The Indian banking industry has become an example for a movement that has seen exponential growth in the past decade.
It was in the 1980s that the need to introduce computer’s in the Indian Banking system was felt, so as to offer better customer service and improve accounting and bookkeeping. A committee was set up by Reserve Bank of India to make recommendations on the ‘computerization’. Later, banks switched to Local Area Networks (LAN) wherein a group of PCs shared a common communication line. After a few years, banks embraced the Core Banking system which supported the bank’s everyday transactions like opening new accounts, initiating, and servicing loans, processing cash deposits, permitting withdrawals and so on.
Subsequently, branch banking transformed into Digital banking. The tech elements helped banks to build features and provide better customer experience through ‘Anywhere’ and ‘Anytime’ Banking. This functionality changed the game, as customers could now do banking transactions 24*7 in India without having to visit a branch.
Commercial banks quickly adopted digital just to remain in the race!
Both banks and customers, gained by utilizing the new technologies available for the sector, making the whole experience user-friendly and trust-enabling.
E-banking resulted in cost reduction for the banks and simultaneously helped banks in building their client base which in turn opened income/revenue streams from newer channels.
With the introduction of computerization and automation in the banking ecosystem such as MICR, Electronic Funds Transfer etc. Commercial Banks in India moved into a new orbit. Inter–connected network among banks through the use of common software further enhanced access to data and faster transactions as well as decision-making. Usage of Channels like ATMs further enhanced ability to transact anywhere in the country without visiting the physical branch. The Central Bank has taken several steps to reinforce the instalment and settlement framework in banks, giving this framework an even bigger push.
The Present Scenario
Today, the Indian government is a big supporter of digital transactions. Platforms such as United Payments Interface (UPI) and Bharat Interface for Money (BHIM), launched by the government, have been a significant milestone for the financial ecosystem of the country. Advancement and ubiquity of digital payments are further bringing about noteworthy digitalization and transformation of banking. As we are taking strides towards a cashless economy, we see a rise in number of non-branch channels in the country. The number of ATMs in the country has seen sharp increase in the past decade. Electronic payment frameworks, such as NEFT, ECS, RTGS, Mobile banking, Debit cards, Credit Cards are becoming basic and common.
Role of Data Analytics and Artificial Intelligence
Better business performance, smooth customer acquisition and onboarding, better productivity and reduction in risk are the fundamental objectives for a bank. In this data-driven world, seamless execution is reliant on ability to store and manage information in a safe and secured environment. Banks are building large data analytics engines to be able to generate meaningful insights about customers in order to take better decisions.
AI is also changing the way customers consume services. Conversational bots, customized support, enhanced user experience along with access to the best rates, services and minimal documentation is the name of the game!
AI is further enabling the banking industry to leverage data, reduce risks and thereby provide the flywheels to the industry to transform it into the next orbit.
Conclusion Indian Banks are gradually and progressively jumping on the digital bandwagon. In order to compete with not only other banks but fin-tech companies, they are introducing advanced digital tools to make the banking experience rich and seamless. For one, here is a race where more than one side shall be a winner. More power to the banks and their digital aspirations!
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