VOLUME: 09, Issue 05, Paper id-IJIERM-IX-V, October 2022
44 E-BANKING: A REVOLUTION IN THE PHASES OF TRADITIONAL BANKING IN INDIAMs. Kirti Kalyani1, Dr. Rupesh Shukla2
1BBA (EC) Student of IMS D.A.V.V. Indore (M.P.)
2HOD (Computer Application) SCMKVM, Indore (M.P.), Visiting Faculty IMS D.A.V.V.
Indore (M.P.)
Abstract - This research is aimed at understanding the concept of E-banking and how E- banking can help in achieving the goal of Digital India. Banking is one of the most integral services provided in the financial sector. And when this service of banking shakes its hand with the online technological advancements, a new term is born which is known as Digital Banking, or we can call it as E-banking or Online Banking. E-banking is all about the facilitation of various banking operations over the World Wide Web. The facility of E- banking provides the customers with the ease of banking at their fingertips. E-banking has not only benefitted the customers’ sector, but also the banks itself as E-banking increases the productivity of banks by reducing the cost of various banking operations and it also facilitates speedy settlements of transactions in bulk. Our honorable Prime Minister Mr.
Narendra Modi launched the Digital India Campaign on 1st July, 2015 with the aim of establishing modernization and globalization in the economy by putting a foot forward for the cashless economy. The present study highlights the role of E-banking in fulfilling the goal of Digital India and this study also enlightens the importance of the emerging technologies in the banking sector.
Keywords: E-banking, cashless economy, mobile wallet, net banking, plastic cards, information technology, E-payment gateway, blockchain, cloud computing, artificial intelligence, geo-tagging.
1 INTRODUCTION
On July 1, 2015 the Government of India launched the Digital India Campaign under the leadership of our Honorable Prime Minister, Mr. Narendra Modi.
Image Source:
https://www.digitalindia.gov.in/content/i ntroduction
The main vision of this campaign was to implant digital empowerment among the people of India. The main objective of this campaign was to setup a vision of IT (India Tomorrow) and this could be achieved by realizing (Indian Talent) and merging it up with IT (Information Technology). Then, on November 8, 2016 at 8:00 pm, Mr. Narendra Modi, our honorable Prime Minister announced the demonetization of 500 and 100 rupees notes in India. This decision taken by our PM had many reasons behind it. But, one of the primary reasons was to lay a foundation for the Digital India Dream.
And now, if we look upon the COVID-19 Pandemic period, we would definitely realize that it is advantageous for us to
avoid the exchange of physical cash. In such severe times, our only helping hand or we can say that our only financial supporting tool we hadwas E-banking or E-payment gateways. E-banking facilitates speedy transfers at the ease of our fingertips. When we are focusing on cashless economy, we actually dream of any economy where the transactions taking place via cash are less and transactions taking place through payment methods such as banking cards, e-wallets or any other digital payment gateways dominate the economical transactions. The major benefit of establishing a cashless economy is to curb black money and this is possible due to the transparency feature in the E- banking sector, which is further facilitated through KYC. The activities in a cashless economy majorly take place through different modes such as:
Mobile or e-wallet (use of digital payment apps)
Net banking {NEFT, i.e., National Electronic Fund Transfer
RTGS, i.e., Real Time Gross Settlement
IMPS, i.e., Immediate Payment Service (in case of India)}
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45 Plastic cards (debit/credit cards used in swiping machines or POS terminals)
This study highlights the importance of the emerging technologies in the banking sector and further some reasons are provided on why should these technologies should be adopted in the banking sector for the automation of all the financial transactions.
1.1 The Concept of Electronic Payment Electronic payment or E-payment system is a way through which an individual involves himself in monetary transaction, wherein, he/she makes the payment through an electronic medium instead of using cash or cheques. The various modes of electronic payment include:
Plastic cards (credit and debit cards)
E-banking (Internet banking, mobile banking, ATM, Point of Sale, Electronic Data Interchange, Electronic Fund Transfer such as NEFT, RTGS, IMPS, etc.)
Mobile wallets/ e-wallets (Paytm, PhonePe, GooglePay, etc.)
1.2 The Digital India Campaign
Image Source:
https://www.digitalindia.gov.in/content/i ntroduction
On July 1, 2015 the Government of India launched the Digital India Campaign with the aim of digitizing all the government activities and the campaign also looked forward to enhance the internet connectivity and advance the Information Technology sector, so that the citizens of India can easily enter into and adapt to the digital world of technology.
The three main areas where the Digital India mission focused were:
Providing a utility source to each and every citizen of India in the form
of a well-developed digital infrastructure.
On demand services and governance.
To ensure that every citizen is digitally empowered.
The essential nine pillars of the Digital India campaign are:
Broadband highways
e-Governance
Electronics manufacturing
Universal access to mobile connectivity
e-Kranti
IT for jobs
Public Internet Access Programme
Information for all
Early Harvest Programmes 1.3 Demonetization in India
On November 8,2016 the Government of India announced demonetization in India which further meant that the Rs. 500 and Rs. 1000 currency notes would no more be considered as a legal tender.
The main objectives of taking this crucial step were:
To curb black money from the Indian market.
To eradicate the counterfeit notes from the market.
To transform the cash-oriented economy of India to a cashless economy.
To reduce the interest rates prevailing in the banking sector.
To completely remove all kinds of anti-social activities and their finances.
To stop the practice of tax evasion in the country.
To completely eradicate the unethical and illegal business activities.
One of the main objectives of the demonetization decision was to establish a cashless economy, wherein the people confidently involve themselves into digital payment methods for conducting various monetary transactions. The Government of India announced demonetization not just to resolve the issue of black money circulation, but also to change the cash- centric phase of the Indian economy to a completely digitized economy which will
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46 further help the nation to jump from adeveloping phase to a developed phase.
1.4 Need of Study
This study is basically aimed at knowing about various technologies which are contributing mainly to the banking industry. Here, focus is laid on the terminology, E-banking, because E- banking is a force that will drive the Digital India Campaign. Digital India campaign and the Demonetization both had a common objective of creating a cashless economy, where the citizens of India involve themselves in transactions through digital payment methods instead of using cash for transacting. In order to achieve the dream of Digital India, the people of India need to use the various modes of digital payment such as plastic cards (credit and debit cards), net banking, mobile or e-wallets, etc. Before opting for any E-payment method, people must verify it as per the guidelines issued by the Reserve Bank of India (RBI). If we look at the recent scenario, where the situation of COVID-19 pandemic was getting serious day by day, people were trying to avoid the cash related transactions as there pertains a risk to the physical exchange of cash. So, it is more advisable to go for various electronic payment methods for performing various economical transactions. The motivating factor in the Digital India campaign was to make use of more and more technological resources in every economic activity that is being performed in India.
Achieving the dream of Digital India and a cashless economy is possible only when people adopt the digital payment systems.
So, this study is basically performed to showcase the major role of E-banking in transforming the cash- oriented economy of India into the cashless economy of India.
2 LITERATURE REVIEW
Chandrawati Nirala and Dr. BB Pandey (2017) in their study entitled “Role of E-Banking services towards Digital India”
highlighted the rapid advancement taking place in the information and communication technology sector.
This advancement is the major reason for the revolution in the banking industry. Their study
concluded that the integration of technology into the banking sector is responsible for the digitization of all the major banking activities which take place in the customers’ mobile phones with ease.
Ms. Jasdeep Kaur (2017) in her study entitled “Growth of E- banking in India” significantly shows that there is rapid advancement in the digitized technological field of India. This rapid advancement will take along the banking industry with it which will result in more and more people, especially, the youth in adapting the E-banking technology.
T. Selvakumar (2017) in his piece of study entitled “A Study on Role OF E-banking In Indian Economic Growth” reflects that the innovation taking place in the information technology sector of India is being taken up by the banks to improve and improvise their banking products in order to offer customer delight. Banks, especially, the private and foreign banks are more into integrating the IT advancements into their banking service.
Dr. (Smt.) Rajeshwari M. Shettar (2019) in her study entitled “Digital Banking in Indian Perspective”
fairly shows how the digitized process of banking has benefitted the customers including various businesses. This study further introduces us to the benefit of E- banking, i.e., convenience and this benefit is termed as ‘Anywhere Banking’. The increased use of smart phones and internet technology also plays a vital role in the facilitation of E-banking.
Arpita Pandey (2018) in her research study entitled “Impact and Importance of Digital Payment in India” highlighted the importance of education and training in regards with the technological advancements taking place on a daily basis. The study focused on the literacy factor especially, among the rural areas in India as in order to make use of the digital payment methods, the people should be first aware about the required infrastructure and processes.
VOLUME: 09, Issue 05, Paper id-IJIERM-IX-V, October 2022
47 Suhas D. and H. N. Ramesh (2018) in their study entitled “E-banking and its Growth in India – A Synoptic View” shows that how E- banking has entirely changed the banking sector. Not only the customers, but the banks are also benefitted from the advent of E- banking facility as it reduced their cost of transactions and it also facilitates accuracy and speed in the banking transactions. The study also states that the banks have also realized the importance of the Information Technology.
Tarun Bhradwaj (2016) in his research, entitled “Role of E- banking in Current Scenario in India” focused on the Telecommunication Infrastructure Development which helps boost the banking industry of India. This study also highlights the benefits that are offered by various digital/
online payment gateways to the customers such as convenience, 24x7 accessibility, etc.
Ananya Gupta in her study entitled
“Impact of E-banking its Growth and Future in India” emphasis is laid on education, training and infrastructure relating to E-banking.
The study tells that proper education must be provided in the rural areas where people are not aware about the E-banking services.
At the same time, government should also wisely plan the infrastructure in these areas, so that the people in the rural areas can also benefit from the E-banking services. Another point which was presented in this research study was that the employees working in the banking sector must be properly trained through various workshops and seminars on how to deal with the management of E-banking activities and how the security system of these E-banking and E- payment gateways can be improved.
2.1 Objectives
To study the role of E-banking in laying the foundation of Digital India and a cashless economy.
This study seeks to examine the revolutionary changes brought in by
the IT advancements in the Banking sector.
To learn about the initiatives taken by the Government of India in order to develop and promote E-banking.
To study the innovations that have been made in the field of E-banking.
To identify the services and facilities provided by the E-banking sector to achieve the dream of Digital India.
2.3 Research Methodology
Type of Research: The present study is descriptive in nature. This study defines E-banking and how has E-banking changed the entire set of activities taking place in the market. The study further describes how the advancements in the Information Technology sector converted the conventional way of banking to the convenience banking.
This research also highlights that E- banking is the foundation of the Digital India Campaign as well as that of the cashless Indian economy.
Nature of Data: The analysis of the study is based on the secondary data. The collection of secondary data was done through several verified websites, research studies, books and magazines. The secondary data thus stated gave a perspective of how active the E- banking sector in India is.
3 ANALYSIS AND INTERPRETATION
Secondary Data
Table 1 Line graph showcasing the currency to GDP ratio in India
Source: RBI Data
For Table 1: If we want to measure the cash payments, we can measure it in two ways, (i) the value of Currency in Circulation (CIC) versus Gross Domestic Product (GDP) and (ii) the value of
VOLUME: 09, Issue 05, Paper id-IJIERM-IX-V, October 2022
48 ATMwithdrawals that take place acrossthe country can be used for this purpose.
Table 2 Value of banknotes in circulation across India from financial
year 2001 to 2022(in billion Indian rupees)
Source: RBI Data
For Table 2: In financial year 2022, the banknotes worth more than 31 trillion rupees in circulation across India. As of November 2016, due to demonetization in India the circulation of 1,000 rupee banknotes was discontinued and 2,000 rupee banknotes were issued instead.
Table 3 India's Cash Withdrawal:
Automated Teller Machines: Value from Nov 2019 to Jun 2022 in the chart
Source: RBI Data, www.ceicdata.com For Table 3: Cash Withdrawal:
Automated Teller Machines: Value data was reported at 2,713,680.000 INR mn in Jun 2022. This records a decrease from the previous number of 2,802,670.000 INR mn for May 2022.
Table 4 Sector wise – Geographical region wise ATM deployment in India
For Table 4: The above chart depicts the penetration of Automated Teller Machines in different regions of India.
Table 5 E-commerce payment methods in India
Source: J.P. Morgan Payments Trends Global Insights Report
For Table 5: The JP Morgan Global Payments Trends Report - India Country Insights observed that Indian payments market, historically dominated by cash, is evolving to meet the demands of smartphone led online shopping culture, with cards and digital wallets rising in prominence.
3.1 Emerging Technologies in the Banking Sector
Technology has played a major role in the automation process, especially in the banking industry. The Annual Report 2020-21 of RBI clearly shows that the total volume of digital transactions was 4,371 crores as against 3,412 crores in 2019-20. This significantly defines the level of acceptance as well as the
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49 efficiency of the digital payment system inIndia. Some of these technological advancements which have entirely changed the phase of traditional banking are illustrated below:
Blockchain: A blockchain is nothing but a digital storehouse of information, similar to a database. A blockchain is popularly known for its application in the crypto currency sector. Under this technology, data is stored in the form of blocks, which is then linked to the previous data block, thus forming a chain called as the blockchain. This kind of structure ensures security of data in the entire banking network. This technology can initiate global commerce in the banking sector by completely eliminating the manual procedures.
Some of the major advantages offered by blockchain technology in banking sector include:
Faster payments
Efficient clearance and settlement systems
Trade finance availability
Better accounting and auditing systems
Cloud Banking: The use of cloud computing technology in banking sector is termed as cloud banking.
This technology ensures on- demand delivery of computing services which further leads to efficient management of core banking applications over the internet. Cloud banking plays a vital role in E- banking environment, hence, eliminating the need of walk-in- premises. Some of the primary services provided by cloud banking are:
Identity proofing
Risk management
SCA (Strong Customer Authentication)
Artificial intelligence and machine learning: This technology is mainly used in the banking sector for the purpose of fraud detection.
This ensures secured management of sensitive information without the threat of human error. Customer service plays a key role in banking sector and this service can be made efficient by using chatbots and virtual assistants such as Siri and Alexa. Using AI in the field of banking also offers accuracy in loan management by scrutinizing the loan applications as per bank regulations and granting loans after proper risk evaluation. AI in banking enables continuous investigation along with regular updation as per framework laid by RBI.
Open Banking: This technology uses API (Application Programming Interface). It is the process of activating third-party payment service. It allows financial parties to access necessary banking information including day to day banking transactions and payments history. The main advantage offered by open banking is that it ensures transparency in the entire banking system. Open banking is mostly used in the field of personal finance, where users can remotely access their bank accounts and investments.
Geo- tagging: This technology was introduced by RBI in March, 2022.
The vision of RBI behind the same was 4Cs (Competition, Cost,
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50 Convenience and Confidence). Thistechnology will capture the geographical coordinates including the longitude and latitude of the payment touch points which are deployed by the merchants in order to collect the payment from their customers. The ecosystem of Indian Payments is evolving day by day. It has given rise to technologies such as Point of Sales (POS) terminals, QR codes, Unified Payment Interface (UPI), etc. According to the report published by National Payment Corporation of India (NPCI), UPI- led digital transactions crossed the highest-ever value of Rs. 81 lakh crore with 5.42 billion transactions in FY22. But, still many people prefer cash method of payment as a primary mode. So, RBI's geo- tagging will even penetrate the digital payment in rural areas, irrespective of their location and literacy levels.
3.2 Limitations
The collection of secondary data seemed to be a tedious process.
Difficulty was faced while validation and verification of secondary data.
Analysis of secondary data was a time consuming task and involved a study of numerous indicators.
In order to give a balanced view to the data collected via official website of RBI, the data had to be analyzed from different angles which resulted in consumption of more time and efforts.
3.3 Fulfillment of Objectives
To study the role of E-banking in laying the foundation of Digital India and a cashless economy: After analyzing data from different perspectives, it is clear that in order to set up a strong foundation for Digital India, E-banking must surely become a handy tool for each and everyone in India.
This study seeks to examine the revolutionary changes brought in by the IT advancements in the Banking sector: Information Technology has given a big boost to the banking sector by changing its phase from traditional to virtual.
To learn about the initiatives taken by the Government of India in order to develop and promote E-banking:
This study shows that the Government of India is continuously making efforts to encourage digital payments, so that more and more people can gain awareness about E- banking.
To study the innovations that have been made in the field of E-banking:
This study significantly highlights the major tech innovations which has driven the banking sector such as blockchain, cloud banking, artificial intelligence, machine learning, open banking, geo- tagging, etc.
To identify the services and facilities provided by the E-banking sector to achieve the dream of Digital India:
This study clearly throws light on the benefits of E-banking not just to the banking industry but to the entire customer base. For example, the use of chat bots and virtual assistants has made it easy for the working professionals to resolve customer queries and focus on the bank management tasks.
4 CONCLUSION
In the present era, E-Banking is playing a vital role in the Indian Banking sector and it will continue to do so in the near future. The banking sector today is re- defined and re-engineered with the increased and advanced usage of Information Technology and it is pretty sure that the future of banking will offer more and more services over the internet to the customers with the help of continuous product and process innovation. As keenly observed by all of us, there has been a revolutionary shift from the sellers’ market to the buyers’
market in the industry, and so the banks have also changed their approach from conventional to convenience banking and from mass banking to class banking.
The concept of online banking holds a lot of potential with the emergence of growing internet awareness among customers, integration of banking services with E-commerce service, the increasing reach of the internet and the entry of global players in the banking sector.
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51 In order to ensure security oftransactions in E-banking, RBI has issued a set of guidelines in the public interest with the aim of creating awareness among the people about the E- banking facility.
Under the visionary and excellent leadership of our respected Prime Minister Mr. Narendra Modi, the Government of India launched the Digital India Campaign on July 1, 2015 and not only this, Demonetization was also announced on November 8, 2016. Both of these activities were in traduced with a common objective of digitalizing g the Indian economy and calling it for a cashless economy, where people actually adopt the digital payment gateways to conduct their day to day economical transactions instead of the physical exchange of cash.
The physical exchange of cash is also a risky way of transacting as handling huge amount of cash is always a risky venture.
So, it is advisable to use the E-payment methods for conduction the monetary transactions and this can be done through e-wallets, net banking and the use of plastic cards (debit and credit cards).
5 SUGGESTIONS
The security system of all the E- banking gateways, especially, the E- wallets and Net banking services must be upgraded and improved as per the RBI guidelines in order to minimize the risk in conducting online transactions and also reducing the cases of financial frauds taking place in the E-banking industry.
People in rural areas must be given education and training on how to
use the E-banking services and this can be done by organizing various E-banking education camps.
Educating the people in rural areas is not enough; the government should also lay their focus on setting up the required infrastructure in order to ensure smooth working of the E-banking system.
The employees working in the banking industry must be trained via various seminars and workshops on how to handle the E-banking system, so that there is no hindrance in the level of customer satisfaction.
The banks must lay their focus on the user interface of various net banking applications in order to make sure that their customer can easily use these applications.
REFERENCES
1. Suhas D., H N. Ramesh (2018). E-banking and its Growth in India – A Synoptic View.
Journal of Management Research and Analysis. p. 378-381
2. Chandrawati Nirala and Dr. BB Pandey (2017). Role of E-Banking services towards Digital India. p. 67-71
3. Ms. Jasdeep Kaur (2017).Growth of E- banking in India. p. 88-94
4. T. Selvakumar (2017). A Study on Role OF E-banking In Indian Economic Growth. p.
560-566
5. Dr. (Smt.) Rajeshwari M. Shettar (2019).
Digital Banking in Indian Perspective. p. 1-5 6. Arpita Pandey (2018). Impact and
Importance of Digital Payment in India. p.
176-178
7. Tarun Bhradwaj (2016).Role of E-banking in Current Scenario in India.
8. Ananya Gupta. Impact of E-banking its Growth and Future in India. p. 436-439 9. RBI Data.
https://m.rbi.org.in/Scripts/PublicationsVie w.aspx?id=1941
