A project on

“A STUDY ON EVOLUTION OF BANKING IN INDIA: A CASE FOR

DIGITALIZATION”

A project submitted to

University of Mumbai for partial completion of the degree of

Bachelor in Accounting and Finance

Under the faculty of commerce

By

YOGITA KESHAV REWALE

Under the guidance of

PROF. NEETU GIDWANI

VEDANTA COLLEGE

(Vithalwadi Station Road,

Vithalwadi West, 421003)

March 2024
 A project on

“A STUDY ON EVOLUTION OF BANKING IN INDIA: A CASE FOR

DIGITALIZATION”

A project submitted to

University of Mumbai for partial completion of the degree of

Bachelor in Accounting and Finance

Under the faculty of commerce

By

YOGITA KESHAV REWALE

Under the guidance of

PROF. NEETU GIDWANI

VEDANTA COLLEGE

(Vithalwadi Station Road,

Vithalwadi West, 421003)

March 2024

2
 Certificate

This is to certify that Miss. YOGITA KESHAV REWALE has worked and duly completed
her/his Project Work for the degree of Bachelor’s in Management Studies under the Faculty
of Commerce in the subject of PROJECT WORK IN Accounting and Finance and her
project is entitled, “EVOLUTION OF BANKING IN INDIA: A CASE FOR
DIGITALIZATION” under My Supervision.
I further certify that the entire work has been done by the learner under my guidance and that
no partof it has been submitted previously for any Degree of any University.
It is her own work and facts reported by her personal findings and investigations.

PROF. NEETU GIDWANI

Seal of the
College

Date of submission:

3
 Declaration by learner

I the undersigned Miss. YOGITA KESHAV REWALE here by, declare that the work
embodied in this project work titled “A STUDY ON EVOLUTION OF BANKING IN
INDIA: ACASE FOR DIGITALIZATION”, forms my own contribution to the research

work carried out under the guidance of PROF. Neetu Gidwani is a result of my own
research work and has not been previously submitted to any other University for any
other Degree to this or any other University.
Wherever reference has been made to previous works of others, it has been clearly
indicatedas such and included in the bibliography.

I, here by further declare that all information of this document has been obtained and
presented in accordance with academic rules and ethical conduct.

YOGITA KESHAV REWALE

CERTIFIED BY
PROF. NEETU GIDWANI

4
 Acknowledgment

To list who all have helped me is difficult because they are so numerous, and the depth is so
enormous.
I would like to acknowledge the following as being idealistic channels and fresh dimensions in
the completion of this project.
I take this opportunity to thank the University of Mumbai for giving me chance to do this
project.
I would like to thank my Principal. Dr Sangeeta Kohli for providing the necessary facilities
required for completion of this project.
I take this opportunity to thank our Vice Principal. Dr Kiran Menghani, for his moral support
and guidance.
I would also like to express my sincere gratitude towards my project guide PROF. Neetu
Gidwani whose guidance and care made the project successful.

I would like to thank my College Library, for having provided various reference books and
magazines related to my project.
Lastly, I would like to thank each and every person who directly or indirectly helped me in the
completion of the project especially My Parents and Peers who supported me throughout my
project.

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 Index

Sr.No Chapter Name

1 INTRODUCTION TO BANKING

2 REVIEW OF LITERATURE

3 RESEARCH METHODOLOGY

4 DATA ANALYSIS AND INTERPRETATION

5 CONCLUSION AND SUGGESTIONS

6 BIBLOGRAPHY

7 APPENDIX

6
 Chapter no. 1 Introduction to Banking

The banking system is considered almost as old as civilization and has existed in varied forms,
and the banking system in India is no exception to that. The banking system of a country
upholds its economic development. Considering the economic condition of people, the need
for financial services and the advancements in technology that followed, the banking sector
inIndia has gone through major transformations over the past five centuries. There you must
understand the different types of banking systems in India.

A bank is a financial intermediary for the safeguarding, transferring, exchanging, or lending

of money. Banks distribute “money” - the medium of exchange. A bank is a business and banks
sell their services to earn money, and they need to market and manage those services in a
competitive field.

Meaning

A bank may be defined as an institution that accepts deposits, makes loans, pays checks and
provides financial services. A bank is a financial intermediary for the safeguarding,
transferring, exchanging, or lending of money. A primary role of banks is connecting those
with funds, such as investors and depositors, to those seeking funds, such as individuals or
businesses needing loans. A bank is a connection between customers that have capital
deficitsand customers with capital surpluses.

Banks distribute the medium of exchange. Banking is a business. Banks sell their services to
earn money, and they must market and manage those services in a competitive field. Banks
are financial intermediaries that safeguard, transfer, exchange, and lend money and like other
businesses that must earn a profit to survive.

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 1.1 Traditional Banking:

In traditional banking systems, a customer by opening bank account in banks, take the facility
of saving his money by depositing money in local bank. He/she could withdraw his/her money
through checks, counter payment and through bank draft. He/she had to meet the bank manager
and tell his/her problem. He can take the physical help for getting loan from bank. Bank locations
and branch locations offer a full range of services to the customer. Physical bank locations are
fully staffed with knowledgeable employees ranging from tellers to loan officers. But whatever
the service they want one has to be physically present on bank to get the service. This sort of
bank has a fix time in which they work. So no banking facilities were available after that time.

1.2 Modern Banking:

Modern Banking Systems also known as E-banking systems is a Windows access, full point-
and-click, on premise provider offering Core Data Processing Solutions, Item Capture,
Imaging Solutions, and Management Information Systems. All of these programs are an
integral part of the core solution. Modern banking includes: Internet Banking, Telephone/PC
Banking, Network Systems and more! Customer gets his bank account ID and password and
he/she can check his account, pay his bill and print his/her receipt through his/her home
personal computer which is connected with Internet. E-banking is development of today’s
banking system. In other words-banking is electronic banking whose facility, can be taken
through your regular broadband Internet connects. It is available 24 hours a day. 7 days a week.
So customer can do their jobs whenever they are free. They don’t have to be bothered on their
office time to pay for bills or withdraw cash etc. on their work time. Electronic bankingsystems
consist of a service that allows you to conduct transactions without physically being in a bank
branch.

1.2.1 Challenges faced by Modern Banking World:

There are many challenges of today’s modern banking world and few of them we will
discuss here. The first challenge regarding modern Banking world is;

8
1. Consumer expectations;
These days, consumer expectation is a major challenge that modern banking is facing today
and the majority of the banks are not able to deliver the quality of service that consumers are
demanding in today’s modern banking world and a majority of the banks are feeling the
pressure, especially in regards to technology.

Banks are unable to provide ease of access to the customer regarding modern banking in
today’s world like easy to use online banking that what customers are demand today. And also
the challenges banks are facing regarding consumerexpectations is the mobile banking app
that mobile banking app should be friendly and easy to use.

2. Increasing Competition;

The second challenge regarding the modern banking world is increasing competition between
the banks. Different Financial Institutions like Commercial banks, credit unions, Fin Techs,
and national banks all are competing for the same customers in today’s modern banking world.
New products are introducing day by day by the different banks that increase the competition
between the banks in today’s era of the modern banking world.

3. Cyber-Security Issues in Banking;

Cyber-attacks are increasingly seen as a top concern issue for bankers and also the banking
sector is the most single targeted area by hackers and fraudsters for obvious reasons in today’s
modern banking world. According to Casey Morella says: “Banks face a delicate balance
between customer experience and fraud management: while practices of prevention can create
friction and a declined customer is often an unhappy customer, fraud events can result in lost
banker- customer relationships.”

There is a $2.1 trillion financial crime cost of the global economy is recorded every year that
is more than the combined GDP of Saudi Arabia, Pakistan, Switzerland, and Ireland. In
today’s Era of the modern banking world, Fraud detection and security issues are a big
and costly headache for the banking industry.

9
 Today majority of the Banking customers are moving away from using cash andchecks and
relying more on electronic banking to complete transactions. In response to this shift, financial
institutions continue to develop more web portalsand mobile apps to compete with each other.
Although the aim of these apps andportals is providing convenience and enhancing the
customer experience, on the other hand, they pose a unique risk in terms of cyber security.

According to the study, about 85% of the tested web apps had flaws and a lack of secure data
storage to ineffective cryptography that would permit cyber- attacks against users. There are
numerous reason that allows the cyber attacker for getting access the customer information:

 Lack of server security.

 Insecure data storage.

 Leakage of data on user side.

 Inadequate encryption.

4. Faster Technological Changes

Banking can’t survive today without technology and also the fastest changes in the technology
day by day increases the competition between the financial institutions. With the fastest
changes in the technology new products are introduced day by day by the banks that increase
the competition between them. On the other hand, the fastest changes in technology in the
banking sector create easiness for the customer but it also creates a large competition between
the financial institutions.

4. Regulation;

Although for risk managers and industry analysts there is a slightly less of a concern,
bankers cite tightening regulatory requirements as sometimes costly, excessive, and
ineffective. While on the other hand bankers recognize the need for tougher controls,
concerns were raised about the volume and complexity of current regulation which was
stated to eat into overall industry margins and management time.

10
 Bankers are also concerned about the impact of rising regulatory requirements that are
imposed by the central bank on innovation and diversity, as well as their ability to compete
effectively against smaller players who are not exposed to the same regulatory inspection.

Although in today’s era of the modern banking world many banks have become more
conscious about the risk and also banks are adapting well to increasingly stringent
requirements, regulation continues to be a concern for banks who must invest a sizable
amountof time, money, and effort into meeting compliance standards.

In today era of modern banking world Regulatory requirements by the central bank continue
to increase on the banking sector, and also today need of banking sector is to spend a large part
of their discretionary budget on being compliant, and also bank needs to spend their
discretionary budget on building systems and processes to keep up with the growing
requirements. These regulatory challenges are continued to increase by the central bank, so
today the need for traditional banks is to constantly evaluate and improve their operations.

5. Political interference;

Another challenge regarding the modern banking world is political interference and also the
Bankers are complaining that political interference is now the biggest risk facing the banking
industry in which the Bankers expressed concern that due to the multitude of reasons
governments could interfere in the banking operations. The government could intervene in the
banking operations in such a way as raising revenues in a time of budget stress, increase
investor protection, and rebuild the national tax base. Bankers highlighted the impact of the
upcoming U.S. elections and also bankers highlighted the uncertainty in several political
environments including in Europe and across the Middle East, which could result in greater
interference over banking management, like banking lending policies and taxation. Due to the
political interference in the banking sectors, bankers are unable to conduct their business
activities smoothly as the bankers can run without political interference.

Nowadays due to the much of the political interference in banking activities Bankers are aware
of the potential for greater political interference in how they manage their day to day banking
operations, also the banks are aware that what should be the lending policies, and taxation
based on a host of macro and microeconomics factor.

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 1.3 Evolutionary Phases of Banking in India

Let’s take a look at the banking evolution in India from the time the first bank was established
in India to the current mobile banking era–what happened in between. The history of banking
in India can be broadly classified as:

1.6.1 The Pre-independence Phase (1770-1947):

The organized banking sector in India dates back to more than a century before independence
when the Bank of Hindustan–the first bank of India was established in 1770 in the then-Indian
capital, Calcutta. It failed in due course and was liquidated in 1832. Subsequently, several
banks like the General Bank of India (1786-1791) and the Oudh Commercial Bank (1881-
1958) established during the pre-independence era didn’t last very long either.

The Bank of Bengal, Bank of Bombay, and Bank of Madras, established by the East India
Company during the early to mid-1800s–together known as the Presidential Banks were
later merged in 1921 to form the Imperial Bank of India. It was later nationalized in 1955
and named the State Bank of India (SBI).In 1959, the SBI was given charge of 7
subsidiary banks, making it India’s largest Public Sector Bank (PSB).

12
 As many as 600 banks were founded during this period. While many major banks failed to
work due to a lack of proper management skills, machines, and technology which led to time-
consuming processes and human errors, leaving the Indian account holders fraud-prone. A few
banks survived the test of time and exist even today:

Between 1906 and 1911, inspired by the Swadeshi movement, several local businessmen and
political figures established banks for the Indian community. Many of these are still
operational.

During the First World War (1914-1918), till the end of the Second World War (1939-1945),
and two years later, until the independence of India, the banking system witnessed turbulent
times leading to the collapse of a large number of banks.

1.6.2 The Post-independence Phase (1947-1991):

It is one of the most important phases of the history of banking in India. Post- independence,
the evolution of the Indian banking system continued when the Government of India (GOI)
adopted the approach of a mixed economy in 1948 with extensive intervention in markets to
strengthen the economy. The Reserve Bank of India (est. 1935) was nationalized in 1949, and
it was empowered to regulate, control, and inspect all banks in India.

13
1.6.3 Nationalization in 1969:

In the 1960s, the RBI had become a large employer, and the Indian banking industry had begun
playing an important role in supporting economic development. Yet, except for SBI, most
banks continued to be run by private entities.

The Government of India issued the Banking Companies (Acquisition and Transfer of
Undertakings) Ordinance in 1969 and nationalized the 14 largest commercial banks inIndia at
that time.

1.6.4 Nationalization 1980:

The second wave of Nationalization followed in 1980 with 6 more commercial banks, which
later became an integral part of the history of banking in India.

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1.6.5 Reasons for nationalization of banks in India:

The nationalization of Indian banks was a major development in the course of the evolving
Indian banking industry. It also impacted the functioning of various types of banks. To
understand the impact, it caused and played a major role in shaping the industry, let’s deep-
dive into the scenarios that led to it. There was adire need to:

 Promote the economic development of the country

 Develop confidence in the banking system of India

 Prevent the concentration of economic power in the hands of a select few

 Improve the efficiency of the banking industry

 Create a socio-economic balance

 Mobilize the national savings and channel them into productive purposes

 Sectors such as exports, agriculture, and small-scale industries were lagging behind

 Serve the large masses of the rural population. 

1.6.6 Positive impacts of nationalization:

The nationalization of the Indian banks was a major milestone in the evolution of banking in
India that played a major role in guiding its future course. The nationalization of banks in India
became a milestone step in the direction of financial prosperity, especially in rural India, when
there were no major banks. The nationalized banks in India helped to improve the efficiency
of the banking system.

It also boosted the confidence of people in banks. The lagging sectors like small industries and
agriculture got a substantial boost. The nationalized banks also raised the funds thus helping
the Indian economy grow by leaps and bounds. After the nationalization, different types of
banks in India were established. Currently, there are 12 nationalized banks in India. Generally,
the supply, product range and reach of banking in India is fairly mature-even though reach in
rural India and to the poor still remains a challenge. The government has developed initiatives
to address this through the State Bank of India expanding its branch network and through the
National Bank for Agriculture and Rural Development (NABARD) with facilities like
microfinance.
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1.6.7 Liberalization in 1993:

In 1993, the GOI adopted economic liberalization that brought about a massive change in its
economic policies to enhance the participation of private and international investments. The
RBI approved 10 private banks in India:

In a few years, Kotak Mahindra Bank (2001), Yes Bank (2004), IDFC (2015), joined the
league.

1.6.8 Positive impacts of liberalization:

Here’s how liberalization revolutionized the Indian banking picture:

 Revitalized the banking sector and led to the rapid and strong growth of government
banks, foreign banks, and private banks in India

 A modern and tech-based approach started setting into traditional banks

 Paved path for Payments banks

 Small finance banks came into existence

 The digitalization of bank transactions and operations became a norm

 Foreign banks such as Bank of America, Citibank, HSBC, etc., set up branches in India.
Currently, there are 46 international banks in the country.

 Nationalization of banks took a pause. Instead, the Indian banking sectorwitnessed several
mergers in the public sector banks.

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1.4 Different types of banks in India

Banks in India are classified into 5 types namely Commercial Bank, Co- operative Bank,
Specialized Banks, Payments Bank, Small Finance Bank. The most widely known Banks fall
under the Commercial Bank Category. Commercial Banks include Private Sector Banks,
Public Sector banks, Regional Rural Banks and Foreign Banks. Co-operative Banks were set
up for the welfareof the society. They exist in the form of Urban Co-operative Banks and Rural
Co-operative.

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Commercial Banks

Commercial banks in India function solely to generate profits by accepting deposits and giving
out loans. Commercial banks are regulated by the Banking Regulation Act of 1949. Their
primary function involves collecting deposits and offering loans to various entities like
people,corporations, and governments. Commercial banks can be owned by the government
or by private entities and are grouped into 4 categories:

Public sector banks:

These are the banks in which the GOI owns the majority of the stock. Public sector banks in
India function under the government to establish trust in the bank customers that their money
is safe. The government issues financial guidelines for public sector banks in India. The public
sector banks charge less for their services than private banks in India. These banks also
introduce various financial schemes for public benefit.

Private sector banks:

In these banks, a private entity, an individual, or a group of people own the majority of the
stock. The RBI lays the guiding rules for the private sector banks, which are the same for all
banks in India.

Regional rural banks:

These are unique commercial banks that lend at a reduced rate for agriculturalpurposes in rural
areas to boost the rural economy.

Foreign banks:

These are banks that are headquartered overseas with branches in India.

Co-Operative Banks:

Co-operative banks were set up to enhance social welfare by providing short- term low-interest
loans to agriculture and related industries. Co-operative banks are financial entities established
on a cooperative basis and belong to their members. This means that the customers of a
cooperative bank are also its owners. These can be further categorized as:

18
  Rural
These mainly finance agriculture-based activities, including farming, dairy, and fish culture,
along with small-scale industries and self-employment activities.

 Urban
These banks finance people for self-employment, industries, small-scale units, and home
finance.

Specialized Banks

Between 1982-1990, the government established several specialized banking institutions with
specific requirements for sectors like agriculture, foreign trade, housing, and small-scale
industries. And the evolution of financial services in India began with noteworthy financial
institutions like:

 NABARD (National Bank for Agriculture and Rural Development,1982) to support

agricultural activities

 EXIM Bank (Export-Import Bank of India, 1982) to promote export and import

 National Housing Bank (1988) to finance housing projects

 SIDBI (Small Industries Development Bank of India, 1990) to fund small-scale industries.

Payments Banks

Payments banks are a newer genre of banks conceptualized by the RBI in 2014 to operate on
a smaller scale with minimal credit risk. The main objective was to advance financial inclusion
by offering banking and financial services to the unbanked and under banked segments.
Payments banks come with certain limitations they can accept deposits of only up to ₹2
lakhsper customer and can’t issue loans or credit cards. However, they can offer both current
and savings accounts, issue ATM and debit cards, and offer net banking and mobile banking.
The convenience of making online payments through mobile apps marked the evolution of e-
banking in India.

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 India currently has 6 Payments banks:

Small Finance Banks

Small finance banks were granted approval by the RBI in 2016 to extend financial inclusion
to people who are not served by regular banks. It’s a niche category of banks that provides
savings facilities and credit to small businesses, small and marginal farmers, and micro and small
industries through modern technology at low-cost operations.

Here’re some of the operational small finance banks in India:

1.5 Digital banking in India

Banks are not just part of our lives, but have a significant role in our daily lives. Banks always
try to adopt latest technologies to enhance customer experience. Digitalization is not an option
for banking industry, rather it is inevitable. The buzzword in India now a day is creating a
cashless economy. The successful implementation of demonetization, leads the Government
to implement digital transactions. Digitalization is the process of converting data into digital
format. Digitalization means the adoption of technology. The main objective of the
government of India is make 25 billion digital transactions through multiple factors.

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Digitalization of banking requires platforms like Unified Payment Interface(UPI), Aadhar Pay,
Debit Cards and Immediate Payment Service (IMPS). Digital banking may be viewedas
adoption of various existing and emerging technologies by the banks. In the present scenario,
we find ourselves in a digital wonderland, where the milkman accepts wallet payment withouta
fuss, a man buys a geometry set worth about Rs.100 using a credit cardand the vegetable
vendor uses QR code based “Scan and Pay” utility. The new innovative digital technologies
and futuristic thought processes have given birth to whole new businesses and social
dimensions. Make in India and Digital India is now the buzzwords to a bright and sustainable
industrial and financial progress of our nation. Digital banking provides solutions to bankers
for their short term and long term business and technological requirements. In the present
scenario, factors like enhancing of customer satisfaction, unifiedcustomer experiences, faster
output, infinite banking volumes, financial inclusion, operational efficiencies, scale of
economy etc. are being sought by leveraging digital banking technologies. The digital Indiais
the Indian government’s flagship programmed with a vision to convert India into a
digitallyempowered country. Faceless, paperless, cashless is requirement of India government.
Registration, Invoicing, Payment selection, Payment confirmation are the important phases of
digital payment system. This generally includes three electronic payment instruments like,
cash, cheque and card.

Digital banking basically means the digitization of all banking activities that were traditionally
available only by visiting a bank branch–opening an account, transferring funds, making
payments, etc. Digital banking involves high levels of process automation and web-based
services and may include APIs enabling cross-institutional service composition to deliver
banking products and provide transactions. It provides the ability for users to access financial
data through desktop, mobile and ATM services.

Digital banking started taking shape in India during the late 1990s. ICICI bank was the first
one to introduce this service to their retail customers. However, it gained popularity in 1999
with reduced internet charges and increased awareness.

By the 1990s the Internet became widely available and online banking started becoming the
norm. The improvement of broadband and ecommerce systems in the early 2000s led to
what resembled the modern digital banking world today. The proliferation of smartphones
through the next decade opened the door for transactions on the go beyond ATM machines.
Over 60% of consumers now use their smartphones as the preferred method for digital
banking.
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 In 2016, the GOI launched the UPI (Unified Payment Interface) System and BHIM by the
National Payments Corporation of India (NPCI), setting off the digital payments revolution
with what we popularly known as mobile banking.

In 2021, Niti Aayog proposed setting up full-stack ‘digital banks’, which will entirely rely on
the internet to offer their services and not on their physical branches. This is expected to
revolutionize digital banking in India.

1.5.1 ROLE OF DIGITIZATION IN INDIAN BANKING:

Banks in India as a whole were very reluctant to adopt the changes brought about by
technological advancement. A number of factors brought about the mechanization and
digitization in banking industry in India. The putting in place standard cheque encoders was
the first step forward in digital transformation in banking. Magnetic Ink Character Recognition
(MICR) helps in the sorting and processing of cheques with each bank branch having an MICR
code. The next step was more of a necessity than an innovation. Banking is a respective job
and therefore a labor intensive one where the worker is prone to making mistakes. In order to
minimize errors and speed up the process, banks began using computer technology with
standard personal computers and then set up their own local area networks (LAN). As the
networks grew and banks began to connect together, Core banking came into being.
Centralized Online Real time Exchange(CORE) banking thus allowed customers to perform
financial transactions and access their account from any of the participating branches. These
services made it easier for customers to operate their account and slowly led to the coining
of the phrase: Anytime, Anywhere Banking”.

Then Automated Teller Machine (ATMs) arrived on the scene and electronic fund transfers
were made possible. Online banking and Tele banking made their appearance in the 2000’s
and different modes of online fund transfers were instituted like Real Time Gross Settlement
(RTGS), Immediate Payment System(IMPS). National Electronics Fund Transfer (NEFT) and
National Electronic Clearing Service (NECS). Recent years have seen the growth in mobile
banking services and other innovative services online. The role of digitization of banking in
India that began in the 1080’s has certainly come a long way.

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1.5.2 Factors affect the scope of digital banking in India:

Education: A lack of knowledge about banking in itself is a hurdle. Many parts of India still
struggle with very low literacy rate. The lack of knowledge about computers and the use of
the internet is a challenge.

Fear: There are a number of unfounded fears individuals have about the use of the internet.
Cases of fraud are often increases and this adds to the fear factor, resulting in a number of ill-
informed customers being nervous to use digital banking.

Training: There is much resistance from within the banking industry itself. Employees are not
trained in the use of innovative technology. They are unable to utilize different features of
digital banking.

Following the advancements in technology, several fitness in the country have taken digital
banking to the next level in partnership with traditional banks to bring an array of financial
services.

1.5.3 Digital banking trends in India:

Digital India in the banking sector has grown sharply in recent times. Some trends in digital
banking in India are:

 Increase in Customers: The government’s encouragement to use electronic wallets has

contributed much to people adopting the use of technology in financial transactions.

 Chat Bots: A number of banks have already employed chat bots in their customer care
operations. There is steady increase in the number of chat bots employed as well as
improvements in their speed of response, quality of interaction and the quality of services
rendered.
 Merge Physical and Digital Process: Many banks today offer a mixed physical and digital
process to their customers. The customers could walk into the bank and then use devices there
to carry out their transactions. In the Indian context we will certainly see a steady increase in
this kind of service especially in the rural areas.

23
  Mobile Technology: The proliferation of mobile phones and the easy and cheap availability
of internet have meant that the banking sector had to provide digital services via mobile
phones. A number of banks have developed apps to help customers handle banking
transactions on their mobile phones. This trend will only continue.

 End to End Digital Banking in India: A number of customers are already using devices to
handle their banking tasks. Banks have come to realize that digitization is the only way
forward. Hence a number of banks have already started on the path of end to end digitization
in their effort to provide all kinds of services over the internet resulting in paperless
transactions.

1.5.4 What Encouraged and Accelerated this Massive Shift to Digital Banking?

Shri Shaktikanta Das, Governor, Reserve Bank of India, attributes the growth in digital
banking to 'higher levels of sustainable development and financial inclusion.’ Deep telecom
penetration, the availability of the internet and the ready adaptation of technology has
accelerated credit access and efficient payment systems for now and the future of digital
banking are all responsible for this flourishing growth. The pandemic acted as a catalyst for
this transformation.

Here is a quick check of the major factors:

 Transformation in Banking: The advent of new technologically powered payment

methods like digital currency, block chain and distributed ledger systems has enabled the
adoption of fintech (financial technology).

 Willingness to adopt: Last year 93% of payments were made through digital methods and
more than 50% of these transactions were done via QR Code. The use of cash was the third
most popular option, and the use of cards went down further. The most active users are
Gen-Z (ages 18 to 25) with a 37 per cent and 48 per cent Millennial (ages 26 to 43).
MasterCard Indian consumers’ payment preferences report.

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 Consumer comfort with digital payment methods: Consumers have access to wearable
technology, mobile wallets, credit cards and debit cards and QR codes that enable such
payments. The trust that consumers are showing in these payment modes should be
respected by fintech players, banks, regulators and most importantly thegovernment for
the strong future of the banking industry. 

 Growth in biometric payment: Consumers prefer biometric payment over cards or

devices. Also, there is growing trust in biometrics over two-factor authentication according
to the MasterCard Indian consumers’ payment preferences report.

 Readily using BNPL: Indian consumers have resisted a fairly high usage of BNPL (Buy
Now, Pay Later), and they reserve the payment mode for emergencies. There is a large
section that felt that they would use this option if it were backed by a major payment
network.

 Increase of digital tech talent: India is closing the digital gap in fintech with itsoptimized
skill sets of talented technology professionals.

 Nationwide financial inclusion: Fintech innovations like the Indian stack are speeding
greater financial inclusion even in the tier III+ sectors.

 Banks want sustainable growth: Financial institutes must display a robust growth model
based on efficiency and accessibility. Traditional banks recognized the role of digital
banking in this sphere.

 Covid-19 accelerated growth: During COVID 19 banks recognized the need to respond
to customer demand. Banks offered technology that provided financial safeguard, with
24x7 banking, credit, and direct benefit transfer among other services.

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1.5.5 The importance of digital banking in today’s world:

 Digital banking has become a boon at a time where travelling to the bank for a simple task of
transferring funds was a challenge. Now people can save on the travel time and conveyance
money. Moreover, it has become highly convenient for working class, elderly people, to carry
out their bank work from the comfort of their homes.

 Through digital banking, you no longer need to wait for the bank working hours to carry out
any bank work. Now you can do the required transactions whenever it is convenient to them,
24*7, even on holidays!

 You need not have to contact the bank alone to report lost or Credit Cards. Now one has the
additional option to report lost or stolen cards, activate cards, put misplaced cards on hold, and
request for a replacement of card from the click of a button online.

 Shopping online was practically non – existent few decades ago. Today, current business brands
like Amazon, Snap deal, eBay, etc. have become huge market grossers thanks only to digital
banking. They thrived into successful ventures, allowed start-up companies and different
industries to emulate them. In turn, they now give you a wider opportunity to shop online, as
well as plenty of brand options to consider!

 Digital banking, especially through mobile banking has helped the rural areas. Now, they don’t
have to worry about travelling long distances now, just to get to the closest bank especially
during any financial emergencies. In fact, the rural population, benefits the most from digital
banking as they have access to the simplest of banking transactions just with a click of a button.

 Filing your income tax returns traditionally meant endless paperwork. Now, IT returns can now
be filled, and subsequent tax payments can be done via digital banking. This reduces the
headache of tedious tax returns filling work. Also, government challans can be paid online.

 With currency being exchanged on a daily basis, there is a possibility you would come into
possession of counterfeit notes and fake currencies previously. However, in today’s time digital
banking eliminates that possibility when money transfers are done digitally.

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1.6 TYPES OF SERVICE BANKS PROVIDE TO TRANSFERMONEY

With the advent of technology, Indian Government is aggressively promoting digital

transactions. The launch of United Payments Interface (UPI) and Bharat Interface for Money
(BHIM) by National Payments Corporation of India (NPCI) are significant steps for
innovationin the Payment Systems domain. Today banks aim to provide fast, accurate and
quality banking experience to their customers. Today, the topmost agenda for all the banks in
India isdigitization. The banking sector has also changed, and one of the primary concerns that
technology has solved is the transfer of funds from one bank to another bank . Let us
understand more which better mode to transfer funds is.

DIFFERENT WAYS TO TRANSFER MONEY ONLINE :

Real-Time Gross Settlement (RTGS) :

It is the method of settling funds in real-time, on an order-by-order basis. To put it another

way, the request to move or settle funds is handled directly rather than in batches as it is
done in NEFT. The RTGS framework is optimized for high- volume transactions. As a result,
the minimum amount that can be sent via RTGS in a single day is Rs 2 lakh. The maximum
amount per day is Rs 10 lakh. On a working day, banks will use the RTGS service window for
consumer transactions from 8 a.m. to 6 p.m. Banks charge service charges forthe amount
depending on the value of the transaction. The charges differ with different banks and the
timing of transactions.

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National Electronic Fund Transfer (NEFT):

The National Electronic Fund Transfer System (NEFT) is an electronic fund transfer system
that settles transactions in batches. NEFT service can be availed in a bank branch using cash,
cheque, or a DD. Also, it can be using a net in a bank branch using cash, cheque, or a DD.
Also, it can be using a net banking facility from your bank account. The maximum amount
you can submit through NEFT in cash is Rs 50,000. Banks have been instructed not to
charge their savings bank account holders any fees for NEFT funds transactions initiated
online from January 1, 2020. NEFT facilities are now available all the time, i.e. 24×7, 365
days.

Immediate Payment Service (IMPS):

Even on Sundays and holidays, IMPS is available 24 hours a day, seven days a week. It is a
perfect banking network in case of an emergency because it transfers funds instantly. The
regular IMPS fund transfer cap is Rs.2 lakh. In IMPS, the minimum transaction value is Rupee
1. If transfers are made using a mobile number and MMID, the maximum limit isonly
Rs10,000. The IMPS fund transfer is managed by the National Payments Corporation ofIndia
(NPCI). Individual banks set their own fees for remittances through IMPS.

Unified Payments Interface (UPI):

UPI is a mobile-based instant real-time payment system for transferring funds between bank
accounts. UPI enables bank account holders from different banks to send and receive money
using only their Aadhar Unique Identification number, mobile phone number, or virtual
payment address, without having to enter bank account details. Popular UPI apps are BHIM
PhonePay, Google Pay.

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 1.8 Online banking

Online banking, also known as internet banking, web banking or home banking, is anelectronic
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 to
provide customers access to banking services in addition to or in place of traditional branch
banking. Online banking significantly reduces the banks' operating cost by reducing reliance
on a branch network and offers greater convenience to some customers by lessening the need
to visit a branch bank as well as the convenience of being able to perform banking transactions
even when branches are closed. Internet banking provides personal and corporate banking
services offering features such as viewing account balances, obtaining statements, checking
recent transactions, transferring money between accounts, and making payments.
Some banks operate exclusively online, with no physical branch. These banks handle customer
service by phone, email, or online chat. Online banking is frequently performed on mobile
devices now that Wi-Fi and 5G networks are widely available. It can also be done on a desktop
computer.
These banks may not provide direct automatic teller machine (ATM) access but will make
provisions for consumers to use ATMs at other banks and retail stores. They may reimburse
consumers for some of the ATM fees charged by other financial institutions. Reduced
overhead costs associated with not having physical branches typically allow online banks to
offer consumers significant savings on banking fees. They also offer higher interest rates on
accounts.

1.8.1 Advantages of online banking

In addition to being able to bank at any time, from anywhere, there are other advantages to
banking online. You may also be able to:

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 Pay bills online

This might be one of the top advantages of online banking because you don’t have to take time
out of your day to go to the bank. You can simply log into your account and pay your bill
online right away. For increased efficiency, you may also set up automated bill payments,
which helps you manage your cash flow when you have monthly payments to and from
vendors.

Transfer money

You may need to do a rapid money transfer to a client or vendor, or you may need to transfer
money from one account to another. Instead of sending a registered cheque and waiting for it
to clear, you may securely transfer the money online.

Deposit cheques online

Rather than driving to a bank branch and waiting in line, you may be able to deposit cheques
online in minutes. And because most financial institutions have an app that replicates its
services from your phone, you have the ability to always bank on the go. Plus, some banks
offer 24/7 customer service, so you can speak to a customer service representative at any time.

Lower your overhead fees

If your business banks online, your banking fees may be lower, as online banks may not have
to pay for the cost and upkeep of branches, and those savings may be transferred to you. Plus,
they may have more no-fee options that add to your savings.

1.8.2 Disadvantages of online banking:

While online banking is always improving, there are some disadvantages for business owners
reliant on immediate and constant access to their banking services.

Technology disruptions

Online banking relies on a strong internet connection. If your internet is disrupted by a power
outage, server issues at your bank, or if you’re in a remote location, your ability to access your

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 accounts might be affected. Scheduled site maintenance also means you can’t access your
accounts and may have to seek an alternative.

Lack of a personal relationship

A personal relationship with your bank may be able to offer an advantage over online banking.
If you need a business loan, a new line of credit, a waived fee orto make changes to your
current banking needs, having that relationship can help.

In-person banking relationships can also help you craft a business accounttailored to your
specific needs. They can also make notes in your files about cheques, cash deposits and
international payments so you can avoid extended holds on your money.

An ideal relationship would be a blend of online banking for your day-to-day transactions and
a personal relationship with your banker to assist with bigger needs. That way, you have
multiple options to support your business.

Privacy and security concerns:

 Financial institutions have very good security, but no system is foolproof. Valuable
information is always prone to hacks, but you might be able to prevent this if you:

 Always use the mobile app and the website directly. You should see a small lock to the left of
the search bar, which indicates the site is secure.

 Make sure you have a strong password based on a combination of numbers, symbols and
letters. It’s also important to change your password regularly.

 Do not click on any links in text messages if you haven’t agreed to that method of
communication.

 Use two-step authentication, which adds an extra layer of security.

Limited services:

Online banking features a lot of services, but some of them still require business owners to go
into banks to “wet sign” documents. This includes loan and credit applications, a large cash
withdrawal or large deposits. But as online banking technology continues to evolve, you
mayeventually be able to electronically sign for these in the future.

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 These days, banks know business owners want the ease and convenience of online banking,
so they’re constantly upgrading and improving their digital assets. You may take advantage of
this rapidly changing banking technology and tailor an online banking system that is uniqueto
your business needs.

Digital payment

Digital payments are transactions that take place via digital or online modes, with no physical
exchange of money involved. This means that both parties, the payer and the payee, use
electronic mediums to exchange money.

The Government of India has been undertaking several measures to promote and encourage
digital payments in the country. As part of the ‘Digital India’ campaign, the government has
an aim to create a ‘digitally empowered’ economy that is ‘Faceless, Paperless, and Cashless’.
There are various types and methods of digital payments.

It is estimated that India’s digital payments industry will grow to more than 300% of its current
size by 2025. The growth arc of digital payments is impressive, especially considering India’s
previously large unbanked population. With a customer-centric attitude, India’s digital
payments industry is utilizing solutions from banks, fitness, and the government, to make the
digital payment experience as seamless and as secure as possible. For financial services in the
country, the opportunities in such a dynamic, fast-paced market.

1.9.1 Digital Payment Modes in India:

Various initiatives to improve digital payment systems in India are as follows:

Banking Cards:
Banking cards offer consumers more security, convenience, and control than any other
payment method. The wide variety of cards available – including credit, debit and prepaid –
offers enormous flexibility, as well. These cards provide 2 factor authentications for secure
payments e.g. secure PIN and OTP. RuPay, Visa, MasterCard are some of the example of card
payment systems. Payment cards give people the power to purchase items in stores, on the
Internet, through mail-order catalogues and over the telephone. They save both customers
andmerchants’ time and money, and thus enable ease of transaction.

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USSD:
The innovative payment service *99# works on Unstructured Supplementary Service Data
(USSD) channel. This service allows mobile banking transactions using basic feature mobile
phone. There is no need to have mobile internet data facility for using USSD based mobile
banking. It is envisioned to provide financial deepening and inclusion of under banked society
in the mainstream banking services.

AEPS:
Aadhar Enabled Payment System (AEPS) is a bank led model which allows online
interoperable financial transaction at PoS (Point of Sale / Micro ATM) through the Business
Correspondent (BC)/Bank Mitra of any bank using the Aadhar authentication.

UPI:
Unified Payments Interface (UPI) is a system that powers multiple bank accounts into a single
mobile application (of any participating bank), merging several banking features, seamless
fund routing merchant payments into one hood. It also caters to the “Peer to Peer” collect
request which can be scheduled and paid as per requirement and convenience. Each Bank
provides its own UPI App for Android, Windows and iOS mobile platform(s).

Mobile Wallets:
A mobile wallet is a way to carry cash in digital format. You can link your credit card or debit
card information in mobile device to mobile wallet application or you can transfer moneyonline
to mobile wallet. Instead of using your physical plastic card to make purchases, you can pay
with your Smartphone, tablet, or smart watch. An individual’s account is required to be linked
to the digital wallet to load money in it. Most banks have their e-wallets and some private
companies. e.g. Paytm, Free charge, Mobikwik, Oxygen, mRupee, Airtel Money, Jio Money,
SBI Buddy, itz Cash, Citrus Pay, Vodafone M-Pesa, Axis Bank Lime, ICICI Pockets, SpeedPay
etc.

Banks Pre-paid Cards:

Spending money is loaded onto the prepaid card in advance with a bank account debit card if
you have “opted in” to your bank’s overdraft program. This means that your bank may charge
you a fee for covering the cost of a purchase or ATM withdrawal that exceeds what you have
in your account.

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 Point of Sale:
A point of sale (Po’s) is the place where sales are made. On a macro level, a PoSmay be a
mall, a market or a city. On a micro level, retailers consider a PoS to be the area where a
customer completes a transaction, such as a check out counter. It is also known as a point of
purchase.

Internet Banking:
Internet banking, also known as online banking, e-banking or virtual banking, is an
electronicpayment system that enables customers of a bank or other financial institution to
conduct a range of financial transactions through the financial institution’s website. It includes
National Electronic Fund Transfer (NEFT), Real Time Gross Settlement (RTGS), Electronic
ClearingSystem (ECS) and Immediate Payment Service (IMPS).

Mobile Banking:
Mobile banking is a service provided by a bank or other financial institution that allows its
customers to conduct different types of financial transactions remotely using a mobile device
such as a mobile phone or tablet. It uses software, usually called an app, provided by the banks
or financial institution for the purpose. Each Bank provides its own mobile banking App for
Android, Windows and iOS mobile platform(s).

Micro ATMs:
Micro ATM is a device that is used by a Million Business Correspondents (BC) to deliver basic
banking services. The platform enables Business Correspondents (who could be a local kirana
shop owner and will act as ‘micro-ATM’) to conduct instant transactions.

1.9.2 Some of the major challenges are:

Fraud and Security:

The security breaches and risks for data security is the biggest concern among the
consumers and can be considered as a key challenge for the adoption of digital payments.
Making a safer route for transactions is imperative and not a choice as hacking and security
breaches can cause financial as well as a reputational loss for the company.

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Awareness and Adoption:
India is a cash dominant society. Even though there is a rapid increase in digital payment
modes, there is still a lack of awareness among people concerning security, data privacy, etc.
which is leading them to believe that making payments via cards or cash is better than mobile
application. Consumers still don’t consider mobile wallets as a safe mode for payment and the
mobile wallet industry needs to invest a good amount of time and effort to overcome this.

Merchant Support:
Adopting mobile wallets is putting many merchants into the dilemma. Many merchants (from
small as well as big businesses) are still resisting upgrading to EMV standards and contactless
payments. This is resulting in customers sticking to the traditional/old methods of payments.

Compliance:
Mobile wallets need to be compliant with all legal requirements of government standards. The
mobile wallet industry should take needed efforts in the best interest of customers as well as
for themselves.

Compatibility:
Mobile wallets need to be compatible with all the mobile models and their operating systems.
The customer is the king and he is looking for a seamless and convenient way of digital
transaction, for which it is required that compatibility exists across all Operating Systems and
mobile devices.

Rise of UPI:
Unified Payment Interface is developed by NPCI, India and can be considered as the biggest
competitor for mobile wallets. Though UPI has its own share of problems, in the long run, it
can be definitely considered as a major challenge for mobile wallets.

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1.9.3 Importance of Digital Payments Cost Savings

Digital Payments will reduce a huge amount of cost that governments and companies used to
invest.

Accessibility and Convenience

Using digital payment modes is very easy. You can make online payments within a second. In
case of a contactless transaction, you need to hover your card over the payment equipment.
People can use it using any mobile device.

Lower Risk

Online payment gateway will securely send the important transaction details. There is no
specific time for making an online transaction, you can do it whenever you want.

Trace Everything

The best part of using digital payment mode is that you can trace your transaction.

1.9.4 Future of Digital Payment

After the arrival of COVID-19, the online payment industry is booming. Various digital
payment companies are doing their hardest to encourage digital payment methods. There is no
doubt that the post pandemic era will be the era of digital payment mode. There are several
enterprises that have introduced advanced payment terminals as technology progresses. This
payment terminals would make it easier for retailers to take payments via credit card.
Customers would now have the option to make deposits in a comfortable manner. As a
consequence, for small merchants, the digital payment mode will be a blessing in disguise.

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1.9.5 Various Modes of Digital payments

Formed in 2008, under the patronage of RBI and Indian Bank Association, NPCI hasembarked
on a machine for touching every Indian across its diverse range of digital payment items like
UPI (Unified Payment Interface), BHIM (RuPay, NETC, AePS (Aadhaar enabled Payment
System), BHIM Aadhaar, Bharat Billpay, NFS (National Financial Switch), NACH (National
Automated Clearing House), CTS, IMPS (Immediate Payment Service) and to facilitate Safe
and protected digital payments.

These services are helpful in

 Shift of money from person to person

 Person to business, such as kirana stores, petrol stations, recharges, e- commerce
 Business to business, such as a retailer to supplier or distributor
 Business to person as salaries, reimbursement, claim

1.9 Digital cash

Digital cash eliminates many problems associated with physical cash, such as misplacement
or the potential for money to be stolen or damaged. Additionally, digital cash can be traced
and accounted for more accurately in cases of disputes. As consumers find an increasing
number of purchasing opportunities at their fingertips, there is less need to carry physical
cashin their wallets.

Other indications that demand for digital cash is growing are highlighted by the use of peer-
to-peer payment systems such as PayPal and the rise of untraceable crypto currencies such as
bitcoin. Almost anything imaginable that can be paid with physical cash can theoretically be
paid with the swipe of a bank card, including parking meters. The problem is this technology
is still not omnipresent. Cash circulation grew in the United States by 42% between 2007 and
2012, with an average annual growth rate of 7%, according to the BBC. The concept of an all-
digital cash economy is no longer just a futuristic dream but it's still unlikely to outdate
physical cash in the near future. All digital banks are possible as a consumer option, but people
may still have a need for physical cash in certain situations. ATMs help banks cut overhead,
especially if they are available at various strategic locations beyond branch offices.

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The Reserve Bank of India is set to launch the pilot of its central bank digital currency (CBDC),
which it categorizes as legal tender in a digital form. Commonly known as the digitalrupee, it
will be exchangeable at par with existing currencies and will be considered acceptable for
payments and a safe store of value.

Also being called the e₹ or the digital rupee, CBDC issued by the RBI is aimed at creating an
additional option to use money and isn’t very different from the currently-issued banknotes;
only the digital rupee is expected to be transacted digitally and facilitate ease of use.

The digital rupee is the RBI’s accepted version of cryptocurrencies, which the central bank
has dismissed repeatedly and called a serious challenge to the stability of the financial system
of the country.

Being an electronic form of sovereign currency, the CDBC is being touted as safer than private
crypto currencies and here’s how the both will differ.

1.8.1 What Is Digital Rupee or Digital Currency?

A digital currency is any currency that is available entirely in electronic form. Currencies’
electronic types already predominate a large number of nations’ financial systems. Digital
currency, however, is exclusively exchanged through virtual means and does not leave a
computer network.

The three major varieties of digital currency are crypto currency, central bank digital currency
(CBDCs) and stable coins.
The foundation of crypto currency is provided by block chain technology which
is the most usual form of distributed ledger used by digital currencies. According to Coin
Market Cap, the availability of crypto currencies is more than21,000.

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1.10.2 Advantages of Digital Currency

Here are some of the advantages of digital currency:

Faster Mode of Payment

Digital currency can make your payments much faster than current means like automated
clearing houses or wire transfers that take days for financial institutions to confirm a
transaction.

Cheaper Global Transfers

At times global transactions can get very expensive. Individuals are charged high fees to move
funds from one nation to another, especially when it includes currency conversions. Digital
assets could interrupt this market by making the transaction cost-effective and quick.

24/7 Availability

Digital currency transactions work at the same speed i.e. 24 hours a day and seven days a
week. On the other hand, existing money transfers frequently take more time during weekends
and outside normal working hours because banks are shut and cannot confirm transactions.

No Manufacturing Required

Physical currencies have many requirements such as the establishment of physical

manufacturing facilities. Whereas, in digital currencies, no such expense is involved. Also,
digital currencies are immune to soiling or physical defects that are present in physical
currency.

Well-organized Government Payments

If the government developed a central bank of digital currency, it could send payments like
child benefits and food stamps, and tax refunds to people instantly, rather than trying to figure
out prepaid debit cards or mail them a check.

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1.10.3 Disadvantages of Digital Currency

Here’s a list of some drawbacks of digital currencies:

Options

The crypto popularity is a downside. According to the head of Sidley’s FinTech and Block
chain group Lilya Tessler, across different block chains, there are several digital currencies
being created with their own limitations.

It will take a certain amount of time to decide which digital currencies in certain cases might
be appropriate to use. It also includes whether a few are designed to scale for mass adoption.

Costly Transaction

Crypto uses block chain technology where computers must resolve complex equations to
validate and record transactions. This in turn takes a significant amount of electricity, the more
the transaction the more the expense.

However, this would probably not exist for the central bank of digital currencies as complex
consensus processes are not required and CBDC would likely oversee it.

Steep Learning Curve

On the part of the user, digital currencies require work to learn fundamental tasks like how to
open a digital wallet and securely store digital assets. For the wide adoption of digital
currencies, the system needs to be simplified.

Issues of Cyber security

The digital currency has made people constantly worry about cyber security and facing many
threats due to less secure methods to store this money. Cyber- attacks are probably increasing
and can also threaten digital currency users with virtual theft.

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 Chp No.2 Research Methodology

2.1 Objective of study

1. To study the overview of digitalization.

2. To study the digital banking impact on payment bank.
3. To study the digital strategy for public and private sector banks.
4. To study the future relationship of digital India and digitalization.
5. To study the opportunities and challenges of digital banks, digital payment sand digital cash.
6. To study the importance of digital payment application in e-commerce.
7. To study the measures taken by private and public sector banks against the frauds in
onlinebanking.
8. To find out whether India going cashless has helped our citizen

2.2 Scope of the study

The scope of this research is to identify the services provided by digital banking or online
banking and digital payment. This research is based on primary and secondary data. This study
focuses on dimension of services provided if banks, payments and cash becomes digital. It
aims to understand the skills of banks in the area of services are performing well and shows
the areas which requires to improve.

2.3 RESEARCH METHODOLOGY

Research methodology is a process used to collect information and data for the purpose of
making business decision. The methodology may include publication research, interviews,
surveys and other techniques, and could include both present and historical information.

Research design:
A research design is a systematic approach that a researcher uses to conduct a scientific study.it
is the overall synchronization of identified components and data resulting in a plausible
outcome. To conclusively come up with an authentic and accurate result.

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 This research includes survey and fact-finding inquires of different kind.

Source of data:

Primary data is the data which are collected through personal contact. Through questionnaire-
the questionnaire is written set of questions through personal contact- in personal interaction
ask question in face-to-face contact to other person.

Secondary data is the data which are available in the form of fact and figures. The source

of secondary data are:

 Websites

 Magazines

 Articles

Data collection:

1. Primary data

 Through interaction with people.

 Through questionnaire filled from the people

2. Secondary data

 Through internet
 Through books which cover banking factor

3.4 Types of data collected

1. Primary data:
The primary data are the first hand information gathered for research to solvethe need by
surveying the sampling units and collection of feedback from them involves the primary data
with structured queries will be prepared for the customers. There will be survey within the
customers giving the questionnaire. The questionnaire were structured non disguised
questionnaire which the questionnaire contained, were arranged in a specific order besides the
questions asked were logical for the study, no questions can be termed as irrelevant.

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 Sources of primary data:
 Personal interview
 Questionnaire

Personal interview

This method was the most appropriate way of survey, because by persona interview I came to
know about how the respondents feel about the banking companies. The personal interview is
conducting mainly for collectinginformation for fulfill of the questionnaire.

Questionnaire

This method proved to be better because it was not possible to interview every one and it was
less time consuming to fill up the questionnaire rather than answering the interviewer’s
questions. The questionnaire is to prepare to know awareness level among the people. The
questionnaire is fully focused for collecting the brand awareness information and findings the
market potential of digitalization.

In this method questionnaire were distributed to the respondents and they were asked to answer
the questions in the questionnaire. This questionnaire were
structured non disguised questionnaire because the questions which the questionnaire
contained, were arranged in a specific order every besides every questions asked were logical
for the study, no questions can be termed as irrelevant.

2. Secondary data

The secondary data is collected from the banks websites and other websites, through listing by
personal observation. The secondary data are collected by some other people for their workand
it already exists. The researcher started investigation by first examining the secondary data to
see whether the problem can be partly or fully solved by without collecting primary data. Since
the secondary data were not sufficient to solve the entire problem, so primary datawere not
sufficient were collected to fill the gap.

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 Sources of secondary data:

 Through internet
 Magazine

Data collection and instruments:

Questionnaire were designed as a main instrument to conduct survey. A questionnaire
constraint of 15 set of questions presented to respondents for their answer. The questionnaire
was non-disguised because the questionnaire was constructed so that the objective is clear to
the respondent. The respondents were aware of the objectives. They knew why they were asked
to fill the questionnaire. The questionnaire is used for the purpose of knowing the brand
awareness among digitalization of banks, payments, and cash of people of Mumbai city.

Field work:
Field work is done in this project individually with no biasness. The field work comprises of
filling of questionnaire by different sector individuals. The study involved a fieldwork where
the consumer contacted individually and were persuaded to discharge the information through
the questionnaire.

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 Chapter no.3 REVIEW OF LITERATURE

1. Author: Pandey and Rathore (2018)

In their study discussed the impact of digital payment system. Due to modernization and
globalization, it was very important for the people to accept the modern method of payment.
The study is based on secondary data and various literatures from past papers and government
data. All data collected has been analyzed and used to find the impact and adoption of digital
payments by the people.

2. Author: Pushpa S. Abbigeri and Rajeshwari M. Shettar (2018)

In their article, talked about how the Digital India flagship program attracted large number of
people to start using digital wallets, which people started to useas there was lots of cash back
offers and coupons. After the digital India flagship program a lot of mobile wallet companies
entered India and other methods such as UPI, NEFT to a surge. The initiative taken by the
government and RBI was being accepted by the people as they were using such methods.

3. Author: Shivathanu B. (2019)

In his study adoption of digital payment system in the era of demonetization emphasized on
how the digital payment system was used by the people or accepted by the people during
demonetization. It was based on a conceptual framework where the sample size was 766 .The
data analyzed suggested that behavioral intentions and innovation resistance had an impact on
the actual usage.

4. Author: Mamta, Prof. Hariom Tyagi and Dr. Abhishek Shukla (2016)

Title: “The Study of Electronic Payment Systems”.

This investigation aimed to identify the issues and challenges of electronic payment systems
and offer some answers for improve the epayment system quality. The successful
implementations of electronic payment systems depend on how the security and protection
dimensions perceived by consumers just as sellers are famously managed, thus would improve
the market confidence in the system.

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5. Author: Preeti Garg and Manvi Panchal (2016)

Title: “Study on Introduction of Cashless Economy in India 2016: Benefits and Challenge’s”.

This paper contemplated the perspectives on individuals on presentation ofcashless economy

in India. The investigation was led in Delhi area and information was gathered with the
assistance of organized poll and examined utilizing basic rate technique. Reactions from
respondents shows that cashless economy will help in checking dark cash, counterfeit’s
counterfeit money, battling against illegal intimidation, diminish money related burglary, helps
in improving financial development of our nation. Significant difficulties that can upset the
execution of the strategy are digital extortion, high ignorance rate, disposition of individuals,
absence of straightforwardness and effectiveness in digital payment system. The investigation
found that, the presentation of cashless economy in India can be viewed as a stage right way.
It helps in development and advancement of economy in India.

6. Author: Vidya Shree DV, Yamuna N. and Nitua Shree G (2015)

Title: “A Study on new Dynamics in Digital Payment System – with special reference to
Paytm and Pay U Money”.

The research paper is zeroing in on the effect of the new digital payments systems on clients
and issues experienced assuming any. The research found that, individuals are more mindful
about the online payments through portable applications and there is a more extensive
expansion in development rate. The research likewise found that, Paytm and Pay U cash is
giving simple payment structures contrasted with Digital payment system.

7. Author: Murli & Subbakrishna, 2012

Cash is the focal point of the fund flow in every business. However, cash has been used as a
narrow term representing currency notes or coins only. Therefore, to overcome this deficiency
Reserve Bank of India introduced number of e-banking initiatives to develop paperless
payment and the new settlement systems like Electronic Clearing System (Credit/Debit),
Electronic Fund Transfer (EFT), National Electronic Fund Transfer (NEFT), Real Time Gross
Settlement System (RTGS) etc. Now customers use internet banking facility as information
point and as counter of a bank as well.

46
 8. Author: Preeti Garg And Manvi Panchal (2016) –

Title: ‘Introduction of Digital Economy in India 2016’

The research scholars explain the benefits and challenges towards adoption of digital economy
in India. After demonetizing the Indian government has implemented major changes in their
economic environment of commerce. The government works on many policies to decline the
dependency on cash. And start many programmes at various levels to encourage the people to
do digital transaction to strengthen the digital economy in the interest of everyone. After all
this a large part of Indian population is still outside the scope of online transaction.

9. Author: K.Suma Velly and K.Hema Divya-(2018)

Title: “Digital Payment in India with Perspective of Consumer Adoption”

In this study, they said that due to demonetization it’s resulted tremendous growth in digital
payments. These transformations make a great change toward digital payments and make a
more transparency in transactions which empowersthe economy of the country. The purpose
of this study is to get a research the impact of demonetization on adoption of online payments
and digitization of payment system to analyses the level of adoption of digital payment system
by the customers’ E-payment system are important mechanism used by the individual and
organization as a convenient way of making payments over the internet and a same time a
gateway to technological advancement.

10. Author: Aditya Sharma (2015)

Title: ‘Digital India – A New Change In India Economy’

In this study he searches about the recently new concept about the adoption of digital India.
At the time of digital campaign in India 160 million Jan Dhan accounts 130 million direct
benefit transfer and 110 million insurance policies transfer in digital only in few weeks to give
power of digitalization. In 1986 in India the service of internet started from that starting till
today India growing at very high growth rate. He explains the 9 pillars of digital India. It is a
Indian Government initiatives to ensure government services are made easily available to the
people online in digital form by increasing internet connectivity.

47
11. Author: Dr. Arunangshu Giri and Ipsita Paria (2018

Title: “A Literature Review on Impact of Digitalization on Indian Rural Banking System and
Rural Economy”. The present paper focuses on the review and summarizes various studies
which were made by different researcher of different location across India on the impact of
digitalization on rural banking system of India. The study found that, digital banking is having
enormous potential to change the landscape of financial inclusion. The study also found that,
with the features as low cost, easyof use digital banking can accelerate the integration of
unbanked economy to themainstream.

12. Author: K. Hema Divya and K. Suma Vally (2018)

Title: “A Study on Digital Payments in India with Perspective of Consumer’s Adoption”.

The present paper focuses on the analysis of the adoption level of the digital payment systems
by customers. Primary data was collected from 183 respondents in Hyderabad. The collected
data through questionnaire were analyzed by using chi-square technique. The study found that,
the deployment of technology for digital payments have improved the performance of banking
sector and able to achieve the motive cash less country.

13. Author: Anthony Rahul Golden S. (2017)

Title: “An Overview of Digitalization in Indian Banking Sector”.

In this article an attempt has been made to study the overview of digitalization in Indian
Banking sector. Banks are not just a part of our lives but have a significant role in our daily
lives. Thus banks always try to adopt latest technologies to enhance customer experience. The
study found that, due to the adoption of this digitalization, the banking sectors in India face
some remarkable changes as well as hurdles. The study also found that, as we are in the digital
era, it is not possible to avoid the growth and services or digital banking.

48
 14. Author: Santiago Carbo - Valverde (2017)

Title: “The Impact on Digitalization on Banking and Financial Stability”.

In this article an attempt has been made to discuss the impact of digitalization on banking
activities and challenges that imposes for financial stability. The study found that,
digitalization is an opportunity to reduce marginal costs and increaseproductivity in financial
services.

15. Author: Martina Franciska and Dr. S. Sahayaselvi May - June2015.

Study focuses on secondary information and resources have been collected from books,
articles, journals and relevant pages Review with a view to the review and progress of one of
them. This article clarified the different forms of digital payment transfers used by ordinary
people in their day-to-day lives. A total of 4018 billion mobile banking transactions were
completed in 2015-16, compared to 60 billion in 2012-13. Digital payments to rural regions
are now extending the reach of mobile networks, the Internet and electricity. During the time
of demonetization, the Government of India compelled the people to do all trade directlyor
indirectly. India has more than 100 crore active network connections and more than 22 core
smartphone users. The cashless change is not only better than the cash exchange, but less time
consuming. So, there is no question that the upcoming transaction method is a cashless
transaction.

16. Author: Jayalakshmi. S and Parvathi. S, July 2019.

This article showed that digital payment is an effective means of doing business of all sectors
to reach out to prospective clients and to examine the idea of digital banking, digital payment
and digital payment methods. Digital payments have many benefits over cash, such as
simplicity, security and clarity. Slow internet access and extra costs for digital purchases are
a big barrier to the introduction of this digital payment system in India. In the next few years,
there will be a whole new way of transferring capital in the Indian economy.

49
17. Author: Dr Rajeshwari M May-June 2019.

This article explaining the operating cost of banks has been significantly decreased by Digital
Banking. This has made it easier for banks to charge lower service fees and provide higher
interest rates for depositors as well. The decrease in operational costs meant more benefit for
the banks. Digital transformation is moving from traditional banking to a digital world. This
paper covers the role of digitization in Indian banking, factors that affect the scope of digital
banking in India, and trends in digital banking in India. Data were derived from a number of
sources, such as journal journals, government publications from India, and various RBI
databases. The study also showed that the simple use of digital banking would drive the
integration of the unbanked economy into the mainstream.

18. Author: Sanaz Zarrin Kafsh (2015)

In this study the author conducted a study on "Developing Consumer Adoption Model on
Mobile Wallets in Canada"; 530 respondents were chosen for the convenience sample, and the
partial least squares model was then applied to test the data. According to the study, the
acceptance of digital payments can be predicted based on perceptions of usage, convenience
of use, and security.

19. Author: Kevin Foster, Scott Schuh, and Hanbing Zhang (2011)

In this study the authors looked at consumer payment methods for cash holdings and
withdrawals, which have been declining since 2010. In contrast to 2009, there was an increase
in card payment systems in 2010, which led to a decrease in the use of paper money. Since
2010, there has been an increase in the use of debit and credit cards as opposed to cash
transactions, which gradually declined and gave rise to prepaid payments.

20. Author: Nitsure (2014)

In this study the author highlighted the difficulties faced by the users using the e-payment
system in developing nations like India, which were brought on by the lack of widespread
internet and technological use. The article concentrated on important problems faced by the
users including security, regulations, etc. The author concluded that in a nation like India, there
is a significant risk that the underprivileged population will not have the opportunity to learn
about or receive any such information.

50
 Data Analysis and Interpretation

1. Gender (Male, Female)

Gender Percentage
Male 48.9 %
Female 51.4 %

Interpretation:

 51.4% are female respondents

 48.6% are male respondents

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 2. Occupation

Occupation Percentage
Student 62.9 %
Self Employed 31.4 %
Salaried 5.7%
House Wife 0%

Interpretation:
 31.4% respondents are salaried people
 62.9% respondents are students

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3. Age

Age Percentage
Below 20 Years 8.9 %
20 - 25 68.6 %
25 - 30 8.6 %
Above 30 Years 14.3 %

Interpretation:

 8.6% respondents are below 20 years

 68.6% respondents are 20-25 years
 8.6% respondents are 25-30 years
 14.3% respondents are above 30 years

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4. What is your reason behind your shift towards digital banking or online banking?

Shift Percentage
Convenience and efficiency 45.7 %
Safety and security 20 %
International transfers 11.4 %
Available 24*7 22.9%
Cost Saving 0%
Higher interest rates / lower fees 0%

Answer: People provided mixed opinions and many reasons for their shift. These are as
follows:

 Convenience and efficiency

 Safety and security
 International transfers
 Available 24*7
 Cost saving
 Higher interest rates / lower fees

54
5. What is your reason behind your shift towards digital payments?

Shift Percentage
No need to carry huge cash. 40 %
Cashback offers. 17.1 %
Easy and fast way to make payments. 14.3 %
Easy to track the record of Payments. 2.9 %
24*7 transfer. 20 %
Discounts and reward points. 5.7 %

Answer: People provided mixed opinions and many reasons for their shift. These are as
follows:
 No need to carry huge cash.
 Cashback offers.
 Easy and fast way to make payments.
 Easy to track the record of Payments.
 24*7 transfer.
 Discounts and reward points.
 Time saving.

55
6. Who/what influenced you to try online banking?

Shift Percentage
Friends / Family 71.4 %
Main Bank 17.1 %
Social Media 11.4 %

Interpretation:

 71.4% respondents are influenced by friends or family

 17.1% respondents are influenced by main bank
 11.4 % respondents are influenced by social media

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 7. Digital payment method used by respondents

Mode of payment Percentage

Paytm 22.9 %
Google Pay. 65.7 %
Debit Card 5.7 %
Credit Card 2.9 %
Other’s 2.9 %

Interpretation:

The above data has shown that Google Pay has been the most favorite app for digital payments

 22.9% people use paytm

 65.7% people use Google pay
 10% people use debit card
 7% people use credit card

57
8. Do you think that Digital Payments are safe enough?

Is it safe Percentage
Yes 97.1 %
No 2.9 %

Interpretation:

• From the above pie chart 97.1% respondents think that digital payments is safe
and 2.9% think that digital payments is not safe.

• 2.9% respondents think that digital payment is not safe because sometimes transaction
glitch occurs also accounts can get hacked

58
9. Do you think Digital cash can reduce or eliminate black money from India?

Replacement Percentage
Yes 62.9 %
No 37.1 %

Interpretation:

 62.9% respondents thinks digital payments can reduce or eliminate blackmoney from India.
 37.1% respondents said they don’t think it can help in reducing corruption or black money

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10. In how much time do you think India can achieve completely cashless economy?

Is it safe Percentage
Within 3 Year 20 %
5 – 10 Years 37.1 %
More than 10 Years 42.9 %

Interpretation:
 20% respondents said India can become completely cashless within 3 years.
 37.1% respondents said India can become completely cashless within 5-10 years.
 42.9% respondents said India can become completely cashless within more than 10years

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 11. What is the impact of COVID-19 on usage of digital payment?

Usage Percentage
More cash, Less digital payment 8.9 %
More digital, less cash payments 77.1 %
Only Digital, no cash payment 14.3 %

Interpretation:
 77.1% respondents used more digital payment and less cash while lockdown as it was
continent.
 14.3% respondents used only digital payment and no cash.
 8.6% respondents used more cash and less digital payment due to lack of knowledge.

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 12. Which mode of online money transfer do you often use?

Often use Percentage

NEFT 8.6 %
UPI 80 %
RTGS 5.7 %
IMPS 5.7 %

Interpretation:
 80% respondents use UPI for online money transfer
 8.6% respondents use NEFT for online money transfer
 5% respondents use IMPS for online money transfer
 7% respondents use for online money transfer

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 13. How often do you use digital payment?

Usage Percentage
Daily basis 71.4 %
Once in a week 20 %
Once in a month 8.9 %
Once in a year 0%

Interpretation:
 71.4% respondents use digital payment on daily basis
 20% respondents use digital payment once in a week
 8.6% respondents use digital payment once in a month
 0% respondents use digital payment once in a year

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 14. Challenges faced by customers while using digital banking?

Challenges faced Percentage

Security 22.9 %
Technical issue 71.4 %
Transaction Difficulty 5.7 %
Lack of Person banker relationship 0%

Interpretation:
 22.9% of respondents face security issue while using digital banking.
 71.4% of respondents face technical issue while using digital banking.
 0% of respondents face transactional difficulty while using digital banking.
 5.7% of respondents face lack of person banker relationship issue while using digital banking

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 Chapter no. 4.2 SWOT Analysis of Digital Banking

4.2.1 STRENGTH OF DIGITAL BANKING

From Customer’s Perspective:

Although Internet banking has provided abundant of services, below mentioned are some of
the major benefits to customers.

 On Demand Service: the major strength of using e-banking is that customer can do any
transaction at any suitable time. He/she is not bound to the timings of banks.

 Less Paper Work: There is less formality and instant result. Moreover, the paper work is also
reduced as the customers need not to fill the form for transfer/payments.

 Statements of all means available readily: A customer can download monthly/weekly or even
annual statements in the blink of an eye

 Disbursement of Funds throughout/outside the country: A customer can easily transfer the
money to any person, anywhere in the world

 Easy Payment of bills: Any kind of utility bills - electricity, water and telephone etc., education
fee, online shopping, funds transfer, reservation of tickets and brokerages in share market etc.
can be paid quickly. So, there is no need to wait in long queues.

 Customized Services: The customer is able to customize the desired services as per his/her
choice especially on Internet and mobile phones. The customers can change PIN/passwords
easily. Even on ATM s/he is able to change her/his PIN for security purpose. So the deployed
service delivery

From Banker’s Perspective:

 Less Operational Cost: The proper implementation of Electronic Banking System has been
facilitating the banks to improve their productivity and efficiency by reducing their operational
costs. In addition to above, the banks are also saving their costs in terms of deployment of
additional manpower to handle complex banking operations because the machines have the
capacity to replace the men which are engaged in doing hectic works such as processing of
huge data, preparation of various types of reports and management of information.

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 Increase in Productivity: The deployment of Electronic Banking Solutions has been helping
the banks to provide their services to various customers and this in turn has reduced the
workload on employees to some extent. The banks have been deploying their excess
manpower in new fields such as marketing of products, field survey and loan recoveries etc.
This has enhanced the productivity of the banks

 Aids in Economic Development: The deployment of Electronic Banking Services have been
acting as economy development agents to the Governments because funds can be transferred
instantaneously anywhere in India whenever required using NEFT and RTGS etc.

 Less Rush at the counters: Due to E-Banking, majority of works such as opening of new FD‟s,
Transfer of funds, opening of PPF accounts etc. can be handled by customers themselves. So
banks are relieved from such tasks and hence less crowded

4.2.2 WEAKNESS OF E-BANKING

 Lack of interaction: There is a lack of direct interaction with staff of bank. In case, if any
problem arises during net banking, the customer feels inconvenient and hence are discouraged
to use it freely.

 Higher Maintenance and initial setup cost: There is huge investment involved in hardware and
software setup. Moreover, even after making investments, the technology becomes obsolete
very frequently, a higher maintenance cost has to be spent regularly, which becomes difficult
for small banks.

 Fear of insecurity: Most of the customers are reluctant to use e-banking, as they have a fear of
failures of transactions, and they think there is lack of robust security measures.

 Vulnerable to loss of data: There is a possibility of loss of data due to technical fault/system
crash. However, backup methods are there, but still there is a need to be careful and banks
should employ staff to take the backups after every transaction.

 Vulnerable to cyber-attack: Highly secured mechanism needs to be built up and deployed to

save the customers from the cyber-attacks. Security measures such as bio-metric, digital
signatures should be made mandatory to use e-banking

 Training to customers: There is large sector of customers, who are not net savvy and are not
comfortable to use online services. Banks should hold practical training sessions for such
customers and should provide a manual to them to help them come out of the situation if they
got stuck somewhere while doing e-banking

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 4.2.3. OPPORTUNITIES

IT field is growing rapidly and new technology is available very fastly. New Technologies
has opened a door of opportunities to the banks as they can deploy them to provide
improvedservices, bring efficiency, transparency and even in better decision making. Some
of the opportunities are shortlisted below:

 Using IOT:
Internet of Things is the latest technological development in IT field. It is the interconnection
of things that communicate and transfer information with each other using internet. The
things can be CCTV camera, Wearable’s (e.g. wrist watches), smartphones, or anything.
These things capture the information and transfer them to other things (e.g. computer) and
can help in decision making. IOT senses and gathers data in the „physical‟ world and
converts the data into actionable, digital output. This technology can also gather other
insights, such asuser waiting time in banks, therefore banks can improve their customer
service on-site hiring more staff to liaise with customers. Banks can use
IOT in Risk and Fraud Detection. Eg If a person wants to obtain a loan from banks, Data
generated by IOT through electronics, sensors, s/w, wearable, spending patterns, general
image of customer in market, changes in working capital can be used to access financial
health and hence creditworthiness of a customer.

 Using Artificial Intelligence:

AI involves „the ability of machines to emulate human thinking, reasoning and decision -
making‟. Eg „intelligent assistant‟ powered by AI could let you interrogate your bank
accounts and credit card data and helps you manage your spending and budgets. AI also help
users to save small amounts of money with no effort. It connects to current account and the
AI learns your spending habits, allowing it to automatically deposit small amounts of money
into your linked savings account on a regular basis.

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 Using Block Chain:
Block chain technology is a very practical solution to the problem of storing, authenticating
and protecting data. A block chain is a distributed ledger technique in which all the members
participating in the network share transaction information between the parties. That is, block
chain is a distributed database that maintains a continuously growing list of data records that
are hardened against tampering and revision, even by operators of the data store’s nodes.
Modern electronic payment systems rely on trusted, central third parties to process payments
securely. This innovation made trading more convenient. In the financial sector, such as
interbank payment and global.

4.2.4 THREATS:

 Weak Communication System:

Most of the banks in the country currently employs communication system which is
vulnerable to breakdown. There is a need of strong and secure communication system which
should be available 24 hours a day such as VSAT, Leased line connections etc.

 Lack of Awareness regarding cyberLaws:

People hesitate to use e-banking services as they have a fear of fraudulent activities. This is
because of unawareness about legal framework of cyber laws. This can be bridged by
spreading awareness level among customers by conducting regular seminars, advertisements
in televisions, newspapers, articles in magazines and be a part of curriculum in
school/colleges/university level education etc.

 Poor Integration of E-banking services with other services:

To make efficient use of e-Banking Service as an integral service to customers, it is needed

that banks and Government agencies/ departments should collaborate with each other. This
is the integration of E-Governance service with Electronic Banking Service such as online
deposit of cheque revenue fees and utility bill paymentsEtc. This will lead into synergy in
the system.

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 Organizational, Operational and Legal Risks:
The e-banking is prone to various types of risks such as

a. Organizational Risk: With the introduction of technology, the distribution of work has
affected. It can result in poor distribution of manpower and financial resources. A good
management information system should be employed to overcome such risks

b. Operational Risks: E-banking services are prone to operational risks such as loss of data due
to human error, server breakdown, system failure, wrong entry of information etc. There is
need to deploy certain control mechanisms to check the continuity of services, data flow and
recovery of system in case of system failure etc.

69
 CHAPTER NO. 5 CONCLUSION AND SUGGESTION

5.1 FINDINGS OF THE STUDY

1. Digital banking has drastically reduced the operating costs of banks. This has made it possible
for banks to charge lower fees for services and also offer higher interest rates for deposits.
Lower operating costs have meant more profits for the banks.

2. With the increased convenience of anytime, anywhere banking, the number of customers has
increased for banks. Human error in calculations and recordkeeping is reduced. With records
of every transaction being maintained electronically, it is possible to generatereports and
analyze the data at any point and for different purposes.

3. The benefits of digital banking stress its importance by themselves. However the socio-
economic conditions we face add to the importance of digital banking in India. With a high
rate of crime and corruption, digital banking is a safe way to handle financial transactions.

4. Many cities are known for pickpockets who eye bulged wallets and hence the option of
paying by credit or debit card or through online wallets is a much safer option.

5. With more digital data available with banks, they can take data driven dynamic decisions by
using digital analytics. This benefits the both the customers and bank.

70
 5.2 SUGGESTIONS

1. Technical defaults should be evaded by employing well trained and expert technicians in
field of computers, so that loss of data can be avoided.

2. Seminars and workshops should be organized by the banking professionals on the

salubriousutilization of e-banking services especially for those who are ATMs or computer
illiterate.

3. E-banking services should be customized on basis of age, gender, vocation etc. so that needs
and requisites of people can be rewarded accordingly. Government should magnify
investments for the construction of well-furnished building and infrastructure.

4. It is important for banks to work on not only good website, social media connect and mobile
banking etc.

5. Banks must be careful regarding cyber threats; Banks should be prepared to handle cyber-
attacks. Design with user success as focus, content understandable by anybody, supported
with demos and help to reduce intimidation.

6. New regulations constrain banks to adopt their digital offerings, widening the competition
form new players.

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5..3 CONCLUSION

With the increasing usage of smart phones, digitalization of banking sector is inevitable to
catch up the increasing expectations of the world. It indeed reduced human errors and
increased convenience. With the help of digital banking, most businesses do not have to rely
on the bank operation timings. Now the transactions can be made even in the odd hours. There
are some transactions like paying bills or making regular payments that can be automated in
the digital banking platform. As a result, the businesses are able to save a lot of time on the
manual processes and this has a great impact on their productivity. The number of customer
base has also increased because of the convenience in 'Anywhere Banking'. Digitization has
reduced human error. It is possible to access and analyze the data anytime enabling a strong
reporting system. Digital banking is converting the brick and mortar banks into more greener
and efficient places to operate. There are a plethora of options that people can opt for when it
comes to banking. In the present scenario, people can check their bank account details, pay
their bills online, transfer money to other accounts and all these can be done very comfortable
at their residence. For this the only requirement is the internet connection.

Even with the certain difficulties people are still attracted towards the digital banking and
payment system. More and more people are getting towards the digital banking, cash and
payment system because of its ease of use, time saving, being cash less, no banking hours’
time bound. Because of covid-19 as the norm for them to social distancing, no touch services
the digital payment system usage increased with the highest rate. As part of the safety measures
people are using it more and more. After covid-19 every single shop has adopted thedigital
payment system for the receiving and paying the money.

The Government is deliberately moving people to accept digital payments at present, if it has
been mandatory before, with social distancing and the COVID- 19 crises. The offline-to-
online transition in payments has been around for a long time, but there has been an increased
change in customer behavior in the latest lock-down scenario attributed to COVID-19. NPCI
encouraged and urged customers and all service providers of critical services to move to
digital payment systems in order to remain secure.

72
We're starting to see solutions coming up, and Merchants are heading further into the
'physical world.' And they don't have to go online entirely. People will be able to call any
messaging mechanism in our use to position orders or communicate by exchanging images,
telling them what they want to purchase and eventually digitally the payment will happen.
Everyone goes out and picks up the items or delivers them. After the lockdown, it's going to
be a phase where we'll still have to be careful and take extra precautions to stay safe until
theworld has really got rid of this situation. This period is all about creating these solutions
andinnovating to meet these needs for the public, retailers and businesses.

In the recent lockdown situation, along with RBI and the government, we are asking citizens
to switch to digital payment methods in order to remain protected. NPCI and other state
governments are ensuring that more providers of essential services are on the digitalplatform.
The government has taken action on social media to motivate the use of online payments and
discourage the use of cash. In their day-to-day transactions such as NEFT, IMPS, BBPS,
which are available 24/7, the RBI and the government continuously reiterate several digital
payment options available to customers.

Through the use of smartphones, the digitization of the banking sector is bound to satisfy the
increasing expectations of the population. Indeed, it reduced human error and improved
comfort. With the aid of digital banking, most enterprises do not have to focus on the timingof
banking operations. Transactions will now be made even in odd hour.

73
BIBLIOGRAPHY :

https://goniyo.com/blog/the-evolution-of-banking-in-india/

https://medium.com/@mabdulbasit01/today-challenges-of-modern-banking- world-597ec163d13d

https://www.mjtnet.com/robotic-process-

automation?gclid=CjwKCAiAr4GgBhBFEiwAgwORrRo6eg0J9hlf8MBvH5WdcHtof9HzF-
DfqYjNsroljFmIqs7kXwOBeBoCYw8QAvD_BwE

https://www.forbes.com/advisor/in/investing/digital-currency-in-
india/#:~:text=The%20Reserve%20Bank%20of%20India,a%20safe%20store%2 0of%20value

74
 APPENDIX :

1. What is your reason behind your shift towards digital banking or online banking?

 Convenience and Efficiency

 Safety and Security
 International Transfer
 Available 24*7
 Cost Saving
 Higher Interest Rates / Lower Fees

2. What is your reason behind your shift towards digital payments?

 No need to carry huge cash

 Cashback offers
 Easy and fast way to make payments
 24*7 Transfer
 Discount and reward points
 Time saving

3. Who/what influenced you to try online banking?

 Family or friends
 Main bank
 Social media

4. Digital payment method used by respondents.

 Paytm
 Phone pay
 Google pay
 Debt card credit card

5. Do you think that Digital Payments are safe enough?

 yes
 no

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6. In how much time do you think India can achieve completely cashless economy?

 3 years
 5 years
 5-10 years
 more than 10 years

7. Do you think Digital cash can reduce or eliminate black money from India?
 yes
 no
 maybe

8. What is the impact of COVID-19 on usage of digital payment?

 more cash, less digital

 more digital , less cash payment
 only digital , no cash payment

9. Which mode of online money transfer do you often use?

 NEFT
 RTGS
 IMPS
 UPI

10. How often do you use digital payment?

 Daily basis
 Once in a week
 Once in a month
 Once in a year

11. Challenges faced by customers while using digital banking.

 Security
 Technical issue
 Transaction difficulty
 Lack of person banker relations

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