Retail Banking
Overview
Service with a smile is today’s banking tagline for the customers who decide for nothing less. Retail banking is archetypal marketable banking where a customer makes use of nearby branches of generously proportioned commercial banks. The services presented are: providing saving services, verifying accounts, security assets, individual loans, debit and credit cards, etc.Nowadays, banks are looking for substitute ways to bestow with and differentiate along with their varied services. Clienteles, both corporate as well as retail, are no longer excited to get in line in banks, or stay on the telephone, for the most fundamental services. They require and foresee to be competent to handle their financial transactions where and when they wish to.
Introduction to Retail Banking
INTRODUCTION
The origins of banking can be related to ancient times, starting with elementary money lending and bartering practices for rural products, cultivation and other commodities. After the industrial revolution which began in Europe in the 17th century, when Europeans started forming colonies all over the place in the world and the necessity for credit for exchange was felt like at no other time, from here it has picked up an incredible catalyst. Until late into twentieth century, banks began working similarly. But the entrance of the Internet in the 1990s changed it all. A surplus of potentials arose for Indian commerce, which obviously had a great influence on the working of banks.
1.1 Current Banking System in India
The Indian banking sector is categorised into:-
Figure 1.1 Banking System in India
Source: RBI
Banking Innovations and Creativity in India
In the 1990s, the banking sector in India posed greater importance on technology and improvement. In order to provide improved quality of services at superior speed, banks have started to use the technology. Banks also took a keen eye on rustic markets and commenced a wide range of customized products and services focussed only to the particular needs of their rural clientele. Banking activities also surpassed their conventional range and new thoughts like personal banking, retailing and banc assurance were brought in.
Client Needs Expedite the collection of receivables from across the country Electronic banking interfaces to automate disbursements Implement efficient account structure for concentration of funds Minimize excess cash and overdraft balances Sound MIS for effective planning and decision making End-to-end integration with bank’s interface & ERP systems |
Key initiatives by Reserve Bank of India (RBI):
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Figure 1.2: Technology Developments in the Banking Industry
Drivers for change in Indian Banking:
The various drivers which led to change in Indian Banking. Four reasons can be dimensioned to it:
- Governments have enforced doctrines and plan of action based on an addition in competition with regard to increase skills and efficiency; it has helped in the outcome as for the beginning of big new financial institutions that functions at the same time in various sectors such as retail banking, wholesale banking, insurance, asset management and risk management mechanism.
- With the emergence of new technology it can create an infrastructure permitting a participant to move out with a broad orbit of banking and financial services.
- Due to increase in the competition, banks had to answer to the enhanced success-fullness of their clients and to clients’ arousal to get the high-grade transaction achievable. These drivers have forced banks to move in various spheres and provide variant services.
- Development of customized product is now the major concern for the banks, as now the customers are more Cell Phone and they need their transactions to be accomplished at one place as one-stop shop.
1.2 Retail Banking
Service with a smile is today’s banking tagline for the customers who decide for nothing less. Retail banking is archetypal marketable banking where a customer makes use of nearby branches of generously proportioned commercial banks. The services presented are: providing saving services, verifying accounts, security assets, individual loans, debit and credit cards, etc.
A comprehensive and innovative banking system is necessary for continuous financial enhancement. Banking sector expansion and growth has gone from side to side uncountable twists and turns after the independence. Technical advancement has been enormously accountable for the quick growth and extends of retail banking. There is also a growth in the nature and the number of products being offered underneath retail banking. Retail banking has vast prospect as well as challenges in a growing economy like India. The Retail Banking atmosphere today is moving swiftly. The market these days gives us challenges to offer several and innovative modern services to the customer through a combined aperture as so to make sure that the bank’s customer gets “steadiness and constancy” of service delivery across time across all channels. Present-day Automated bankers now more seem at reducing in their operational costs by accepting safe technology thus plunging the answer moment to their customers so as to get improved customer care services.
Retail Banking- Meaning
Retail banking is the management of commercial banks with separate clients, both on liabilities and assets sides of the balance sheet. Fixed, current/savings accounts being on the liabilities side; and home loans, advances being on the assets side, are the more legitimate of the items advertised by banks. Related added services comprised are credit cards and demat services.
Retail Banking- Characteristics
Retail Banking Sector is characterised as:
Figure 1.3: Characteristics of Retail banking
Advantages of Retail Banking:
Retail banking has certain merits overshadowing certain demerits. Merits are analysed from resource perspective and asset perspective.
Resource Perspective | Asset Perspective |
Retail deposits are steady and comprise core deposits. | Retail banking effects in better capitulate and better bottom line for a bank. |
They are interest not sensitive and less good buying for added interest. | Retail section is a good boulevard for funds consumption. |
They comprise low cost funds for the banks. | Consumer loans are supposed to be of lesser risk perception and NPA discernment. |
Effectual customer relationship management with the retail clientele built a strong client base. | Helps profitable revitalization of the nation through greater than before production activity. |
Retail banking boosts the supplementary business of the banks. | Improves standard of living and accomplish ambitions of the people through reasonably priced credit. |
Effect of Technology on Retail Banking
Latest developments in technology have created a spurt in “technology-based self-service”. Such developments are varying the way that service firms and consumers interact, and are raising a host of exploration and practice issues relating to the distribution of e-service.
E-service is becoming progressively significant not only in determining the victory or catastrophe of electronic commerce (Yang et al., 2001), but also providing that customers with a superior skill with respect to the collaborative flow of data.
The financial system globally has been facing a lot of changes. Mergers and acquisitions, expanded rivalry, deregulation, changing data frameworks and innovation, and HR with various capacities are simply a few ‘potencies’ that are prompting the banking commerce (Pereira, 1995). Technology is one prime ‘driving force’ currently in different businesses. It is thus important to discover the investments in technology and their effect in the bank business.
Dabholkar (1994) states that when the customer is in direct contact with the technology there is more control with Internet banking. Nonetheless, if there is a non-attendance of direct contact, for example, with phone banking, it is expected that there is less control gathered by the client through this exchange. Bateson (2000) has given numerous investigations on the need for purchasers to have control amid benefit strokes of luck. When a customer simply picks the technology to use as a form of service delivery the effect is high in terms of quality characters. Some of the quality features that are very important to customers are efficacy and speed.
Role of E-Commerce in Retail Banking
Financial services industry over time has opened to momentous revolution that can be termed as e-developments which is progressing quickly in every aspect of monetary intermediation and budgetary markets, for example, e-money, electronic banking (e-banking), e-fund, e-protection, e-trades, e-expediting, and e-observation. The driving forces behind the speedy revolution of banks are influential alterations in the economic setting comprise among others innovations in information technology, automations in financial products. These factors make it complex to design a bank’s policy, which Dabholkar (1994) talk over how technology-based services have made innovative service delivery options accessible to organizations, making customer contribution more extensively possible. Customers make use of touch screen “kiosks” to request take-away food, although banks have comprehensively distributed ATM to withdraw money, initiate funds transfer, making deposits into accounts and performing any other transactions like balance inquiry, e-ticketing.
Technological advancement have removed tedious, time consuming jobs, reduced human fault to banking related services. Technology also delivers customer information that it would be much more costly to deliver on a person-to-person basis. Cell phone banking services permit non-cash transactions to be performed from anywhere, which required a visit to a branch before (Prendergast and Marr, 1994).
1.3 Scenario of Retail Banking in India
The Indian economy is on a dynamic development path and boasts of a steady annual growth rate, with rising overseas trade reserves and prospering capital markets along with the other factors. World Bank has projected the Indian economy to be amongst the top 3 economies in the world by 2050. Retail banking setup in India perceives a remarkable revolution in the samples of product creation and operation. The intrusion of consumerism has its usual trickle over result in terms of amplified necessity of retail banking products- cards, loans, tailored products and services. The retail banking sector has its routine slit out: keeping rate of knots with the fast flowing vicious surroundings, best practice of technology, growing customer backing by directing at rural India on the way to inclusive banking, getting healthier the customer service ideologies & intentionally calculating revolutionary products and services on the way to targeted sections.
April 11, 2016 was an epic day for masses living in India. The government launched a digital banking system known as Unified Payment Interface (UPI) that permits people to transfer money easily to and from a bank account or to others by means of a smartphone. Although money transferring of this kind was accessible to people before that date, it wasn’t easily reached to everyone. Now, with the help of UPI, almost everybody in the country can open a bank account, save money and perform various financial transactions.
So far, in spite of the range of financial services on offer, customers in an unstable and undefined domain will progressively need an intellect of durability and safety for their deposits. Due to the low dispersion of formal, planned financial services among households and small and medium initiatives, the prospects for financial mediators, mainly banks, continue to be very lively.
1.4 IT in Banking - A New Era
The Indian economy opened up in 1991 and almost kept up a correspondence with the worldwide Internet revolution which had a double impact on the Indian private and public sector banks that were as yet obstructed in old methods for working. After the Indian IT administrations organizations began to slam against, it was simply a question of time before Indian banks entire heartedly secured innovation. This changed the approach for business process computerization in managing an account, which aided better client benefit, lesser handling costs and expanded profitability.
The banking sector has clutched the usage of technology to service its customer's quicker with better service at one click. Emergent engineering science (IT) has denatured the banking industry from traditional branch based banks to netted banking services and digitization. Broadband internet was a cheaper source and it had made the movement of data effortless and fast. Technology has changed the system of rules and administration system of all banks. And it is now dynamical and focusing on delivering services to their customers. Banks are have now blossomed into a supermarket where once the customer comes, and get all the things done in his basket. From providing conventional banking services, banks have progressively transformed themselves into worldwide banks. The concentration is shifting from collective banking to People centric banking with launching of various products which are highly customized. Branches are on the job for 24 X 7 running with the adoption of Telephone banking, Cell Phone Banking, Internet Banking, ATMs, and E - banking.
In recent times, we cannot think about the victory of a banking system without information technology and communication. It has inflamed the role of banking sector in the economy. The financial transactions and payment can now be handled quickly and easily. The banks with the up-to-date technology and techniques are more successful in the competitive financial market. They have been able to produce more and more business resulting in their greater success. Many empirical and theoretical studies have been carried out at the national and international level to study the impact of electronic banking and information and communication technology (ICT) on banking sector, shoppers, and administration quality and instalment system. The examinations mostly accentuation upon e-banking effect on efficiency and benefit basically because of core banking system, electronic fund transfer, real time gross settlement system and electronic clearing services. From the banks perspective Internet Banking arrangements are for the most part identified with cost reserve funds and Internet Banking stays one of the practical and more compelling conveyance channels.
It is notable that there is a number of driving force inspiring the adoption of internet banking that have been suggested in the literature. Electronic banking is a greater concept than banking through the internet and the internet is a key delivery channel for electronic banking and its value to consumers and banks is constantly increasing.
Before IT emergence in order to withdraw money people had to stand in long lines and to clear the cheque it took a week. The banking industry has journeyed a long way and it has been possible because of IT usage in banks. Banks have advanced with the emergence of IT which has led to reduced operational costs and increased productivity. Although banks has benefited from IT, but the major beneficiaries of this technology advancement are the banking customers. Some of the major transformations brought by the addition of IT and how it has profited the banking customers are illustrated here: -
- Core Banking Solution (CBS):This term refers to the systems management of branches, which allows its consumers to take benefit of banking services from any of the CBS enabled bank branch, regulate their records, and, paying little heed to where the client keeps his record. CBS branches are between connected with each other. Hereafter, Consumers of CBS branches can exploit from different banking offices from some other CBS branch found anyplace around the world. CBS has computerised all core banking operations such as debit and credit of transactions, maintaining passbook, calculation of interest on loans and deposits. Advantages of Core Banking Solutions are Customer Convenience, Multi-device User-friendliness, 24x7 facilities, Improved Efficiency and Improved Relationship.
- Automated teller Machines: An automated teller machine (ATM) is a computer operated telecommunication device that offer banks’ customers to make transactions self-sufficiently without the help of a banker. ATM works by put in a plastic ATM card which has a magnetic stripe and a chip that has customer’s card number and some safety information.
- Smart Cards: It is referred to as plastic money. These cards have inbuilt integrated circuit in it which helps to reduce the requirement for paper currency. With the help of these cards customers can shop by swiping their card and the money gets automatically debited from their account.
- Internet Banking: Internet banking is a form of information system that makes use of the advanced resources of the Internet to permit customers to influence financial activities in simulated space. Internet banking is a fresh specific banking area, which authorize individuals to communicate with their banking accounts virtually from anywhere globally.
- MICR: MICR stands for Magnetic ink character recognition. MICR code is an innovation utilized primarily to process and clear the checks and other reports simple by the managing an account industry. In MICR the encoding line is at the bottom of checks and contains the archive compose pointer, bank account number, bank code, cheque amount, check number, and a control indicator. The innovation grants MICR per users to sweep and read the information straight into a data-accumulation gadget. Distinct barcodes and related advancements, MICR characters can be perused by humans. This innovation spares time required to exchange cheques from one city to other and the cheque clearing time has likewise diminished from 3 to 1 day.
- Cell phone Banking: Nowadays Cell phone plays a vital role in e-banking. This technological service provide customers to view their bank statements, transfer money from one account to another and gives the complete control over their account through the use of Cell phones. Cell phone Banking permits the bank’s customers to perform a number of financial transactions via Cell phone or tablet.
- RFID in Banks: Radio frequency identification (RFID) is a modern development in the banking industry for maintaining healthier customer relationship management. The New tech banks like YES bank, DENA bank use this technology for its customers so that it can give them a special treatment when they visit the branch. Customers using this technology have a RFID enabled chips in their Cell phones which help them to pay at shopping malls and other outlets by waving their Cell phones on the contact less readers. The money gets immediately debited from their personal accounts.
- Digital Wallet: These days, carrying hard cash is not necessary as with the emergence of Digital wallets purchase of any type can be made with payment cards, and spending can be traced online. The major benefit is that it’s more secure than carrying hard cash in your pockets. Cell Phone Applications hold the payment and loyalty card data. BHIM app, Mobiwik, Paytm, Google Wallet and Apple’s Passbook are some of the most common applications.
- Digital Cash: Digital Cash is also known as e-money, e-cash, digital cash which alludes to an arrangement in which a man can pay for products or administrations safely by the means of electronic gadget without basically interfacing a bank to assist the transaction. A Digital Cash dealing generally incorporates three kinds of clients: A Payer (consumer), A Payee (merchant), A financial relation between a Bank with whom the Payer and Payee have accounts.
1.5 Internet Banking
Internet Banking or Online Banking is an alternative channel offered to customers who can access their accounts and make transfers or payments electronically via internet. Anywhere banking has made life of the customers very relaxed who can perform financial transactions at a click of the mouse. Internet Banking is an important terminology for the process by which a consumer may implement banking transactions by electronic means without going to a brick-and-mortar institute. The major concerns with Internet Banking services are safety and privacy of personal private information. With the usage of Internet Banking, customers can use varied banking services from bill payment, e-ticketing to making investments in various sectors.
Concept of Internet Banking
Automated banking experienced incredible growth in both developed and developing countries and redesigned the banking activities. E-banking commonly known as internet banking permits the customers to do the banking services online without going the bank branches. This is one of the innovative delivery channels offered in the retail banking sector, which provides services like viewing transaction details, transferring funds, paying utility bills, or shopping on-line via telecommunication network. Internet banking changed the traditional methodology of ‘bricks and mortar’ service to the ‘clicks and mortar’ service with the support of the internet (Chau & Lai, 2003). ICICI bank was the pioneer which introduced internet banking in India in the year 1996 (Malhotra & Singh, 2007). Other banks, which followed the legacy, are HDFC, Citi bank and IndusInd Bank. Nationalized banks of State Bank of India, Canara Bank, Allahabad Bank, Punjab National Bank, Bank of Baroda, Syndicate Bank, and others followed the movement by acquainting with internet banking. To study the different facets of internet banking. Three levels of internet banking services are presented in India:
- Information only systems,
- Electronic information transfer system, and
- Fully electronic transaction system.
There are two means to deliver Internet banking services to its customers. Right off the bat, an existing bank with offices which are physically present can create a website and offer Internet banking beside its customary delivery channels. Furthermore, a bank may be setup as a branchless, bank with no physical branch.
History of Internet Banking
Internet banking is alluded to as a facility gave by banking and financial establishments that allow the client to execute bank related transactions over Internet. The major advantage of Internet banking is that people can complete the banking transactions and services sitting at his comfortable home. With the use of Internet banking services, the account holder does not have to individually visit the bank. Many transactions can be performed by the account holder with the assistance of Internet banking. To handle transactions like record of recent transaction, balance inquiry, etc. Internet banking is very useful.
The thought of Internet banking has been instantaneously sprouting with the progression of the World Wide Web (WWW). Computer programmers came up with concepts for online banking transactions who were at work for maintaining banking databases, during 1980's. The innovative process of development of these services was perhaps flashed after many companies started the idea of online shopping. The online shopping encouraged the usage of credit cards via Internet. Many banking establishments had now started generating data warehouse services to make it simple for their working staffs. Banking and finance organizations in Europe and United States in 1980's, started evocative researches and programme experimentations on the idea of 'home banking'. Primarily when computers and Internet were not so well established, 'home banking' mostly made usage of fax machines and telephones to assist their customers. The widespread of Internet and programming facilities shaped more open doors for the development of locally situated banking.
1.5.1 Features of Internet Banking
Online banking services are offered by various organizations that comprise of many features and competences; however some of them are application based. The common features are as per the following:
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1.5.2 Current Scenario of Internet Banking in India
Internet Banking has become an important piece of banking system. The idea of e-banking is of objectively current beginning in India. As in early 90’s old-style model of banking was prevailing which is branch banking, but after 90,s branchless banking services were started. The IT Act, 2000 was passed by the Indian government with effect from the 17th October 2000 to inspect different facets of Internet banking. RBI has set up a commission to discuss on Internet Banking and the committee had focussed on three major areas of Internet banking namely-
- Technological and security issues,
- Lawful issues and
- Governing and controlling issues.
RBI had accepted the recommendations and commendations of the Working committee and thus issued guiding principle to banks to implement internet banking in India. The deep-rooted manual systems which were dominant in Indian banking for centuries seem to be swapped by modern technologies. As per the survey by AVAYA, Indians prefer to use digital channels to perform banking transactions, and will not hesitate to object for poor services. As per the survey report various conclusions were made which are mentioned below:
- 51% of Indians use online banking channels to perform their financial transactions.
- 26% of Indian customers choose to access services by their bank’s website, and the same number of customers would choose to use a Cell Phone app instead of talking to a bank branch person.
- 37% of Indian respondents say if they had a bad experience while performing any financial transaction they will change banks.
- One out of four respondents will share their bad experience on social media like Facebook, twitter.
- 44% of the respondents would let their friends and family know about their issues with the use of banking app or website.
- 93% of respondents are happy by the service delivery from their bankers.
- 22% of the respondents have never confronted any problem related to customer satisfaction.
- 47% of the respondents want to receive information on a new offer or service.
1.6 Cell Phone Banking
While in India traditional branch-based banking is widely used way of conducting banking operation, at the same time commercial banks are experiencing a swift change majorly focussed by the information & telecommunication (ITC) technology. ICICI bank initiated in Cell phone banking services in India. Amongst public banks in India, Union Bank of India was first to announce Cell phone banking (Ali et al. 2010). Cell phone banking in India is as a concept is mainly used for two basic purposes, firstly, for fund transfer (transfer of funds from one bank account to another) and secondly, for merchant banking transactions (purchase of train, bus and movie tickets, among others). Henceforth, the speed in which cell phone banking is growing in India depends on the speed in which banks prepare themselves to adapt to Cell phone banking technology.
Meaning of Cell Phone /Cell Phone Banking: In terms of guiding principle issued by RBI, ‘Cell Phone Banking transaction’ means undertaking banking transactions using Cell Phone phones by the bank customers that includes accessing their accounts, debit and credit to their accounts.
Concept of Cell phone/Cell Phone banking: Cell Phone/Cell Phone Banking refers to the delivery and using banking- and financial services with the help of Cell phone/Cell Phone devices. The range of services offered to customers includes facilities to conduct banking and stock market transactions, to manage accounts and to access personalised information.
The important reasons for which financial institutions offer Cell phone banking services to their customers are:
- Reduced operating costs
- Larger geographic divergence
- Better competitive situation
- Increased customer demand for services, and
- New revenue prospects
Organisation of Cell Phone Banking in India
The structural diagram of Cell Phone banking in India is given below:
Figure: 1.4: Structure of Cell Phone Banking in India
1.6.1 Current Scenario of Cell Phone Banking in India
Cell Phone Banking in India has seen remarkable growth and it can be seen that it has risen 150 % in volume and Value of transactions has risen to 224% from the FY 2015-16 to FY 2016-17. According to the survey by ASSOCHAM India in their report ‘M-Wallet: Scenario Post Demonetisation’. In FY 2017, Cell Phone/ Cell Phone banking segment is projected to contribute a largest share in Indian Cell Phone payment market, with the widely held being money transfers. Its share in the m-payment is projected to rise terrifically from 8% in FY 2014 to 56% in FY 2017 in terms of value. Money transferrals using Cell phone banking and immediate payment system (IMPS)–where money is transferred instantaneously using text message or online banking has showed the highest increase in over 12 months ending October 2016. As per the India Spend analysis of Reserve Bank of India (RBI) data, Cell phone banking transactions raised 175%, while transactions using Cell Phone banking grew 369% from October to November. The development in Cell Phone Banking transactions has seen histrionic rise post November 2016 demonetisation, as large sum of people started choosing Cell Phone banking and other substitutes of digital payments.
Amongst the major banks, the State Bank of India (SBI) has a great lead in terms of numbers in the Cell Phone banking space, with 45 % growth in the calendar year 2014. Comparing to 8.57 million customers in 2013, SBI customers transacted on Cell Phone is 12.5 million in 2014. In terms of transactional value, private banks such as ICICI Bank and HDFC Bank lead in the Cell Phone banking space.
HDFC Bank has noticed more than nine times growth in Cell phone banking transactions in January 2015 in contrast to January 2014. The bank continued the lead position in Cell phone transactions with Rs. 4,906.86 crore value noticed in January. According to data from the Reserve Bank of India (RBI), it had 1.49 million transactions in January 2015 as compared to 290,000 transactions in January 2014.
The bank is followed by ICICI Bank, State Bank of India and Punjab National Bank with respect to Cell Phone banking transactions. ICICI Bank had transactions worth Rs. 2,224.97 crore, followed by SBI with Rs. 1,586.4 crore and Punjab National Bank with Rs. 1,440.61 crore worth of transactions.
Graph 1.1: Value of Cell Phone Banking Transactions
Source: RBI
The Major areas of concern of using Cell Phone banking:
- Rapid growth. Cell phone banking and payments will constantly change, and the expectations among safety and cell phone experts are that the Cell phone channel will shortly become consumers' main financial-services platform. As the channel is useful and can be tailored, users will transfer from PC banking and payments to Cell phone. And the more Cell Phone users, the bigger the security threat.
- Need for new security controls. Because the Cell Phone risk area is growing at a higher pace therefore Security measures need to be taken to improve security.
- More players, more risks. The Cell Phone system depends on a number of players, many of which fall outside the scope of core financial services. Device making companies, operating systems, application developers and network operators all are involved. And all they need is to address security.
- Privacy issues. Emergent Cell Phone confidentiality issues, such as those turning around Geo-location, will become more serious. As more Cell Phone technologies arise, institutions will have to provide stability to customer and member ease with safety and fraud stoppage.
- Role of consumers. Financial institutions must progress approaches to educate their customers and members about vigorously handling their own Cell Phone-device security.
- Insecure Information. There are some risks involved in Cell Phone banking. Retrieving financial services over Cell Phone banking involves submitting personal information via text message. Hackers via unsecured Wi-Fi hot spots can read and alter those messages. Other risks involved are that the banks are not investing enough amount and time in encryption security of its technology.
- Governing Issues. Banking institutions hire telecom agents to install and maintain their Cell Phone banking services. The use of self-governing or franchised telecom agents makes it hard for a country’s central bank to control banking operations to have a general set of standards. This means that different banks can create different Cell Phone banking rules, use inferior banking security software and levy high fees for Cell Phone banking.
- Coverage. One of the major challenges of Cell Phone banking is network coverage. Throughout the country there are a number of telecom service providers, but there is not essentially countrywide coverage for these providers. Bank users may not understand this and can close up with a large cell phone bill full of charges.
- Viruses. Banking institutions must make sure that their channels are secured by a protected layer to confirm the safety of their consumers’ information. Though, some Cell Phones are very susceptible to bugs such as Trojans. These viruses provide hackers the chance to retrieve your banking information via your Cell Phone.
- Security. Security can be an issue with Cell Phone banking although there are a number of government regulations with which cell phone providers must comply. Fraud protection must be developed within the cell phone company. Network security is out of the control of the bank as well as data access and use.
1.7 Benefits of Internet and Cell Phone Banking
Internet and Cell Phone banking functions in the same way as traditional banking excluding that it provides to its customers the chance to access information of their accounts, to make payments or settlements performed in the accounts at any definite time with no prerequisite to be physically presented at the Bank branch. According to various studies Internet banking and Cell Phone banking is becoming more well-known because of the benefits it provides.
Here are the benefits of Internet and Cell Phone banking for bankers and their customers:
1. With Internet and Cell Phone banking, there is no time limitation to bank hours or local locations. The web is available 24/7, which means be where (and when) your customers want you.
2. Improved Customer Service: Internet and Cell Phone banking allows customers to make various financial transactions like transfers between accounts, handling bill payments, or currency exchanges whether they’re on a sofa or in an aircraft. Internet and Cell Phone Banking reduces the traffic that the bank team struggles with in a physical location.
3. Reduced Customer Concern: While customers are muddled or feel distressed about their financial details, Internet and Cell Phone banking is a helping hand. By giving users permission to access their account anytime online via web, bank keep their customers up-to-date and informed with their individual record-keeping.
4. Paperless Statements: With Internet and Cell Phone banking, some customers choose for paperless statements. From the customer’s viewpoint, they get the handiness of their updates looking in their mails. Bankers can save money on physical printing and posting. The environment also smiles with less wasted paper.
5. Have a Complete View of Customers: Internet and Cell Phone banking helps to know customers well. When the banker assimilate the Internet and Cell Phone banking solution with the present backend solutions {such as Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) software}, a banker gain a combined view of their customers that permits to aim them with tailored content and proposals. The user’s individual profile and account information is combined to give a complete view of what their wants are.
6. Location-based Services: Cell Phones have the capability to identify a user’s location, and this is data that Cell Phone banking solution has permission to. This is used for added security. For example, if an online enquiry occurs for a Chennai account from a Cell phone in Bhopal, bank site initiates a series of authorizations, possibly even direct contact, to safeguard the account of the customer. The location services help customers to identify their closest local branch.
7. Leverage SMS Messages: One more advantage of Cell phone banking for customers is the facility of receiving banking alerts on their cell phone. Whether targeting the customers with personalized promotions or giving them routine updates, banker address their customers more precisely by sending them direct messages.
8. Track Rewards and Customer Loyalty Programs: Internet and Cell Phone banking gives an outstanding chance to boost customer retention and attracting new customers. Customer loyalty programs are easy to track when the points and rewards are computerized and joined with the users’ online profiles.
9. Customer Service: Sometimes self-service isn’t enough, Customers want help from an actual person. With online chat and email facilities, Bankers keep their customers satisfied without bothering them to take out time and visit a physical bank location and stand in line.
With all these benefits, Internet and Cell Phone banking have the prospects to increase bank’s own competence though exponentially growing the customer experience. And if the customers are satisfied today, Banks don’t have to wait for the future to reap the rewards.
1.8 Few Initiatives Taken By the Banks in Technology Space
There are various initiatives which has been introduced by Indian banks with the emergence of technology in banking sector. The few initiatives are discussed below:
- To improve its service quality, SBI has deployed web-based portal where customers can register all kind of complaints.
- BoB has taken initiatives like windows server/desktop virtualization and backup consolidation to ensure optimization of resources. (e-TDS) module and leave module to improve its service delivery and efficiency.
- PNB has done necessary up gradation to make its technology platform more stable, robust and improve quality of assets.
- Canara Bank has undertaken several technology initiatives like internet banking, Cell Phone banking, online fund transfer, passbook printing self-service kiosk and financial supply chain management facility for corporate customers (for working capital finance).
- Branding itself as modern tech savvy banks, BoI has implemented many technology based customer centric facilities like online nomination facility, banking through Cell Phone service, implementation of school fee module, self-service kiosk, barcode enabled passbook printing, viewing of public provident fund (PPF) account online and online application for education loans.
- ICICI Bank has leveraged technology to improve customer quality, convenience and reduce customer complaints to enrich customer experience.
- New initiatives like Click2Call and ‘Your Bank Account’ application on Facebook have demonstrated the bank’s focus on technology.
- HDFC Bank has automated credit underwriting process and has enhanced its cross-selling and up- selling capabilities through the implementation of data mining and analytical customer relationship management solutions.
- Axis Bank has made significant investments in making scalable and robust technology platform. The bank has launched the business process management system to improve operational efficiencies. Server virtualization and storage centralization have been put in place to ensure optimal utilization of resources.
- IIBs advancements like cash on-Cell Phone, direct associate and fast reclaim benefit have helped the bank in giving better consumer loyalty and expanding its purchaser base.
- Indian Government is empowering computerized exchanges forcefully. The launch of Bharat Interface for Money (BHIM) and United Payments Interface (UPI) by National Payments Corporation of India (NPCI) are brilliant progress tools for computerized transformation in the space of Payment Systems.
Under this study four major banks are studied and their innovative Electronic Banking services are discussed below:
1.9 State Bank of India (SBI)
State Bank of India is the biggest bank of India with a network of 15000+ branches and 5 associate banks across India. State Bank of India (SBI) gives an extensive banking products and services to manufacturers, entrepreneurs and their clienteles.
1.9.1 Retail Internet Banking Services by SBI
Figure 1.5: Internet Banking Services Provided by SBI
1.9.2 Corporate Internet Banking
State Bank of India is offering a world class services to Corporate Customers through the portal www.onlinesbi.com. CINB facility of SBI allows the corporate customer to carry out banking activities which are as follows:
Figure 1.6 Corporate Internet Banking Services Provided by SBI
1.9.3 The new initiatives of SBI
- State Bank Anywhere Personal: State Bank Anywhere Personal is a cell phone banking app for its retail users. It has various features like safety, convenience and easy to use app which help users to maintain their banking on the move. APP is available in Google Play Store, iOS App store and Windows marketplace.
- State Bank Secure OTP: This is an OTP generation App which confirms the transactions done by both State Bank Internet Banking and State Bank Anywhere App.
- State Bank Anywhere Saral : This APP is simple transactional product introduced for:
- single user friendly
- for sole proprietorship concerns
- For micro enterprises or distinct entrepreneurs
- People who need online dealings facility in their commercial accounts.
Features of State Bank Anywhere Saral
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- State Bank Anywhere Corporate' : State Bank Anywhere Corporate' is the service accessible on Mobile phones for:
Figure 1.7: State Bank Anywhere Corporate by SBI
- SBI Quick – Missed Call Banking: It is the new service which includes Banking by giving a Missed Call or sending an SMS with pre-decided keywords to pre-decided numbers. This service can only be started for the Cell number which is at present registered for a specific account with the Bank.
- State Bank MobiCash: State Bank MobiCash State Bank of India in relationship with BSNL has propelled a Mobile Wallet known as MobiCash. It offers services like reserve exchange, payment of bill, mini statement, enquiry. This wallet can be utilized as a part of self-mode alongside helped mode with the assistance of BSNL CSPs. It can be progressed to Full-KYC wallet, which gives more noteworthy transaction limits and money withdrawal. Features of State Bank MobiCash –
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- State Bank Buddy: State Bank Buddy is one more mobile wallet on Smartphone which is introduced by SBI. It is also named as semi-closed prepaid wallet. The benefit of this wallet is to transfer money to other wallet users and bank accounts, anytime, anywhere.
- State Bank mCASH : A simple, stress-free and quick method to claim funds using mobile number or e-mail id sent by SBI customers through Internet Banking.
Features of Mcash –
Figure 1.8: Features of State Bank CASH
- State Bank of India SMS Banking: State Bank of India SMS Banking service is accessible on all smartphones. Customers just need to send keywords [SMS to 9223440000].
- “BHIM SBI Pay”: “BHIM SBI Pay” APP which allow a payment solution that authorise an account holders of Banks contributing in UPI to send and receive currency from their phones with a simulated payment address of the identifier.
- State Bank of India *99#: State Bank of India *99# unifies USSD system with highly practical UPI platform.
- State Bank No queue: One of the exclusive App to allow customers to book a Virtual Queue Ticket (e-Token) for specific services at particular SBI branches. Customers can generate e-Token beforehand reaching the branch, consequently evading waiting in the queue at the branch and saving time.
Features of State Bank No queue - |
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Figure 1.9: Features of State Bank No queue
- State Bank of India Finder: This APP directs to search State Bank ATM, Branches, CDMs, Address /location of other Cash providing touch points and State Bank Customer Service Point (Cash@CSP) with ease of use of Cash can also be discovered. A customer can set either his/her current location as took through GPS or can set location manually also.
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- SBI’s YONO : YONO stands for You Only Need One is a unified digital banking platform which allow users to access both type of services: 1. financial 2. other services
Presently, YONO is available as a phone app for both Android and iOS. 'YONO' allows customers to instantaneously open accounts, carry out transactions, apply for loans and perform online shopping- altogether in one APP. Some of its important e-commerce partners comprise Amazon, Myntra, Jabong, Shoppers Stop, Uber, Ola, Cox & Kings, Yatra, Airbnb, Thomas Cook, Swiggy and Byjus, among others.
1.10 Punjab National Bank
Punjab National bank was India’s first Swadeshi Bank, which started its activities on April 12, 189 from Lahore, with an approved capital of Rs. 2 lac and working capital of Rs. 20,000. The visionary forecaster and patriot’s demonstrated courage in offering face to the soul of patriotism by framing the first bank oversaw by the Indians. Amid the long history of more than 121 years of the Bank, 7 banks have converged with PNB and it has turned out to be more grounded and more grounded with a system of 6809 branches and 9669 ATMs as on 30th June16.
1.10.1 PNB Retail Internet Banking
Punjab National Bank (PNB) enables its clients to utilize the internet banking office from anyplace whenever, to do basic, helpful, and snappy procedure of banking.
1.10.2 E- banking facilities provided by PNB
Figure 1.11: E- Banking Facilities Provided by PNB
- OTP Based Aadhaar Seeding and Authentication of Accounts: As far as Prevention of Money Laundering (Maintenance of Records) Second Amendment Rules, 2017, all records should be aadhaar linked and confirmed with biometric facility.
- PNB Aadhaar Pay: A digital payment resolution which dealswith the PNB Individual or Sole Owner having Aadhaar Number to obtain payments for goods or services using android phone and Biometric scanner from customers having Aadhaar linked with bank account after Biometric verification from Unique Identification Authority of India (UIDAI).
- Bharat Interface for Money (BHIM) :Bharat Interface for Money (BHIM) is established by the National Payment Corporation of India (NPCI). BHIM is inter-operatable with other Unified Payment Interface (UPI) applications, and bank accounts.
- PNB Kitty :PNB Kitty is secured, quick and useful. By using PNB Kitty, all the payments can be made on a single click.
Figure 1.12: Functions of PNB Kitty
- PNB Mobile Banking: PNB has introduced the mobile banking facility which is known as PNB Mobile for hassle free transaction for its clients. It is quick, convenient and easy, mobile banking services can be availed on various types of mobile and it offers customers the choice of carrying out banking transactions, aids in fund transfers and can schedule forthcoming transactions as well.
1.11 ICICI BANK
ICICI is one of the multinational banking and financial services provider organization. Being India's biggest private segment bank, ICICI Bank has add up to resources of Rs. 7,206.95 billion (US$ 109 billion) at March 31, 2016 and profit after assessment Rs. 97.26 billion (US$ 1,468 million) for the year ending March 31, 2016. ICICI Bank is right now having a system of 4,501 Branches and 14,271 ATM's crosswise over India. It is headquartered in Mumbai, Maharashtra, India.
Figure 1.13 Range of Financial Products and Services
1.11.1 The new initiatives at ICICI Bank
1. 24x7 Electronic Branches:
ICICI Bank has started 24x7 electronic branches which are one-stop search for all banking transactions. Clients can execute their account activities without anyone else, with the assistance of different automated devices and booths.
Electronic branch of ICICI offers:
Figure 1.14 Range of e-services Offered by ICICI
2. Tab Banking: ICICI Bank has launched an Application named as Tab Banking, which gives a prospective client the ease of opening his/her, bank account at his/her home or workplace.
3. Bank-on-the-Move: A new instrument announced by ICICI Bank, in keeping with its promise to reach out and enable banking in areas where there are no branches and ATMs.
Bank on move provide customers to avail various services like
Figure 1.15 Range of e-services Offered by Bank on Move
4. Help-on-Tab: ICICI Bank has launched Help-on-Tab to enhance the experience for day-to-day banking, that permits its branch staff to pre–process clients’ transactions till the time clients are coming up to get serviced in the branch.
5. Smart keys – Transfer Money While Chatting Smart Keys : iMobile Smart Keys which helps to transfer funds while chatting. It is one of the new features of iMobile, which allows customer to perform Mobile Banking on smartphone’s keyboard. There is no need to switch between the apps or disturb your chat, rather it helps to transfer funds quickly.
6. E-Locker:
Figure 1.16 Features of E-Locker
7. 'Touch &Pay':A new mobile payment solution 'Touch & Pay' that facilitates to make protected contactless payments at retail stores using Cell phones. Touch & Pay a Pockets app just give a feature to pat your cell phone at a NFC (Near Field Communication) enabled merchant terminal and make the payment through linked ICICI Bank Debit/Credit Card.
8. Voice Biometric: Remembering passwords is one of the most difficult task, so with this service, voice will act as password for performing all banking related transactions through ICICI call centres. The procedure includes as start communicating with phone banking employee, after that Voice Biometric service of ICICI gives a highly protected phone banking experience.
9. EftCheques : EftCheques permits a quick and simple way of transferring funds without losing out the physical cheque writing experience. This app enables to inscribe a virtual cheque to any individual from your phonebook. The receiver will on the spot receive a web-link via SMS which can be encashed into any bank account with choice of the customer.
10. Contactless Cards: ICICI Bank Contactless Credit and Debit Cards has a different feature of in-built NFC technology that lets customer to make protected and fast payments without the necessity to enter pin, customer need to touch card on the reader and the payment will be made.
11. UPI: This APP of ICICI, in which one can send and receive money using customer’s own name. With Unified Payment Interface (UPI) on iMobile or Pockets app create a virtual payment address of one’s choice (For example: charu@icici) and then link your bank account to send or receive money fast. There is no need of bank details like account number, IFSC etc.
12. Express Home Loans : Express Home Loans is being launched for providing rapid home loan services to customers by just applying at icicibank.com, then need to, upload all the necessary documents and get the home loan approved online within 8 working hours.
13. InstaBanking: This app agrees to initiate transactions through your cell phone at your suitability - anytime, anywhere. The procedure for the same is as follows:
Figure 1.17: Procedure to do Insta Banking
14. Positive Pay :ICICI is providing a unique facility for its customer to use Positive Pay on iMobile app to send the particulars of the cheques with their pictures to bank before one handovers the cheque to the receiver. Bank will honour the cheques only when the details match with the physical cheques. This app gives safety to its customer for payments.
15. ‘MeraiMobile’ :This App assist its customer to save their time and cost of going to a branch to avail banking services. This app helps to carry out a range of regularly used banking services from their Smartphone, without using mobile internet services.
16. ‘iMobile’ : The ‘all new iMobile’ has best-in-class safety features. It allows the customers the facility of dual login, connect with the Bank’s call centre from or within the app without any additional verification, withdrawing cash from an ATM devoid of using a card, tag recurrent transactions as preferences, view collective details of all accounts in the application itself along with receiving alerts from Google Now.
17. Digital locker: DIGI Locker is an inventiveness of Department of Electronics & Information Technology (DEITY) under Ministry of Communications & IT, Government of India. . This initiative is in support of the Digital India programme to decrease needless consumption of paper, time and human efforts.
18. Pockets :It is a VISA-powered e-wallet that can be utilized by any customer of any bank, which is utilized to recharge mobile, send money, shop anyplace, pay bills and more.
1.12 HDFC
HDFC Bank was incorporated in August 1994. It is India's one of the housing finance company. In a limited capacity to focus time HDFC has developed in three principal business fragments as a main player in retail banking, wholesale banking, and treasury operations. As of September 30, 2017, the Bank had a nationwide dispersion organize 4,729 branches and 12,259 ATM's in 2,669 urban communities/towns. Advanced in 1995 by Housing Development Finance Corporation (HDFC).
1.12.1 Some activities that can be done with Net Banking :
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1.12.2 Digital banking products
HDFC Bank has introduced a multitude of very effective digital banking products.
Figure 1.18 Digital Banking Products Offered by HDFC
Powerful Net Banking portal and Mobile Banking app of HDFC allows customers to perform above 205 and 90 diverse types of transactions.
- 30-minute paper-less Auto Loans using Biometric technology: HDFC Bank has propelled an auto loan that is dispensed in only 30 minutes utilizing biometric technology. It is available for HDFC Bank clients, and also others. With this technology-enabled solution, loans for two-wheelers can likewise be sanctioned inside 15 minutes. As of FY 2014-15, 63% of all exchanges at HDFC Bank are led through advanced digital channels.
- 10-second Personal Loan on Net Banking: HDFCs 10 second individual credit is for current clients. Banks claim that they will not only approve the loan instantly, but the loan will be disbursed to the applicant’s account without any delay. Although this loan is just a click away, it is advisable to have a repayment plan ready before applying for it.
- PayZapp: HDFC Bank PayZapp, a payment solution APP, giving customer the right to pay on One Click.
Features of PayZapp:
Figure 1.19 Features of PayZapp
- Chillr: A mobile app which permits customers to immediately transfer money to any contact in their phone book 24×7 as it is connected to customer's bank account. The bank has combined with MobME, a Kochi-based technology firm, to unveil this app.
- LITE App: For using this App one do not require any Internet connection, also doesn’t need too much space on phone and is fast to install, even over slow connections. No need of a Login ID / Password. Then too it is secure App as it works only from your mobile number that’s registered with the bank.
- Missed Call Recharge: HDFC Bank is making life easier not only for the customer but for its family and relatives too, by just giving a missed call to 73 08 08 08 08. Get recharge done anytime, anywhere.
- 'Fast personal loan' on ATMs: 'Fast personal loan' on ATMs are presented by HDFC to its prevalent customers. It helps the client to not only see the offer on ATMs but also acquire the personal loan only on a few clicks.
- Robot IRA: HDFC Bank has recently propelled the primary "Humanoid" in the national keeping money space. The robot IRA is human-sized, will be situated at a city branch soon. The robot will go about as an associate to supplement services that are being given in the branches. The communicating humanoid named IRA (Intelligent Robotic Assistant) will help branch group in overhauling customers. IRA will be set close to the Welcome Desk, where it will welcome customers and guide them to the related counter in the branch, for example, Cash Deposit, Foreign Exchange, Loans, among others in the primary stage.
1.13 Customer attitude towards e-banking system (Internet and Cell Phone banking services)
As per the progression of the international economy towards administrative development, electronic banking is developing very fast and information technology is the most vital factor in this expansion. Banking sector in India understood the significance of this move from the viewpoint of competitive advantage. Banking sector in India concentrated in the advancement of IT and innovation of services and products of electronic banking which includes ATMs, cell phone banking, electronic funds transfer (EFT), debit cards, credit cards, NEFT, RTGS etc. With the innovation in banking industry assessment of the customer attitude is the main factor and this study is focused on customer attitude towards internet and cell phone banking services in four large cities of Madhya Pradesh. Study of customer attitude after using internet and cell phone banking services will discover the various factors of why some banking consumers accept innovations with reference to internet and cell phone banking services and why some are not ready to accept it? Customers globally have easy access to their accounts, 24 X 7 availability of banking services. In India this is not yet common to use these services even at urban areas like Bhopal, Indore, Gwalior and Jabalpur. The consumers who identified that branch banking is time consuming are currently ready to perform transactions at the snap of their fingers.
The banking industry has been extensively influenced by the evaluation of technology innovation. The move towards electronic system of banks has diminished the cost of transaction and enhanced the speed of administration from this time forward. Regardless of the adoption of electronic banking services, banks in India seem to be attentive of the opportunities provided by internet. In fact; banks are moving towards up-to-date internet services to customers at an advanced level.
The enhancement and up gradations in the technology has assisted the user for easy access to the internet. Nowadays people are fascinated by technology that helps them to save time, cost and energy. Internet banking has developed as an operational tool to offer them with the needful. Internet banking can be stated as the setting up of a web page by a bank to deliver information about its product and services (Jasimuddin, 2001). At an improvement level, it involves providing facilities such as retrieving accounts, funds transfer, booking an e- ticket etc. Internet banking today can be seen as a stimulating area to be studied upon. Throughout the years many studies have been directed on the adoption of internet banking a rare of the studies on internet banking studied here notices a lot of development on the nature and opportunity of online banking. Plenteously research has been done in different homelands about the acceptance of internet banking.
Some questions which arise to study customer attitude are:
- Why customers behave in this particular way?
- What is the motivating factor for this particular attitude?
- What is the outcome of this particular attitude?
In turn, the variation in customer attitude has affected the volume and the nature of internet and cell phone banking services. Customer attitude is considered as an imperative topic. It is now important for bankers to comprehend about customer attitude due to competitive economic environment. An understanding of customer attitude is considered as a key component in the success of banking sector.
The aim of this chapter was to discover the topics of internet and cell phone technology and banking. This was done by studying prevailing published studies that reported the origins of the Internet and cell phone technologies. These studies also conferred the growth of these technologies, the marketing prospects they present and their potential to forefront alteration in retail banking in the 21st era.
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INTRODUCTION
The origins of banking can be related to ancient times, starting with elementary money lending and bartering practices for rural products, cultivation and other commodities. After the industrial revolution which began in Europe in the 17th century, when Europeans started forming colonies all over the place in the world and the necessity for credit for exchange was felt like at no other time, from here it has picked up an incredible catalyst. Until late into twentieth century, banks began working similarly. But the entrance of the Internet in the 1990s changed it all. A surplus of potentials arose for Indian commerce, which obviously had a great influence on the working of banks.
1.1 Current Banking System in India
The Indian banking sector is categorised into:-
Figure 1.1 Banking System in India
Source: RBI
Banking Innovations and Creativity in India
In the 1990s, the banking sector in India posed greater importance on technology and improvement. In order to provide improved quality of services at superior speed, banks have started to use the technology. Banks also took a keen eye on rustic markets and commenced a wide range of customized products and services focussed only to the particular needs of their rural clientele. Banking activities also surpassed their conventional range and new thoughts like personal banking, retailing and banc assurance were brought in.
Client Needs Expedite the collection of receivables from across the country Electronic banking interfaces to automate disbursements Implement efficient account structure for concentration of funds Minimize excess cash and overdraft balances Sound MIS for effective planning and decision making End-to-end integration with bank’s interface & ERP systems |
Key initiatives by Reserve Bank of India (RBI):
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Figure 1.2: Technology Developments in the Banking Industry
Drivers for change in Indian Banking:
The various drivers which led to change in Indian Banking. Four reasons can be dimensioned to it:
- Governments have enforced doctrines and plan of action based on an addition in competition with regard to increase skills and efficiency; it has helped in the outcome as for the beginning of big new financial institutions that functions at the same time in various sectors such as retail banking, wholesale banking, insurance, asset management and risk management mechanism.
- With the emergence of new technology it can create an infrastructure permitting a participant to move out with a broad orbit of banking and financial services.
- Due to increase in the competition, banks had to answer to the enhanced success-fullness of their clients and to clients’ arousal to get the high-grade transaction achievable. These drivers have forced banks to move in various spheres and provide variant services.
- Development of customized product is now the major concern for the banks, as now the customers are more Cell Phone and they need their transactions to be accomplished at one place as one-stop shop.
1.2 Retail Banking
Service with a smile is today’s banking tagline for the customers who decide for nothing less. Retail banking is archetypal marketable banking where a customer makes use of nearby branches of generously proportioned commercial banks. The services presented are: providing saving services, verifying accounts, security assets, individual loans, debit and credit cards, etc.
A comprehensive and innovative banking system is necessary for continuous financial enhancement. Banking sector expansion and growth has gone from side to side uncountable twists and turns after the independence. Technical advancement has been enormously accountable for the quick growth and extends of retail banking. There is also a growth in the nature and the number of products being offered underneath retail banking. Retail banking has vast prospect as well as challenges in a growing economy like India. The Retail Banking atmosphere today is moving swiftly. The market these days gives us challenges to offer several and innovative modern services to the customer through a combined aperture as so to make sure that the bank’s customer gets “steadiness and constancy” of service delivery across time across all channels. Present-day Automated bankers now more seem at reducing in their operational costs by accepting safe technology thus plunging the answer moment to their customers so as to get improved customer care services.
Retail Banking- Meaning
Retail banking is the management of commercial banks with separate clients, both on liabilities and assets sides of the balance sheet. Fixed, current/savings accounts being on the liabilities side; and home loans, advances being on the assets side, are the more legitimate of the items advertised by banks. Related added services comprised are credit cards and demat services.
Retail Banking- Characteristics
Retail Banking Sector is characterised as:
Figure 1.3: Characteristics of Retail banking
Advantages of Retail Banking:
Retail banking has certain merits overshadowing certain demerits. Merits are analysed from resource perspective and asset perspective.
Resource Perspective | Asset Perspective |
Retail deposits are steady and comprise core deposits. | Retail banking effects in better capitulate and better bottom line for a bank. |
They are interest not sensitive and less good buying for added interest. | Retail section is a good boulevard for funds consumption. |
They comprise low cost funds for the banks. | Consumer loans are supposed to be of lesser risk perception and NPA discernment. |
Effectual customer relationship management with the retail clientele built a strong client base. | Helps profitable revitalization of the nation through greater than before production activity. |
Retail banking boosts the supplementary business of the banks. | Improves standard of living and accomplish ambitions of the people through reasonably priced credit. |
Effect of Technology on Retail Banking
Latest developments in technology have created a spurt in “technology-based self-service”. Such developments are varying the way that service firms and consumers interact, and are raising a host of exploration and practice issues relating to the distribution of e-service.
E-service is becoming progressively significant not only in determining the victory or catastrophe of electronic commerce (Yang et al., 2001), but also providing that customers with a superior skill with respect to the collaborative flow of data.
The financial system globally has been facing a lot of changes. Mergers and acquisitions, expanded rivalry, deregulation, changing data frameworks and innovation, and HR with various capacities are simply a few ‘potencies’ that are prompting the banking commerce (Pereira, 1995). Technology is one prime ‘driving force’ currently in different businesses. It is thus important to discover the investments in technology and their effect in the bank business.
Dabholkar (1994) states that when the customer is in direct contact with the technology there is more control with Internet banking. Nonetheless, if there is a non-attendance of direct contact, for example, with phone banking, it is expected that there is less control gathered by the client through this exchange. Bateson (2000) has given numerous investigations on the need for purchasers to have control amid benefit strokes of luck. When a customer simply picks the technology to use as a form of service delivery the effect is high in terms of quality characters. Some of the quality features that are very important to customers are efficacy and speed.
Role of E-Commerce in Retail Banking
Financial services industry over time has opened to momentous revolution that can be termed as e-developments which is progressing quickly in every aspect of monetary intermediation and budgetary markets, for example, e-money, electronic banking (e-banking), e-fund, e-protection, e-trades, e-expediting, and e-observation. The driving forces behind the speedy revolution of banks are influential alterations in the economic setting comprise among others innovations in information technology, automations in financial products. These factors make it complex to design a bank’s policy, which Dabholkar (1994) talk over how technology-based services have made innovative service delivery options accessible to organizations, making customer contribution more extensively possible. Customers make use of touch screen “kiosks” to request take-away food, although banks have comprehensively distributed ATM to withdraw money, initiate funds transfer, making deposits into accounts and performing any other transactions like balance inquiry, e-ticketing.
Technological advancement have removed tedious, time consuming jobs, reduced human fault to banking related services. Technology also delivers customer information that it would be much more costly to deliver on a person-to-person basis. Cell phone banking services permit non-cash transactions to be performed from anywhere, which required a visit to a branch before (Prendergast and Marr, 1994).
1.3 Scenario of Retail Banking in India
The Indian economy is on a dynamic development path and boasts of a steady annual growth rate, with rising overseas trade reserves and prospering capital markets along with the other factors. World Bank has projected the Indian economy to be amongst the top 3 economies in the world by 2050. Retail banking setup in India perceives a remarkable revolution in the samples of product creation and operation. The intrusion of consumerism has its usual trickle over result in terms of amplified necessity of retail banking products- cards, loans, tailored products and services. The retail banking sector has its routine slit out: keeping rate of knots with the fast flowing vicious surroundings, best practice of technology, growing customer backing by directing at rural India on the way to inclusive banking, getting healthier the customer service ideologies & intentionally calculating revolutionary products and services on the way to targeted sections.
April 11, 2016 was an epic day for masses living in India. The government launched a digital banking system known as Unified Payment Interface (UPI) that permits people to transfer money easily to and from a bank account or to others by means of a smartphone. Although money transferring of this kind was accessible to people before that date, it wasn’t easily reached to everyone. Now, with the help of UPI, almost everybody in the country can open a bank account, save money and perform various financial transactions.
So far, in spite of the range of financial services on offer, customers in an unstable and undefined domain will progressively need an intellect of durability and safety for their deposits. Due to the low dispersion of formal, planned financial services among households and small and medium initiatives, the prospects for financial mediators, mainly banks, continue to be very lively.
1.4 IT in Banking - A New Era
The Indian economy opened up in 1991 and almost kept up a correspondence with the worldwide Internet revolution which had a double impact on the Indian private and public sector banks that were as yet obstructed in old methods for working. After the Indian IT administrations organizations began to slam against, it was simply a question of time before Indian banks entire heartedly secured innovation. This changed the approach for business process computerization in managing an account, which aided better client benefit, lesser handling costs and expanded profitability.
The banking sector has clutched the usage of technology to service its customer's quicker with better service at one click. Emergent engineering science (IT) has denatured the banking industry from traditional branch based banks to netted banking services and digitization. Broadband internet was a cheaper source and it had made the movement of data effortless and fast. Technology has changed the system of rules and administration system of all banks. And it is now dynamical and focusing on delivering services to their customers. Banks are have now blossomed into a supermarket where once the customer comes, and get all the things done in his basket. From providing conventional banking services, banks have progressively transformed themselves into worldwide banks. The concentration is shifting from collective banking to People centric banking with launching of various products which are highly customized. Branches are on the job for 24 X 7 running with the adoption of Telephone banking, Cell Phone Banking, Internet Banking, ATMs, and E - banking.
In recent times, we cannot think about the victory of a banking system without information technology and communication. It has inflamed the role of banking sector in the economy. The financial transactions and payment can now be handled quickly and easily. The banks with the up-to-date technology and techniques are more successful in the competitive financial market. They have been able to produce more and more business resulting in their greater success. Many empirical and theoretical studies have been carried out at the national and international level to study the impact of electronic banking and information and communication technology (ICT) on banking sector, shoppers, and administration quality and instalment system. The examinations mostly accentuation upon e-banking effect on efficiency and benefit basically because of core banking system, electronic fund transfer, real time gross settlement system and electronic clearing services. From the banks perspective Internet Banking arrangements are for the most part identified with cost reserve funds and Internet Banking stays one of the practical and more compelling conveyance channels.
It is notable that there is a number of driving force inspiring the adoption of internet banking that have been suggested in the literature. Electronic banking is a greater concept than banking through the internet and the internet is a key delivery channel for electronic banking and its value to consumers and banks is constantly increasing.
Before IT emergence in order to withdraw money people had to stand in long lines and to clear the cheque it took a week. The banking industry has journeyed a long way and it has been possible because of IT usage in banks. Banks have advanced with the emergence of IT which has led to reduced operational costs and increased productivity. Although banks has benefited from IT, but the major beneficiaries of this technology advancement are the banking customers. Some of the major transformations brought by the addition of IT and how it has profited the banking customers are illustrated here: -
- Core Banking Solution (CBS):This term refers to the systems management of branches, which allows its consumers to take benefit of banking services from any of the CBS enabled bank branch, regulate their records, and, paying little heed to where the client keeps his record. CBS branches are between connected with each other. Hereafter, Consumers of CBS branches can exploit from different banking offices from some other CBS branch found anyplace around the world. CBS has computerised all core banking operations such as debit and credit of transactions, maintaining passbook, calculation of interest on loans and deposits. Advantages of Core Banking Solutions are Customer Convenience, Multi-device User-friendliness, 24x7 facilities, Improved Efficiency and Improved Relationship.
- Automated teller Machines: An automated teller machine (ATM) is a computer operated telecommunication device that offer banks’ customers to make transactions self-sufficiently without the help of a banker. ATM works by put in a plastic ATM card which has a magnetic stripe and a chip that has customer’s card number and some safety information.
- Smart Cards: It is referred to as plastic money. These cards have inbuilt integrated circuit in it which helps to reduce the requirement for paper currency. With the help of these cards customers can shop by swiping their card and the money gets automatically debited from their account.
- Internet Banking: Internet banking is a form of information system that makes use of the advanced resources of the Internet to permit customers to influence financial activities in simulated space. Internet banking is a fresh specific banking area, which authorize individuals to communicate with their banking accounts virtually from anywhere globally.
- MICR: MICR stands for Magnetic ink character recognition. MICR code is an innovation utilized primarily to process and clear the checks and other reports simple by the managing an account industry. In MICR the encoding line is at the bottom of checks and contains the archive compose pointer, bank account number, bank code, cheque amount, check number, and a control indicator. The innovation grants MICR per users to sweep and read the information straight into a data-accumulation gadget. Distinct barcodes and related advancements, MICR characters can be perused by humans. This innovation spares time required to exchange cheques from one city to other and the cheque clearing time has likewise diminished from 3 to 1 day.
- Cell phone Banking: Nowadays Cell phone plays a vital role in e-banking. This technological service provide customers to view their bank statements, transfer money from one account to another and gives the complete control over their account through the use of Cell phones. Cell phone Banking permits the bank’s customers to perform a number of financial transactions via Cell phone or tablet.
- RFID in Banks: Radio frequency identification (RFID) is a modern development in the banking industry for maintaining healthier customer relationship management. The New tech banks like YES bank, DENA bank use this technology for its customers so that it can give them a special treatment when they visit the branch. Customers using this technology have a RFID enabled chips in their Cell phones which help them to pay at shopping malls and other outlets by waving their Cell phones on the contact less readers. The money gets immediately debited from their personal accounts.
- Digital Wallet: These days, carrying hard cash is not necessary as with the emergence of Digital wallets purchase of any type can be made with payment cards, and spending can be traced online. The major benefit is that it’s more secure than carrying hard cash in your pockets. Cell Phone Applications hold the payment and loyalty card data. BHIM app, Mobiwik, Paytm, Google Wallet and Apple’s Passbook are some of the most common applications.
- Digital Cash: Digital Cash is also known as e-money, e-cash, digital cash which alludes to an arrangement in which a man can pay for products or administrations safely by the means of electronic gadget without basically interfacing a bank to assist the transaction. A Digital Cash dealing generally incorporates three kinds of clients: A Payer (consumer), A Payee (merchant), A financial relation between a Bank with whom the Payer and Payee have accounts.
1.5 Internet Banking
Internet Banking or Online Banking is an alternative channel offered to customers who can access their accounts and make transfers or payments electronically via internet. Anywhere banking has made life of the customers very relaxed who can perform financial transactions at a click of the mouse. Internet Banking is an important terminology for the process by which a consumer may implement banking transactions by electronic means without going to a brick-and-mortar institute. The major concerns with Internet Banking services are safety and privacy of personal private information. With the usage of Internet Banking, customers can use varied banking services from bill payment, e-ticketing to making investments in various sectors.
Concept of Internet Banking
Automated banking experienced incredible growth in both developed and developing countries and redesigned the banking activities. E-banking commonly known as internet banking permits the customers to do the banking services online without going the bank branches. This is one of the innovative delivery channels offered in the retail banking sector, which provides services like viewing transaction details, transferring funds, paying utility bills, or shopping on-line via telecommunication network. Internet banking changed the traditional methodology of ‘bricks and mortar’ service to the ‘clicks and mortar’ service with the support of the internet (Chau & Lai, 2003). ICICI bank was the pioneer which introduced internet banking in India in the year 1996 (Malhotra & Singh, 2007). Other banks, which followed the legacy, are HDFC, Citi bank and IndusInd Bank. Nationalized banks of State Bank of India, Canara Bank, Allahabad Bank, Punjab National Bank, Bank of Baroda, Syndicate Bank, and others followed the movement by acquainting with internet banking. To study the different facets of internet banking. Three levels of internet banking services are presented in India:
- Information only systems,
- Electronic information transfer system, and
- Fully electronic transaction system.
There are two means to deliver Internet banking services to its customers. Right off the bat, an existing bank with offices which are physically present can create a website and offer Internet banking beside its customary delivery channels. Furthermore, a bank may be setup as a branchless, bank with no physical branch.
History of Internet Banking
Internet banking is alluded to as a facility gave by banking and financial establishments that allow the client to execute bank related transactions over Internet. The major advantage of Internet banking is that people can complete the banking transactions and services sitting at his comfortable home. With the use of Internet banking services, the account holder does not have to individually visit the bank. Many transactions can be performed by the account holder with the assistance of Internet banking. To handle transactions like record of recent transaction, balance inquiry, etc. Internet banking is very useful.
The thought of Internet banking has been instantaneously sprouting with the progression of the World Wide Web (WWW). Computer programmers came up with concepts for online banking transactions who were at work for maintaining banking databases, during 1980's. The innovative process of development of these services was perhaps flashed after many companies started the idea of online shopping. The online shopping encouraged the usage of credit cards via Internet. Many banking establishments had now started generating data warehouse services to make it simple for their working staffs. Banking and finance organizations in Europe and United States in 1980's, started evocative researches and programme experimentations on the idea of 'home banking'. Primarily when computers and Internet were not so well established, 'home banking' mostly made usage of fax machines and telephones to assist their customers. The widespread of Internet and programming facilities shaped more open doors for the development of locally situated banking.
1.5.1 Features of Internet Banking
Online banking services are offered by various organizations that comprise of many features and competences; however some of them are application based. The common features are as per the following:
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1.5.2 Current Scenario of Internet Banking in India
Internet Banking has become an important piece of banking system. The idea of e-banking is of objectively current beginning in India. As in early 90’s old-style model of banking was prevailing which is branch banking, but after 90,s branchless banking services were started. The IT Act, 2000 was passed by the Indian government with effect from the 17th October 2000 to inspect different facets of Internet banking. RBI has set up a commission to discuss on Internet Banking and the committee had focussed on three major areas of Internet banking namely-
- Technological and security issues,
- Lawful issues and
- Governing and controlling issues.
RBI had accepted the recommendations and commendations of the Working committee and thus issued guiding principle to banks to implement internet banking in India. The deep-rooted manual systems which were dominant in Indian banking for centuries seem to be swapped by modern technologies. As per the survey by AVAYA, Indians prefer to use digital channels to perform banking transactions, and will not hesitate to object for poor services. As per the survey report various conclusions were made which are mentioned below:
- 51% of Indians use online banking channels to perform their financial transactions.
- 26% of Indian customers choose to access services by their bank’s website, and the same number of customers would choose to use a Cell Phone app instead of talking to a bank branch person.
- 37% of Indian respondents say if they had a bad experience while performing any financial transaction they will change banks.
- One out of four respondents will share their bad experience on social media like Facebook, twitter.
- 44% of the respondents would let their friends and family know about their issues with the use of banking app or website.
- 93% of respondents are happy by the service delivery from their bankers.
- 22% of the respondents have never confronted any problem related to customer satisfaction.
- 47% of the respondents want to receive information on a new offer or service.
1.6 Cell Phone Banking
While in India traditional branch-based banking is widely used way of conducting banking operation, at the same time commercial banks are experiencing a swift change majorly focussed by the information & telecommunication (ITC) technology. ICICI bank initiated in Cell phone banking services in India. Amongst public banks in India, Union Bank of India was first to announce Cell phone banking (Ali et al. 2010). Cell phone banking in India is as a concept is mainly used for two basic purposes, firstly, for fund transfer (transfer of funds from one bank account to another) and secondly, for merchant banking transactions (purchase of train, bus and movie tickets, among others). Henceforth, the speed in which cell phone banking is growing in India depends on the speed in which banks prepare themselves to adapt to Cell phone banking technology.
Meaning of Cell Phone /Cell Phone Banking: In terms of guiding principle issued by RBI, ‘Cell Phone Banking transaction’ means undertaking banking transactions using Cell Phone phones by the bank customers that includes accessing their accounts, debit and credit to their accounts.
Concept of Cell phone/Cell Phone banking: Cell Phone/Cell Phone Banking refers to the delivery and using banking- and financial services with the help of Cell phone/Cell Phone devices. The range of services offered to customers includes facilities to conduct banking and stock market transactions, to manage accounts and to access personalised information.
The important reasons for which financial institutions offer Cell phone banking services to their customers are:
- Reduced operating costs
- Larger geographic divergence
- Better competitive situation
- Increased customer demand for services, and
- New revenue prospects
Organisation of Cell Phone Banking in India
The structural diagram of Cell Phone banking in India is given below:
Figure: 1.4: Structure of Cell Phone Banking in India
1.6.1 Current Scenario of Cell Phone Banking in India
Cell Phone Banking in India has seen remarkable growth and it can be seen that it has risen 150 % in volume and Value of transactions has risen to 224% from the FY 2015-16 to FY 2016-17. According to the survey by ASSOCHAM India in their report ‘M-Wallet: Scenario Post Demonetisation’. In FY 2017, Cell Phone/ Cell Phone banking segment is projected to contribute a largest share in Indian Cell Phone payment market, with the widely held being money transfers. Its share in the m-payment is projected to rise terrifically from 8% in FY 2014 to 56% in FY 2017 in terms of value. Money transferrals using Cell phone banking and immediate payment system (IMPS)–where money is transferred instantaneously using text message or online banking has showed the highest increase in over 12 months ending October 2016. As per the India Spend analysis of Reserve Bank of India (RBI) data, Cell phone banking transactions raised 175%, while transactions using Cell Phone banking grew 369% from October to November. The development in Cell Phone Banking transactions has seen histrionic rise post November 2016 demonetisation, as large sum of people started choosing Cell Phone banking and other substitutes of digital payments.
Amongst the major banks, the State Bank of India (SBI) has a great lead in terms of numbers in the Cell Phone banking space, with 45 % growth in the calendar year 2014. Comparing to 8.57 million customers in 2013, SBI customers transacted on Cell Phone is 12.5 million in 2014. In terms of transactional value, private banks such as ICICI Bank and HDFC Bank lead in the Cell Phone banking space.
HDFC Bank has noticed more than nine times growth in Cell phone banking transactions in January 2015 in contrast to January 2014. The bank continued the lead position in Cell phone transactions with Rs. 4,906.86 crore value noticed in January. According to data from the Reserve Bank of India (RBI), it had 1.49 million transactions in January 2015 as compared to 290,000 transactions in January 2014.
The bank is followed by ICICI Bank, State Bank of India and Punjab National Bank with respect to Cell Phone banking transactions. ICICI Bank had transactions worth Rs. 2,224.97 crore, followed by SBI with Rs. 1,586.4 crore and Punjab National Bank with Rs. 1,440.61 crore worth of transactions.
Graph 1.1: Value of Cell Phone Banking Transactions
Source: RBI
The Major areas of concern of using Cell Phone banking:
- Rapid growth. Cell phone banking and payments will constantly change, and the expectations among safety and cell phone experts are that the Cell phone channel will shortly become consumers' main financial-services platform. As the channel is useful and can be tailored, users will transfer from PC banking and payments to Cell phone. And the more Cell Phone users, the bigger the security threat.
- Need for new security controls. Because the Cell Phone risk area is growing at a higher pace therefore Security measures need to be taken to improve security.
- More players, more risks. The Cell Phone system depends on a number of players, many of which fall outside the scope of core financial services. Device making companies, operating systems, application developers and network operators all are involved. And all they need is to address security.
- Privacy issues. Emergent Cell Phone confidentiality issues, such as those turning around Geo-location, will become more serious. As more Cell Phone technologies arise, institutions will have to provide stability to customer and member ease with safety and fraud stoppage.
- Role of consumers. Financial institutions must progress approaches to educate their customers and members about vigorously handling their own Cell Phone-device security.
- Insecure Information. There are some risks involved in Cell Phone banking. Retrieving financial services over Cell Phone banking involves submitting personal information via text message. Hackers via unsecured Wi-Fi hot spots can read and alter those messages. Other risks involved are that the banks are not investing enough amount and time in encryption security of its technology.
- Governing Issues. Banking institutions hire telecom agents to install and maintain their Cell Phone banking services. The use of self-governing or franchised telecom agents makes it hard for a country’s central bank to control banking operations to have a general set of standards. This means that different banks can create different Cell Phone banking rules, use inferior banking security software and levy high fees for Cell Phone banking.
- Coverage. One of the major challenges of Cell Phone banking is network coverage. Throughout the country there are a number of telecom service providers, but there is not essentially countrywide coverage for these providers. Bank users may not understand this and can close up with a large cell phone bill full of charges.
- Viruses. Banking institutions must make sure that their channels are secured by a protected layer to confirm the safety of their consumers’ information. Though, some Cell Phones are very susceptible to bugs such as Trojans. These viruses provide hackers the chance to retrieve your banking information via your Cell Phone.
- Security. Security can be an issue with Cell Phone banking although there are a number of government regulations with which cell phone providers must comply. Fraud protection must be developed within the cell phone company. Network security is out of the control of the bank as well as data access and use.
1.7 Benefits of Internet and Cell Phone Banking
Internet and Cell Phone banking functions in the same way as traditional banking excluding that it provides to its customers the chance to access information of their accounts, to make payments or settlements performed in the accounts at any definite time with no prerequisite to be physically presented at the Bank branch. According to various studies Internet banking and Cell Phone banking is becoming more well-known because of the benefits it provides.
Here are the benefits of Internet and Cell Phone banking for bankers and their customers:
1. With Internet and Cell Phone banking, there is no time limitation to bank hours or local locations. The web is available 24/7, which means be where (and when) your customers want you.
2. Improved Customer Service: Internet and Cell Phone banking allows customers to make various financial transactions like transfers between accounts, handling bill payments, or currency exchanges whether they’re on a sofa or in an aircraft. Internet and Cell Phone Banking reduces the traffic that the bank team struggles with in a physical location.
3. Reduced Customer Concern: While customers are muddled or feel distressed about their financial details, Internet and Cell Phone banking is a helping hand. By giving users permission to access their account anytime online via web, bank keep their customers up-to-date and informed with their individual record-keeping.
4. Paperless Statements: With Internet and Cell Phone banking, some customers choose for paperless statements. From the customer’s viewpoint, they get the handiness of their updates looking in their mails. Bankers can save money on physical printing and posting. The environment also smiles with less wasted paper.
5. Have a Complete View of Customers: Internet and Cell Phone banking helps to know customers well. When the banker assimilate the Internet and Cell Phone banking solution with the present backend solutions {such as Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM) software}, a banker gain a combined view of their customers that permits to aim them with tailored content and proposals. The user’s individual profile and account information is combined to give a complete view of what their wants are.
6. Location-based Services: Cell Phones have the capability to identify a user’s location, and this is data that Cell Phone banking solution has permission to. This is used for added security. For example, if an online enquiry occurs for a Chennai account from a Cell phone in Bhopal, bank site initiates a series of authorizations, possibly even direct contact, to safeguard the account of the customer. The location services help customers to identify their closest local branch.
7. Leverage SMS Messages: One more advantage of Cell phone banking for customers is the facility of receiving banking alerts on their cell phone. Whether targeting the customers with personalized promotions or giving them routine updates, banker address their customers more precisely by sending them direct messages.
8. Track Rewards and Customer Loyalty Programs: Internet and Cell Phone banking gives an outstanding chance to boost customer retention and attracting new customers. Customer loyalty programs are easy to track when the points and rewards are computerized and joined with the users’ online profiles.
9. Customer Service: Sometimes self-service isn’t enough, Customers want help from an actual person. With online chat and email facilities, Bankers keep their customers satisfied without bothering them to take out time and visit a physical bank location and stand in line.
With all these benefits, Internet and Cell Phone banking have the prospects to increase bank’s own competence though exponentially growing the customer experience. And if the customers are satisfied today, Banks don’t have to wait for the future to reap the rewards.
1.8 Few Initiatives Taken By the Banks in Technology Space
There are various initiatives which has been introduced by Indian banks with the emergence of technology in banking sector. The few initiatives are discussed below:
- To improve its service quality, SBI has deployed web-based portal where customers can register all kind of complaints.
- BoB has taken initiatives like windows server/desktop virtualization and backup consolidation to ensure optimization of resources. (e-TDS) module and leave module to improve its service delivery and efficiency.
- PNB has done necessary up gradation to make its technology platform more stable, robust and improve quality of assets.
- Canara Bank has undertaken several technology initiatives like internet banking, Cell Phone banking, online fund transfer, passbook printing self-service kiosk and financial supply chain management facility for corporate customers (for working capital finance).
- Branding itself as modern tech savvy banks, BoI has implemented many technology based customer centric facilities like online nomination facility, banking through Cell Phone service, implementation of school fee module, self-service kiosk, barcode enabled passbook printing, viewing of public provident fund (PPF) account online and online application for education loans.
- ICICI Bank has leveraged technology to improve customer quality, convenience and reduce customer complaints to enrich customer experience.
- New initiatives like Click2Call and ‘Your Bank Account’ application on Facebook have demonstrated the bank’s focus on technology.
- HDFC Bank has automated credit underwriting process and has enhanced its cross-selling and up- selling capabilities through the implementation of data mining and analytical customer relationship management solutions.
- Axis Bank has made significant investments in making scalable and robust technology platform. The bank has launched the business process management system to improve operational efficiencies. Server virtualization and storage centralization have been put in place to ensure optimal utilization of resources.
- IIBs advancements like cash on-Cell Phone, direct associate and fast reclaim benefit have helped the bank in giving better consumer loyalty and expanding its purchaser base.
- Indian Government is empowering computerized exchanges forcefully. The launch of Bharat Interface for Money (BHIM) and United Payments Interface (UPI) by National Payments Corporation of India (NPCI) are brilliant progress tools for computerized transformation in the space of Payment Systems.
Under this study four major banks are studied and their innovative Electronic Banking services are discussed below:
1.9 State Bank of India (SBI)
State Bank of India is the biggest bank of India with a network of 15000+ branches and 5 associate banks across India. State Bank of India (SBI) gives an extensive banking products and services to manufacturers, entrepreneurs and their clienteles.
1.9.1 Retail Internet Banking Services by SBI
Figure 1.5: Internet Banking Services Provided by SBI
1.9.2 Corporate Internet Banking
State Bank of India is offering a world class services to Corporate Customers through the portal www.onlinesbi.com. CINB facility of SBI allows the corporate customer to carry out banking activities which are as follows:
Figure 1.6 Corporate Internet Banking Services Provided by SBI
1.9.3 The new initiatives of SBI
- State Bank Anywhere Personal: State Bank Anywhere Personal is a cell phone banking app for its retail users. It has various features like safety, convenience and easy to use app which help users to maintain their banking on the move. APP is available in Google Play Store, iOS App store and Windows marketplace.
- State Bank Secure OTP: This is an OTP generation App which confirms the transactions done by both State Bank Internet Banking and State Bank Anywhere App.
- State Bank Anywhere Saral : This APP is simple transactional product introduced for:
- single user friendly
- for sole proprietorship concerns
- For micro enterprises or distinct entrepreneurs
- People who need online dealings facility in their commercial accounts.
Features of State Bank Anywhere Saral
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- State Bank Anywhere Corporate' : State Bank Anywhere Corporate' is the service accessible on Mobile phones for:
Figure 1.7: State Bank Anywhere Corporate by SBI
- SBI Quick – Missed Call Banking: It is the new service which includes Banking by giving a Missed Call or sending an SMS with pre-decided keywords to pre-decided numbers. This service can only be started for the Cell number which is at present registered for a specific account with the Bank.
- State Bank MobiCash: State Bank MobiCash State Bank of India in relationship with BSNL has propelled a Mobile Wallet known as MobiCash. It offers services like reserve exchange, payment of bill, mini statement, enquiry. This wallet can be utilized as a part of self-mode alongside helped mode with the assistance of BSNL CSPs. It can be progressed to Full-KYC wallet, which gives more noteworthy transaction limits and money withdrawal. Features of State Bank MobiCash –
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- State Bank Buddy: State Bank Buddy is one more mobile wallet on Smartphone which is introduced by SBI. It is also named as semi-closed prepaid wallet. The benefit of this wallet is to transfer money to other wallet users and bank accounts, anytime, anywhere.
- State Bank mCASH : A simple, stress-free and quick method to claim funds using mobile number or e-mail id sent by SBI customers through Internet Banking.
Features of Mcash –
Figure 1.8: Features of State Bank CASH
- State Bank of India SMS Banking: State Bank of India SMS Banking service is accessible on all smartphones. Customers just need to send keywords [SMS to 9223440000].
- “BHIM SBI Pay”: “BHIM SBI Pay” APP which allow a payment solution that authorise an account holders of Banks contributing in UPI to send and receive currency from their phones with a simulated payment address of the identifier.
- State Bank of India *99#: State Bank of India *99# unifies USSD system with highly practical UPI platform.
- State Bank No queue: One of the exclusive App to allow customers to book a Virtual Queue Ticket (e-Token) for specific services at particular SBI branches. Customers can generate e-Token beforehand reaching the branch, consequently evading waiting in the queue at the branch and saving time.
Features of State Bank No queue - |
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Figure 1.9: Features of State Bank No queue
- State Bank of India Finder: This APP directs to search State Bank ATM, Branches, CDMs, Address /location of other Cash providing touch points and State Bank Customer Service Point (Cash@CSP) with ease of use of Cash can also be discovered. A customer can set either his/her current location as took through GPS or can set location manually also.
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- SBI’s YONO : YONO stands for You Only Need One is a unified digital banking platform which allow users to access both type of services: 1. financial 2. other services
Presently, YONO is available as a phone app for both Android and iOS. 'YONO' allows customers to instantaneously open accounts, carry out transactions, apply for loans and perform online shopping- altogether in one APP. Some of its important e-commerce partners comprise Amazon, Myntra, Jabong, Shoppers Stop, Uber, Ola, Cox & Kings, Yatra, Airbnb, Thomas Cook, Swiggy and Byjus, among others.
1.10 Punjab National Bank
Punjab National bank was India’s first Swadeshi Bank, which started its activities on April 12, 189 from Lahore, with an approved capital of Rs. 2 lac and working capital of Rs. 20,000. The visionary forecaster and patriot’s demonstrated courage in offering face to the soul of patriotism by framing the first bank oversaw by the Indians. Amid the long history of more than 121 years of the Bank, 7 banks have converged with PNB and it has turned out to be more grounded and more grounded with a system of 6809 branches and 9669 ATMs as on 30th June16.
1.10.1 PNB Retail Internet Banking
Punjab National Bank (PNB) enables its clients to utilize the internet banking office from anyplace whenever, to do basic, helpful, and snappy procedure of banking.
1.10.2 E- banking facilities provided by PNB
Figure 1.11: E- Banking Facilities Provided by PNB
- OTP Based Aadhaar Seeding and Authentication of Accounts: As far as Prevention of Money Laundering (Maintenance of Records) Second Amendment Rules, 2017, all records should be aadhaar linked and confirmed with biometric facility.
- PNB Aadhaar Pay: A digital payment resolution which dealswith the PNB Individual or Sole Owner having Aadhaar Number to obtain payments for goods or services using android phone and Biometric scanner from customers having Aadhaar linked with bank account after Biometric verification from Unique Identification Authority of India (UIDAI).
- Bharat Interface for Money (BHIM) :Bharat Interface for Money (BHIM) is established by the National Payment Corporation of India (NPCI). BHIM is inter-operatable with other Unified Payment Interface (UPI) applications, and bank accounts.
- PNB Kitty :PNB Kitty is secured, quick and useful. By using PNB Kitty, all the payments can be made on a single click.
Figure 1.12: Functions of PNB Kitty
- PNB Mobile Banking: PNB has introduced the mobile banking facility which is known as PNB Mobile for hassle free transaction for its clients. It is quick, convenient and easy, mobile banking services can be availed on various types of mobile and it offers customers the choice of carrying out banking transactions, aids in fund transfers and can schedule forthcoming transactions as well.
1.11 ICICI BANK
ICICI is one of the multinational banking and financial services provider organization. Being India's biggest private segment bank, ICICI Bank has add up to resources of Rs. 7,206.95 billion (US$ 109 billion) at March 31, 2016 and profit after assessment Rs. 97.26 billion (US$ 1,468 million) for the year ending March 31, 2016. ICICI Bank is right now having a system of 4,501 Branches and 14,271 ATM's crosswise over India. It is headquartered in Mumbai, Maharashtra, India.
Figure 1.13 Range of Financial Products and Services
1.11.1 The new initiatives at ICICI Bank
1. 24x7 Electronic Branches:
ICICI Bank has started 24x7 electronic branches which are one-stop search for all banking transactions. Clients can execute their account activities without anyone else, with the assistance of different automated devices and booths.
Electronic branch of ICICI offers:
Figure 1.14 Range of e-services Offered by ICICI
2. Tab Banking: ICICI Bank has launched an Application named as Tab Banking, which gives a prospective client the ease of opening his/her, bank account at his/her home or workplace.
3. Bank-on-the-Move: A new instrument announced by ICICI Bank, in keeping with its promise to reach out and enable banking in areas where there are no branches and ATMs.
Bank on move provide customers to avail various services like
Figure 1.15 Range of e-services Offered by Bank on Move
4. Help-on-Tab: ICICI Bank has launched Help-on-Tab to enhance the experience for day-to-day banking, that permits its branch staff to pre–process clients’ transactions till the time clients are coming up to get serviced in the branch.
5. Smart keys – Transfer Money While Chatting Smart Keys : iMobile Smart Keys which helps to transfer funds while chatting. It is one of the new features of iMobile, which allows customer to perform Mobile Banking on smartphone’s keyboard. There is no need to switch between the apps or disturb your chat, rather it helps to transfer funds quickly.
6. E-Locker:
Figure 1.16 Features of E-Locker
7. 'Touch &Pay':A new mobile payment solution 'Touch & Pay' that facilitates to make protected contactless payments at retail stores using Cell phones. Touch & Pay a Pockets app just give a feature to pat your cell phone at a NFC (Near Field Communication) enabled merchant terminal and make the payment through linked ICICI Bank Debit/Credit Card.
8. Voice Biometric: Remembering passwords is one of the most difficult task, so with this service, voice will act as password for performing all banking related transactions through ICICI call centres. The procedure includes as start communicating with phone banking employee, after that Voice Biometric service of ICICI gives a highly protected phone banking experience.
9. EftCheques : EftCheques permits a quick and simple way of transferring funds without losing out the physical cheque writing experience. This app enables to inscribe a virtual cheque to any individual from your phonebook. The receiver will on the spot receive a web-link via SMS which can be encashed into any bank account with choice of the customer.
10. Contactless Cards: ICICI Bank Contactless Credit and Debit Cards has a different feature of in-built NFC technology that lets customer to make protected and fast payments without the necessity to enter pin, customer need to touch card on the reader and the payment will be made.
11. UPI: This APP of ICICI, in which one can send and receive money using customer’s own name. With Unified Payment Interface (UPI) on iMobile or Pockets app create a virtual payment address of one’s choice (For example: charu@icici) and then link your bank account to send or receive money fast. There is no need of bank details like account number, IFSC etc.
12. Express Home Loans : Express Home Loans is being launched for providing rapid home loan services to customers by just applying at icicibank.com, then need to, upload all the necessary documents and get the home loan approved online within 8 working hours.
13. InstaBanking: This app agrees to initiate transactions through your cell phone at your suitability - anytime, anywhere. The procedure for the same is as follows:
Figure 1.17: Procedure to do Insta Banking
14. Positive Pay :ICICI is providing a unique facility for its customer to use Positive Pay on iMobile app to send the particulars of the cheques with their pictures to bank before one handovers the cheque to the receiver. Bank will honour the cheques only when the details match with the physical cheques. This app gives safety to its customer for payments.
15. ‘MeraiMobile’ :This App assist its customer to save their time and cost of going to a branch to avail banking services. This app helps to carry out a range of regularly used banking services from their Smartphone, without using mobile internet services.
16. ‘iMobile’ : The ‘all new iMobile’ has best-in-class safety features. It allows the customers the facility of dual login, connect with the Bank’s call centre from or within the app without any additional verification, withdrawing cash from an ATM devoid of using a card, tag recurrent transactions as preferences, view collective details of all accounts in the application itself along with receiving alerts from Google Now.
17. Digital locker: DIGI Locker is an inventiveness of Department of Electronics & Information Technology (DEITY) under Ministry of Communications & IT, Government of India. . This initiative is in support of the Digital India programme to decrease needless consumption of paper, time and human efforts.
18. Pockets :It is a VISA-powered e-wallet that can be utilized by any customer of any bank, which is utilized to recharge mobile, send money, shop anyplace, pay bills and more.
1.12 HDFC
HDFC Bank was incorporated in August 1994. It is India's one of the housing finance company. In a limited capacity to focus time HDFC has developed in three principal business fragments as a main player in retail banking, wholesale banking, and treasury operations. As of September 30, 2017, the Bank had a nationwide dispersion organize 4,729 branches and 12,259 ATM's in 2,669 urban communities/towns. Advanced in 1995 by Housing Development Finance Corporation (HDFC).
1.12.1 Some activities that can be done with Net Banking :
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1.12.2 Digital banking products
HDFC Bank has introduced a multitude of very effective digital banking products.
Figure 1.18 Digital Banking Products Offered by HDFC
Powerful Net Banking portal and Mobile Banking app of HDFC allows customers to perform above 205 and 90 diverse types of transactions.
- 30-minute paper-less Auto Loans using Biometric technology: HDFC Bank has propelled an auto loan that is dispensed in only 30 minutes utilizing biometric technology. It is available for HDFC Bank clients, and also others. With this technology-enabled solution, loans for two-wheelers can likewise be sanctioned inside 15 minutes. As of FY 2014-15, 63% of all exchanges at HDFC Bank are led through advanced digital channels.
- 10-second Personal Loan on Net Banking: HDFCs 10 second individual credit is for current clients. Banks claim that they will not only approve the loan instantly, but the loan will be disbursed to the applicant’s account without any delay. Although this loan is just a click away, it is advisable to have a repayment plan ready before applying for it.
- PayZapp: HDFC Bank PayZapp, a payment solution APP, giving customer the right to pay on One Click.
Features of PayZapp:
Figure 1.19 Features of PayZapp
- Chillr: A mobile app which permits customers to immediately transfer money to any contact in their phone book 24×7 as it is connected to customer's bank account. The bank has combined with MobME, a Kochi-based technology firm, to unveil this app.
- LITE App: For using this App one do not require any Internet connection, also doesn’t need too much space on phone and is fast to install, even over slow connections. No need of a Login ID / Password. Then too it is secure App as it works only from your mobile number that’s registered with the bank.
- Missed Call Recharge: HDFC Bank is making life easier not only for the customer but for its family and relatives too, by just giving a missed call to 73 08 08 08 08. Get recharge done anytime, anywhere.
- 'Fast personal loan' on ATMs: 'Fast personal loan' on ATMs are presented by HDFC to its prevalent customers. It helps the client to not only see the offer on ATMs but also acquire the personal loan only on a few clicks.
- Robot IRA: HDFC Bank has recently propelled the primary "Humanoid" in the national keeping money space. The robot IRA is human-sized, will be situated at a city branch soon. The robot will go about as an associate to supplement services that are being given in the branches. The communicating humanoid named IRA (Intelligent Robotic Assistant) will help branch group in overhauling customers. IRA will be set close to the Welcome Desk, where it will welcome customers and guide them to the related counter in the branch, for example, Cash Deposit, Foreign Exchange, Loans, among others in the primary stage.
1.13 Customer attitude towards e-banking system (Internet and Cell Phone banking services)
As per the progression of the international economy towards administrative development, electronic banking is developing very fast and information technology is the most vital factor in this expansion. Banking sector in India understood the significance of this move from the viewpoint of competitive advantage. Banking sector in India concentrated in the advancement of IT and innovation of services and products of electronic banking which includes ATMs, cell phone banking, electronic funds transfer (EFT), debit cards, credit cards, NEFT, RTGS etc. With the innovation in banking industry assessment of the customer attitude is the main factor and this study is focused on customer attitude towards internet and cell phone banking services in four large cities of Madhya Pradesh. Study of customer attitude after using internet and cell phone banking services will discover the various factors of why some banking consumers accept innovations with reference to internet and cell phone banking services and why some are not ready to accept it? Customers globally have easy access to their accounts, 24 X 7 availability of banking services. In India this is not yet common to use these services even at urban areas like Bhopal, Indore, Gwalior and Jabalpur. The consumers who identified that branch banking is time consuming are currently ready to perform transactions at the snap of their fingers.
The banking industry has been extensively influenced by the evaluation of technology innovation. The move towards electronic system of banks has diminished the cost of transaction and enhanced the speed of administration from this time forward. Regardless of the adoption of electronic banking services, banks in India seem to be attentive of the opportunities provided by internet. In fact; banks are moving towards up-to-date internet services to customers at an advanced level.
The enhancement and up gradations in the technology has assisted the user for easy access to the internet. Nowadays people are fascinated by technology that helps them to save time, cost and energy. Internet banking has developed as an operational tool to offer them with the needful. Internet banking can be stated as the setting up of a web page by a bank to deliver information about its product and services (Jasimuddin, 2001). At an improvement level, it involves providing facilities such as retrieving accounts, funds transfer, booking an e- ticket etc. Internet banking today can be seen as a stimulating area to be studied upon. Throughout the years many studies have been directed on the adoption of internet banking a rare of the studies on internet banking studied here notices a lot of development on the nature and opportunity of online banking. Plenteously research has been done in different homelands about the acceptance of internet banking.
Some questions which arise to study customer attitude are:
- Why customers behave in this particular way?
- What is the motivating factor for this particular attitude?
- What is the outcome of this particular attitude?
In turn, the variation in customer attitude has affected the volume and the nature of internet and cell phone banking services. Customer attitude is considered as an imperative topic. It is now important for bankers to comprehend about customer attitude due to competitive economic environment. An understanding of customer attitude is considered as a key component in the success of banking sector.
The aim of this chapter was to discover the topics of internet and cell phone technology and banking. This was done by studying prevailing published studies that reported the origins of the Internet and cell phone technologies. These studies also conferred the growth of these technologies, the marketing prospects they present and their potential to forefront alteration in retail banking in the 21st era.
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