Impact of Digital Transformation on Banking Sectors in India

Almost every sector has been facing a new era of the latest trend of digitalization. Hardly anybody would argue about the power that digitalization holds and how it has shaped the global economy. 

Digitalization is the use of technologies that can enhance a business model by providing newer value-driven opportunities and added revenue. Around the world, technology has been advancing at a rapid rate over the past few decades. 

Technology has made its impact on anything and everything possible and you can now see it in every sector around you, including banking. Banks across the world and the banking sector in India have taken a tremendous step towards a digital transformation. This step has not only helped match the competition but also in giving their clients the best service. 

Digital Transformation in Banking Sectors.

Digital Transformation in Banking Sector in India

Digital transformation as you know is a cultural and operational shift toward the integration of digital technology. In the Banking sectors in India, digital transformation pertains to the integration of technologies into all the divisions of the bank. It not only helps optimize operations but also enhances the value delivered to customers. When executed correctly, the success of integrating digital technologies translates into the bank’s ability to compete better in the banking sector of India. 

While technology forms the backbone of digital transformation, it simply does not magically improve and enhance the systems. Only those banks in this sector that are successful in strategizing and implementing digital technologies see the benefits of digital transformation. 

Some digital transformations do fail when technology is the sole solution that the banks consider. The strategies have to be smart and well thought out about which technologies are to be implemented and how. The mindsets and other challenges that restrict the implementation of and ability to adapt to technologies, too, need to be addressed. A roadmap needs to be in place and followed for a smooth transition. The difference between the success and failure of banks in the banking sector in India lies in the action they take to deploy and adapt to digital technologies. 

Positive Impact of Digital Transformation on Banking Sectors in India

The digital aspect of banking is not just restricted to using the internet to access baking services. Compared to what people usually perceive, it also includes a whole lot of other banking services that are enabled through technology.  

Here are some positive impacts of digital transformation on banking sectors in India:

Easy transfer of money

Digitalization in the banking sector has bridged the gap between rural villages and urban cities, and of having to wait for bank timings to transfer money. All you need now is a stable internet connection to use digital payment modes or E-banking to send money from your account to another, at any time, and from anywhere. E-wallets, UPI, Paytm, and other applications also allow such transfers. 

Proper Record of All Transactions

Digitalization has made lives easier by taking care of all transactional records, tracking your spending as well as helping with budget planning.

By transacting online, the application keeps a record of every transaction made. They automatically record every transaction on the app. In fact, with digitalization, more and more data is being made available to banks who then use digital analytics to build further strategies. 

Furthermore, with the increasing number of cashless transactions, the risk of fax currency is reduced. 

Ease and Convenience

Digitalization has made it quite convenient for purchasers and banks since the use of physical cash has been reduced and people are now resorting to online transactions for their purchases. In fact, people now carry less cash with them when traveling. 

The risk of human error during monetary transactions has also been minimized, leading to better customer loyalty. Digital transactional services such as RTGS (Real Time Gross Settlement), NEFT (National Electronic Funds Transfer), and UPI (Unified Payment Interface) have made it so easy to transfer funds from one bank to another bank. 

Online Bill Payments

Probably one of the biggest advantages of online banking, online bill payments have made life significantly easier. You no longer need to fill out forms or write checks to pay a bill. You can easily pay bills at the click of a mouse. Sometimes, it could take even less than that if you automate your bill payments so the amount gets transferred from your bank account automatically. 

With online bill payments, your bills become centralized and you can track all payments from one place.

Challenges of Digital Transformation on Banking Sectors in India

While digital transformation has had several positive effects on the banking sector in India, making transacting easier and time-saving, it also has its disadvantages and challenges. 

Here are some challenges of digitalization in the banking sector:

Cybercrime

Cybercrime has been plaguing the digital world. It is the use of digital instruments for fraud, illegal activities, violation of privacy, and identity theft. Cybercrime does not need any physical presence of a person and can be committed from anywhere in the world with the use of a computer or mobile device. 

As more and more information is available online through digitalization, the risks have increased for both, banks and their customers. 

Attaining Perfection for the Application

The introduction of applications by banks and other financial institutions has made it easy to track expenses and your accounts from anywhere. You can enjoy several services of the bank at the touch of your fingertips. But, what these banking institutions often fail to realize is that several hundred and thousands of people use these applications. For that reason, the applications should be free of bugs and other performance issues for smooth transactions, otherwise, they tend to crash frequently. 

Upgrading Technology

Technology is constantly evolving. As it keeps developing, so do the banking applications need to keep up with it to cope with the competitive market. Besides, with applications advancing from time to time, customers too need to keep up with those. It may not be convenient and easy for older aged customers who are not so tech-savvy to understand new features.

Conclusion

The technology used and applied in the banking sector in India is set to develop further over the next few years. The sooner the banking sector accepts this development, the faster it can execute digital strategies to help remain relevant in the competitive market. Digital banking is going to be the future of the banking sector in India and companies like Deloitte India have been offering integrated services and solutions to the banking sector in India. 

While there are challenges that pose the banking sector as an impact of digital transformation, strict rules and regulations can help make digitalization safer.