How new-age banking is transforming the banking industry

Banking forms the backbone of any country’s economic system. As the Indian banking sector has evolved, it has given way from the traditional to a new-age system.

The banking services provided by new-age banks in India have improved tremendously over the last few decades. Technological advancements have seen every sector upgrade itself with various technological enhancements, like the introduction of online and digital banking in India.

Banking technology advancements have brought various solutions, such as online deposits, e-bill payments, digital account transfers, and mobile wallet usage. These advancements have reduced delayed transactions and longer turnaround times. Incorporating even newer technologies is transforming Indian banking significantly.

What comprises new-age banking?
 

Different types of modern banking services have emerged in the early phases of technology adoption. These include –

1. Retail banking – Also called consumer banking, retail banking includes services such as credit and debit cards, loan sanctions, account information, and savings accounts.
   
   
2. Mobile banking – Banking activities like account transfers, deposits, and monitoring of spending and earnings can now be done through mobile banking. With the IDFC FIRST Bank Mobile App, you can view and manage upcoming expenses or start an SIP in addition to all the regular banking activities.
   
   
3. Online banking – Online or net banking allows you to access your bank accounts and banking profiles on a web browser. You can log on to your IDFC FIRST Bank Internet banking page and open a new account, apply for loans, send/receive money, save/invest, and do much more, all from the comfort of your home.
   
   
4. Digital-only banking – Traditional banks are adopting the digital-only approach to promote the industry's transition into Banking as a Service (BaaS). The government has also identified digital-only banking as strategically important for financial inclusion.

What’s driving new-age banking?
 

The innovation and emergence of futuristic technologies have made the banking experience hassle-free for consumers. As a result, younger generations are more inclined towards digital banking in India. The growth of mobile technology is also changing the way financial services are delivered. Here are some tech trends that have influenced the Indian banking system and continue to do so –

1. Open banking – Banks merge their financial data, strategies, and programs with third-party software in open banking. Then, a common interface for the customers is created through which they get access to the bank's services, such as the advancement of loans, credit cards, consultancy, fund remittance, etc. These platforms use Application Programming Interfaces (APIs) to establish the connection between the bank and the customers, allowing you to monitor all your finances in one place.
   
   
2. Blockchain – Blockchain is a record-keeping technology that helps keep customers' bank details secure. It is suitably customised and implemented by the banking sector and can deter hackers from gaining confidential information. This high-tech security system is used by new-age banks in India to manage and store data in the form of digital ledgers.
   
   
3. Biometrics – Biometric authentication in banking involves measuring one’s physical characteristics (such as face, fingerprints, retina, or voice) to confirm one’s identity. This technology helps secure payments made through mobile or online banking.
   
   
4. Cloud banking – Cloud-based operating models help banks streamline advancement and cut down the IT costs of software and hardware. Banks do not have to buy the software, data, etc., but they can still interact with the marketplace changes on the go.
   
   
5. Artificial Intelligence (AI) and Machine Learning (ML) – Implementing AI has helped banks administer high-speed data to get valuable customer information. The banking industry is applying AI in various ways, such as –
   
   
   1. Chatbots – Bank chatbots, created using ML and AI, handle customer requests and queries like fund transfers, mini bank statements, balance inquiries, etc.
   2. Robo advisors – Robo advisors are a new banking technology equipped to answer any financial queries that customers may have.
   3. Cybersecurity – AI has the potential to learn the patterns and indicators from any previous frauds and cyber threats. This is helping banks to develop fraud detection algorithms and risk modelling tools.
   4. Generative AI – It helps banks interpret large data sets with high accuracy in real-time. It can revolutionise banking functions like credit risk assessments.

Conclusion

Emerging technologies continue to be adopted in banking, thus providing the ultimate banking environment for consumers. They also enhance operational efficiency and the security infrastructure within the processes.

New-age banks in India, such as IDFC FIRST Bank, are a testament to this transformation in the banking sector. With features such as the Account Aggregator and the ease of online applications, the IDFC FIRST Bank Mobile App continues to stay at the forefront of the banking revolution.