institutions have kept the barriers to switching providers high, preventing
even the unhappiest of customers from closing their accounts. People are held captive,
trapped. But as more fintech alternatives enter the market, one of their core characteristics —
ease of adoption and use — will eventually show people that banking and borrowing don’t
necessarily have to be complicated, nor rigid, nor boring and stuffy.

Because of shrinking budgets, the high costs of maintaining outdated tech stacks and
disparate processes, traditional institutions have been delivering less… with less. It’s
imperative for banking institutions to consider new technologies and digital pathways that
will allow them to deliver an efficient, omni-channel experience. While integrating one
component is certainly better than none, a collective approach not only creates a seamless,
holistic customer experience, but also means the organizational commitment to
implementation only needs to occur once.
Here are five ways a bank can not only improve marketing ROI but also transform the overall
customer experience.

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1. Imagine, Innovate and Create
Banks need to exercise their imagination when it comes to digitally engaging consumers. The
concept of “delight” shouldn’t be confined exclusively to clothing designers and chocolatiers.
Consumers want a humanized, tailored, and effortless banking experience that instills a sense
of pride for their capital and relationship manager. Financial marketers now have robust new
technologies that can help them automate and collaborate, allowing them to create a
streamlined approach to delivering the products and services that matter most to the prospects
being targeted.

2. Design for ‘Park Bench’ Interactions

The time-intensive, oak-desk dialogue about savings accounts, business loans, and credit
lines has been replaced with a side-by-side, dynamically mobile, “park bench” style
interaction. Borrowers, Millennial small business owners in particular, don’t want to endure a
multi-day, multi-form approval process anymore. Part of the negative perception of banks
after the Great Recession is that they negotiate from a distant position of power and are
uninterested in having a balanced conversation about lending. Because of the advent of mass
personalization, customers want to feel that their time and specific borrowing conditions are
not only understood, but also valued. Delivery platforms that facilitate this new person-to-
person, park bench interaction are quickly becoming a functional necessity within banking.

3. Retool Processes From The Ground Up

An inherent trait of the digital customer experience is efficiency—the elimination of
technological redundancies, streamlining of operational workflows, and reduction in service
response times. One can’t expect to execute an effective park bench interaction without
improving backend processes. There’s nothing convenient nor cost efficient about completing
application forms or reviewing loan terms for what seems like an eternity. A pillar of the
digital customer experience is technological ability and operational agility; banking providers
need to accomplish more with fewer resources and roadblocks. Leveraging SaaS solutions
that organize, store, and distribute collateral in and from centralized repositories allow
relationship managers to spend less time on manual processes and more on customers and
their particular lending needs.

4. Derive Insights From Automated Data Analytics

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Knowing which content is the most impactful in customer interactions is imperative to
achieving a successful outcome. But quite often, learning what isn’t working can yield a
greater long-term benefit, as adjustments to collateral and the overall interaction allow for a
more pronounced customer experience. Collecting data on how current and potential
customers engage with your institution is vital to the aforementioned processes, enabling
marketing teams to pivot and respond in a timeframe appropriate for today’s immediate-
results environment. A comprehensive analytics platform is the easiest and fastest method for
learning consumers’ behaviors, needs and wants — thereby crushing the stigma that “banks
don’t pay attention to people, only numbers.”

5. Break Down Silos and Foster Interdepartmental Communication

Operating within individual silos is a sure way for product or customer information and data
to be missed, lost, or incorrectly represented. Additionally, cross- functional success
necessitates the removal of interdepartmental barriers. In the banking industry, such lapses
can be detrimental to an institution’s reputation and compliance status. The term transparency
is rightfully used with exception in banking, but it is synonymous with all experiences digital.
Due to this standard, customers presume that while complete transparency may not be
feasible externally, it should exist among teams internally. These open channels of
communication mean that fewer points of contact are needed to complete a process, answer a
question, or solve an issue. In the digital experience, technologies that keep workflows open
and accounted for make any customer introduction and interaction undemanding and
seamless while still meeting compliance.

IS THE BANKING INDUSTRY LIVING ON BORROWED TIME?

In 1997, Bill Gates predicted the eventual demise of banking when he said, “We need banking but
we don’t need banks.” Are we reaching the point where Gates’ vision is realized? Could we see the
end of banks as we know them in the next 20 years... or maybe the next five?
By Jim Marous, Co-Publisher of The Financial Brand and Publisher of the Digital Banking
Report

The banking industry is being attacked by a growing number of FinTech startups and digital
companies who are working to capture market share from traditional players. To survive,

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traditional banking organizations need to evolve quickly, according to new research from
digital innovation agency Adaptive Lab.

Based on this research, carried out for a new book called Bye Bye Banks?, written by James
Haycock, and co-authored by technology reporter Shane Richmond, despite the fact that
banks are spending billions of dollars on digital transformation and innovation activities,
changing the entrenched culture within these organizations is very difficult. The extensive
qualitative and quantitative research for the book stems from discussions with 110 senior
managers, directors, C-Level executives, CEOs and Presidents within the retail banking
sector.

“The financial services playing field has been changed irreversibly in recent years by a new
generation of companies and leaders who have torn the rulebook to pieces, adopting new
technology, introducing new working practices, and serving customers whose lives are
increasingly orientated around their mobile phones”, says the research. Thanks to the
expansiveness of the web and the accessibility of the smartphone, digital disruption is
happening all around us, breaking dominant business models in retail, entertainment, travel
and telecommunications.

Beyond well-known disruptors such as Amazon, Uber, PayPal, Skype, Spotify, WhatsApp,
Netflix and Airbnb, there are even more smaller start-ups hoping to transform traditional
transactions, companies and even industries.

Displaced, Diminished and Disintermediated

In the time it takes to develop an app, digital disruptors can change the way business is
conducted and the revenue that can be generated. Leveraging simplified designs and big data,
digital disruptors can provide new levels of personalization, contextuality, scalability and
functionality at the tap of a finger.

There are an increasing number of new FinTech start-ups attacking the core functions of
payments, lending, investing, money transfer, advising, etc. Services such as Lending Club,
Funding Circle, Nutmeg, Transfer Wise and Venmo are only the largest (and most
successful) of the new entrants.

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The banking industry may be more at risk than other industries due to their large size,
historically high profitability and tendency to move at a snail’s pace. Bankers are also
hesitant to explore new business models that could cannibalize or compete with existing ones
and find themselves hamstrung by legacy … legacy technology, legacy processes and, in
most cases, legacy thinking.

Banking giants face a further challenge according to the research. With a very high cost of
compliance, it is believed to be harder to deliver change at the rate of the new, agile entrants.
Many in the industry believe that regulation protects them from the tech startups to a degree.

That protective cushion might be slipping away, however, as governments act to promote
competition by changing regulation to encourage new offerings.
“It’s plain to see that a perfect storm of competition, technology, shifts in customer behavior
and regulation looks set to wreak havoc on the businesses we trust with our money. It’s a
matter of when, not if, banking will be reinvented.” – James Haycock
The research discussed in Bye Bye Banks? proposes that incumbent banking organizations are
becoming displaced, diminished and disintermediated by new businesses and new
technologies.
 Displaced – by a superior customer experience and price offered by new entrants,
enabled partly by the luxury of being free of legacy technology and cost base, and
developers closer to the needs of their target customers.
 Diminished – revenues are squeezed and legacy organizations are relegated to
utilities in a market with higher switching frequency.
 Disintermediated – core competency of the incumbents, such as storing and
transferring value, are challenged by the arrival of new technologies, such as the
blockchain. In this phase, complete functionalities may be replaced by FinTech start-
ups.

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“The generation coming of age today might not see a need for a traditional bank at all, just as
they don’t see any reason to have a landline, send letters or buy newspapers,” Haycock says,
saying that the only reason people still have banks – which they no longer trust, in any case –
is inertia. “With 2.5 billion unbanked people in the world, and a billion of those owning a
mobile, a digital disruption is now realigning the entire banking industry.”

What is enlightening (and a bit frightening) are the comments interspersed throughout the
book, where bankers share their views of the impact of the tech startups, the cost of
compliance that the existing players are burdened with, and the contention that customers
won’t trust a startup with their money. Some of these comments are encouraging, while some
reinforce some of the challenges facing legacy organizations around people, culture and
technology.

One of the most disconcerting findings of the research was that top-level managers lack an
in-depth understanding of the digital world and its impact, as well as new competitors. While
some of this lack of knowledge can be attributable to the age and level of executive

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interviewed (less apt to be a ‘digital native’), or that the survey was done in the U.K.,
knowing your ‘enemy’ may be an important first step.

7 HABBIT OF A HIGHLY SUCCESSFUL DIGITAL BANK

As part of banking's digital transformation, seven traits must become habits to successfully
compete and retain consumer trust and satisfaction.
By Roberto Ferrari, General Manager, CheBanca

It is clear to most business leaders in financial services that digital disruption in financial
services is a game changer, although some continue to try to deny it. What is far less clear is
how to successfully adapt financial services organizations to the new digital reality and to
change the industry’s typical slow motion mentality and defensive incumbent behavior.

In the book, The 7 Habits of Highly Effective People, author Stephen R. Covey presents an
approach to being effective in attaining personal goals by gaining alignment with proven
principles. Emphasizing the need for a paradigm shift, each chapter focuses on a habit,
starting first with three internal imperatives, followed by three external imperatives, and then
an overarching habit to sustain growth and improvement.

Some of the key lessons and insights of this book can be adapted and reapplied to banking as
we hope to reshape our organizations to make them successful as we face digital
disruption. Taking inspiration from the book, there are 7 key habits that have worked in our
organization’s transformation.

Three of these changes are ‘internal’ behaviors for the organization to help it grow. Three of
the new habits are ‘external’ to an organization, impacting the way it interacts with the
environment and the market as a whole. As with the best selling book, the final habit is a rule
for continuous improvement.
The 7 habits of highly successful digital bank are:
1. Be customer centric
2. Eliminate silos

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 3. Be a challenger
4. Embrace cooperation and coopetition
5. Work with Fintech startups (or buy them)
6. Build an open IT architecture
7. Strive for a faster innovation planning cycle

1. Be Customer Centric
This may sound obvious but: a) it is not always true for a traditional incumbent; b) it carries
along some key components that are often under evaluated. Being customer centric means
that you:

– Change your mindset. You need to build a digital, customer-oriented culture inside the
bank. Not just profits, but profits as a result of a successfully differentiated and long term
sustainable customer strategy. Marketing is not just about spending, but should relate back to
its original ‘go-to-market’ meaning.

Being ‘digital’ is not just something trending, but is going to be forever and a core part of the
organization. Implementations should not be a second level job execution, but must be smart,
agile, smooth and consumer-oriented and designed. Start thinking about the right
organization structure and interactions, with the right people to digitally lead the change with
customers in mind. Find the right skills.

– Reengineer your business to consumer processes. Start with the end in mind, using
overall customer experience you want to achieve as opposed to starting from a legal and
regulatory constraint perspective. This may sound impossible in an over-regulated industry,
but if someone tells you “this is impossible to do,” you can always find a way.
In addition, you should inject a “Yes we can” culture. Engage your legal, compliance and risk
managers upfront in the process and product design, making them work with others on the
team toward the solution. They will become part of the solution instead of a hurdle.

2. Eliminate Silos
This is organizationally key for a digital bank. This is not just important from the legal or risk
perspective. This must be extended to the whole organization. Some keys to eliminating silos:

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– Build objectives and incentives from a multichannel customer perspective. Find a way
to align objectives across channels and neutralize organizationally driven internal
competition. Break the conflicts.

– Make IT the center of your strategy. Put your COO and CIO at the heart of your
business, working alongside finance, marketing, etc. Since IT organizations are usually built
in silos, break these silos – making them work agile – in teams. Make sure innovation teams
are not logistically miles away from who runs the daily business.

3. Be a Challenger

Challenge your own business model and your traditional way of working. Firms that failed to
challenge their incumbent businesses include Kodak, Blockbuster, Nokia, Blackberry and
many others. Incumbent managers and organizations tend to defend their own profit sources,
and their well-proven (in the past) business models.

Financial service barriers to entry are falling and newcomers are already making inroads,
encroaching on traditional lines of business. While the size of newcomers may look small and
banking may still feel safe, you need a long term competitive perspective. This is a business
revolution not just a technological evolution.

It is time to start thinking about ways to evolve your business model … speeding up
innovation and behaving like a new entrants. If you were a FinTech how would you behave?
What business model would you build to destroy an incumbent? How would you attack the
most profitable sources of your business. Use a challenger mindset if you want to survive in
the long term.

4. Embrace Cooperation and Competition

It is time for a complete rethinking of the banking business model, IT architecture and
systems, since digital banks will mainly serve as IT companies dealing with customers’
money in the future. Banks will need to be much more open and ready culturally and with

53
infrastructural facilities to share business, clients platforms and solutions with external
partners.

The time where banks could run their business in isolation, with very little sharing of cross-
industry platforms is over. Banking is under a massive attack from internet giants and legacy-
free Fintech startups, creating the need for systematic cross-industry alternative digital
solutions.

One very good example of how the banking future should be reshaped is given by the UK-
based Paym P2P payment network. Forced by the Payments Council, it has reached a
coverage of 9 out of 10 current accounts and processed nearly £44 million in less than one
year. As a result, banks and building societies in the UK have been able to work together to
develop a new fast payment solution that will make the life harder for new entrants.

This is the new way forward. Building new digital common platforms, with
competition based on customer preferences around branding, customer experience, value
propositions and add-on value propositions. This is what is happening in the auto industry
and will eventually happen in banking.

5. Work with Fintech Start-Ups

Incumbent banking organizations need to streamline their operations and narrow business and
product development focus. They can’t be all things for all people, but instead, need to cut
oversized operating and distribution costs.

There will continue to be smarter and faster players in a better position to deliver state of the
art vertical solutions and user experiences … eating away at the edges of incumbent
organizations. With regard Fintech start-ups, it may be better to partner than to compete. In
other words, part of the product/service development of a successful digital bank should be
outsourced.

As with many of the 7 habits, this is a complete change of mindset. It is not just about setting
up an incubator or even a $100m VC fund. It is about integrating third party customer

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solutions into your offering. Or, if you want and can, it is about buying them entirely and
having their solution as a key part of your own business proposition. An example of such a
partnership in the U.S. and overseas is with Apple Pay.

6. Build An Open IT Architecture

If you want to build your competitiveness on agile web-scale innovation and open up your
offering to partners and third parties, you need to completely rethink your IT architecture.
Openness is the key word – you need an open programmable, agile architecture.
You need an API-centric platform capable to deliver:

 Consistent omnichannel experiences

 Dialogue in a plug and play scalable manner with third parties software solutions
 Hosting for new outsourced marketplaces
 A new digital CRM that will enable you to interact and learn in real time with your
customers

7. Strive For a Faster Innovation Planning Cycle

The seven habits book ends with a discussion around the capacity to continuously improve,
balancing and renewing resources for long-term well being. Successful banks in the digital
word need to do the same … striving for continuous improvement and renewal. In order to do
so, organizations need to get much much faster in the way they learn, act and react.

Many recent presentations by large banks show their new innovation labs, teams and work-
plans. While impressive few are producing game changing innovations … quickly. The
standard approach to innovation continues to include internal debates, committees, small
pilots, more committees and so on.

Using traditional new product development and approval processes is a non-starter in the new
digital world. The innovation planning cycle is far too slow for today’s high speed digital
banking environment.

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Data Interpretation and analysis of Primary Data

Primary Data Analyis and interpretation

The charts below are the graphical representation of the data collected by primary sources i.e
the responses of the questionnaire, The interpretation of the following are as follows:

As we can observe in the above pie-chart among 100 respondents 63% of the respondants are
Female whereas 37% are Male, This shows that more females are into digital banking than
males, among the total respondants all of them are from Mumbai district. My research is
limited to Mumbai district

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The above graph represents the age of the respondants

As we can observe 80% of the respondants are between the age 18 to 25 followed by 16%
frm the age group 26 to 35 , 3% from the age group 36 to 45 and rest 1% are from the age
group 46 and above

We can conclude with the above graph that new generation in more into digital banking and
old generation still find it risky

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The above Bar graph is a graphical representation of the occupation of the respondants

As we can observe more than 60 % of the respondants are students where as the next highest
occupation of the respondants are others followed by professional, businessman and skilled
labour,this shows the occupation of the respondants also plays an important role in the usage
of digital banking

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The Above chart is the graphical representation to the question” do you have a bank account”

As we can observe in the above statement that among 100 respondants 90% said yes they
have a bank account which demonstrates that almost all the respondants can avail digital
banking benefit as they have a bank account

The above column chart is a graphical representation to the question “ are you aware of these
digital payment applications”?

As we can observe that The Highest bar is of “All of the above” which denotes that the
population is highly literate of the digital banking channels, the second highest rank is of
paytm payment bank followed by Airtel payment bank and jio payment bank

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The above chart is the graphical representation of the ratings that the respondants gave to the
digital service their banks provide.

As we can observe the highest bar is from 3.70 to 5.05 which shows that a quantity of
respondants are closely satisfied with the service whereas the are some which are not the
satisfied with the service hence we can conclude that digital banking needs some
improvements as well as being useful to many.

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The above pie-chart is the graphical representation of the question “do you agree that using
digital banking is easy as compared to traditional banking

As we can observe in the above chart 42% respondants completely agree with this statement
whereas 46% are somewhat agreed. 11% are neutral whereas 1% strongly disagreed to the
above statement. This shows the lack of literacy within the population

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The above chart is a graphical representation to the question “do you find digital banking safe
or risky”?

As we can observe in the above pie chart 62% of the respondants find it safe whereas 11%
find it risky and 27% has no opinion over the safety of digital banking

The above bar graph is the graphical representation of the responses of the question “which
digital mode you normally use”?

As we can observe in the above graph it is the rating of “mobile banking” which says that
Mobile banking is used by the respondants very often as the bar of “often used” is higher
followed by “sometimes”, “rarely used” and never used

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The above pie-chart is the graphical representation of the responses of the question “which
digital mode you normally use”?

As we can observe in the above chart it is the rating of “internet banking” which says that
internet banking is used by the respondants very often as the slice of “often used” is greater
i.e 43% followed by “sometimes”, “rarely used” and never used

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The above pie-chart is the graphical representation of the responses of the question “which
digital mode you normally use”?

As we can observe in the above chart it is the rating of “Debit/Credit cards” which says that
Debit/Credit cards is used by the respondants very often as the slice of “often used” is greater
i.e 81% followed by “sometimes”, “rarely used” and never used

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The above pie-chart is the graphical representation of the responses of the question “which
digital mode you normally use”?

As we can observe in the above chart it is the rating of “Electronic clearing system” which
says that Electronic clearing system is used by the respondants very often as the slice of
“rarely used” is greater i.e 41% followed by “sometimes”, “often used” and never used

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The above bar graph is the graphical representation of the responses of the question “which
digital mode you normally use”?

As we can observe in the above graph it is the rating of “RTGS/NEFT” which says that is
RTGS/NEFT used by the respondants very often as the bar of “sometimes” is higher followed
by “rarely used”, “never used” and often used

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The above bar graph is the graphical representation of the responses of the question “which
digital mode you normally use”?

As we can observe in the above graph it is the rating of “Digital wallets” which says that is
Digital Wallets used by the respondants very often as the bar of “sometimes” is higher
followed by “rarely used”, “often used” and never used.

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The above pie-chart is the graphical representation of the question” your agreement towards
the sentence”

As we can observe the sentence is “one can transact smoothly using digital banking”

Among the 100 respondants 66% strongly agreed to the above statement whereas 30%
somewhat agreed followed by 4% neutral having no opinion on the sentence

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The above chart is the graphical representation of the question” your agreement towards the
sentence”

As we can observe the sentence is “every account holder must use digital mode to transact”

Among the 100 respondants 69% agreed to the above statement whereas 19% somewhat
agreed followed by 20% neutral having no opinion on the sentence and 2% disagreed to the
above statement .As the bar of agree ids highest among the all we conclude that average
people agree to the above statement.

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 Chapter 5: Conclusion & Recommendation
From the above information it is concluded that digital banking is emerging strongly and
effectively in todays time. Earlier people were used to traditional banking but with the
passing time people have started excepting digital banking with the emergence and
introduction of new technologies and services provided by the banks. With digitalization the
banking system it has become very convenient and easy to use the banking services and to get
excess to their bank account anytime from anywhere through internet excess in their device
like mobile, laptop, computer etc.

Now a days banking is not just restricted to making deposit and withdrawing money. Digital
banking have various channels like mobile banking , internet banking , digital wallet etc,
which provides various service like bill payment service, fund transfer, credit card customers,
investing through internet banking, mobile and DTH recharge and shopping.

The benefit of digital banking is that a person can make any payment and can transfer fund
from one account to another from anywhere and can avoid visiting a bank physically, but
with benefit it has certain drawbacks also like while dealing in digital banking a person
cannot established a personal relation with a bank , issue with transaction and security issues.
Different banks have taken various initiative to bring in digitalization in banking and
transform traditional banking system into digital bank.

Though, most of the customers prefer manual banking over e-banking, the customers tend to
use e-banking / internet banking and adoption of e-banking and internet banking services
among the bank customers is significantly influenced by the number of times visiting the
banks as well as the number of banking transactions per month.
Most of the services through e-banking / internet banking performed by both public and
private banks are beyond the expectation of the customers. Similarly the various services
provided by both public and private sector banks are more than adequate for customers. It is
concluded finally that there is significant difference between public and private sector banks
in respect of both services provided and services performed via e-banking / internet banking.

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FINDING

 The perceived status of usefulness is associated with monthly income of the bank
customers.
 Majority of the bank customers, whether presently use e-banking or not, have
intention to continue to use e-banking / internet banking and The usefulness of e-
banking / internet banking services depends upon the age of the bank customers.
 The usefulness of e-banking / IB in respect of “Account details and balance
statements” is significantly less among graduates when compared to secondary
educated and post graduates.
 There is significant difference in the perceived status of usefulness of e-banking /
internet banking services by educational status of the bank customers.
 The level of usefulness of e-banking services is significantly less for rural bank
customers when compared to their semi-urban and urban counterparts.
 The perceived level of benefits from e-banking / IB adoption differ significantly based
on location of the bank customers.
 An adoption of e-banking / internet banking provided by the private sector banks is
more beneficial in terms of “time and cost”, “providing accurate, relevant and up-to
date information” and “accessibility with convenience” compared to public sector
banks.
 The benefits from e-banking / internet banking are “Save time & Cost less”, “Provide
accurate, relevant and up-to date information”, “Flexible and easily accessible with
convenience” and “Assists to share the experience with bank and other customers
more efficiently”.

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 BIBLIOGRAPHY

INTERNET SITES:

 www.wikipedia
 https://toughnickel.com
 www.worldjute.com
 www.encyclopedia.com

MAGZINE:

 The Financial Brand

NEWSPAPER:

 Economics Times

BOOK:

 Information Technology in Banking and Insurance

Innovation in Banking and Insurance

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 Annexure

Questionnaire

Survey on digital Banking

A survey to study the preferences of banking customers

Q:1 Your answer: __________________________________

Q:2 GENDER *
 Female
 Male
 Prefer not to say
Q:3 Age *
 18 - 25
 26 - 35
 36 - 45
 46 and above
Q:4 Occupation *

Choose
 Business
 Skilled Labour
 Professional
 Student
 Others

Q:5 Do you have a bank account ?

 Yes
 No

Q:6 Kindly tick the digital payment application you are aware of.

 Airtel Payment Banks

 Paytm payment banks
 Fino Payment Banks

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  Jio Payment Bank
 Aditya Birla Idea Payment Banks
 India Post Payment Banks
 All of the above

Q:7 Rate from the scale 1 to 5, your satisfaction towards digital service offered
by your bank ?
Very disappointing
1
2
3
4
5
Excellent

Q:8 Do you agree that using digital Banking is easy in comparision to

traditional banking.? *

 Strongly agree
 Agree
 Neutral
 Disagree
 strongly disagree

Q:9 Did you find Digital Banking safe or risky?

 Safe
 Risky
 Neither safe nor Risky.

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Q:10 Which digital mode you normally make use of? *

Services Often used Sometimes Rarely Never

used used used
Mobile Banking
Internet Banking
Debit/Credit Cards
Electronic Clearing System
RTGS/NEFT
Digital wallets
Mobile Banking
Internet Banking
Debit/Credit Cards
Electronic Clearing System
RTGS/NEFT
Digital wallets

Q:11 Kindly enter your agreement towards the following statement

Statements Strongly Agree Neutral Disagree Strongly

agree Disagree
one can transact
smoothly and quickly
through digital mode
every account holder
must use digital mode
while transacting

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https://docs.google.com/forms/d/113T46fTF3MLTCyrll81Y4uCmSyZ-
dfu_nOBYtR2FWKA/edit#response=ACYDBNgLh5PnnM8DF3jq29eUvpvHiDteMXHEdV4slxS6AumjTFF
r-TZLMcmYl1QTUD1xHfg

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