How new-age banking is transforming the banking industry

Without banking, it is impossible to discuss or even think of a country’s economy. It is often considered the backbone of a nation’s economic system.

In India, the banking system has evolved over time, with the modern banking system formed of regional rural banks, cooperative banks, commercial banks, small finance banks, payments banks, local banks and specialised banks like NABARD. 

The banking services provided by new-age banks have improved tremendously over the last few decades. Advancements in the field of technology have seen every sector upgrading itself with various technological enhancements. In the same way, the banking industry saw the introduction of online banking and digital banking in India.

If we look at the banking industry of the past, one major drawback was the lack of technology in banking services. This often led to failed/delayed transactions and longer turnaround times. Advancements in banking technology brought along various solutions like online deposits, e-bill payments, digital account transfer, mobile wallet usage, etc. 

Digital banking procedures have made banking processes faster and more convenient for customers. Banking services are among the most highly utilised services, and the incorporation of technology such as Artificial intelligence (AI) has brought about a major transformation in Indian banking.

What Comprises New-age Banking?

Within the scope of new-age banking, we can categorise the concepts and sub-parts of banking that were almost inconceivable a few decades ago. 

Retail Banking
 

Also called consumer banking, retail banking includes services such as credit and debit cards, loan sanctions, account information, and savings accounts. Retail banking is bringing more security and convenience into the banking experience of individual customers.

Mobile Banking
 

With most customers owning mobile devices today, it is only natural that banking activities like account transfers, deposits, and monitoring of spends 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 a SIP, in addition to all the regular banking activities.

After the COVID-19 pandemic, it was noted that 4 out of 5 urban Indians now prefer mobile banking applications. 

Online Banking
 

Conceptually similar to mobile banking, online or net banking offers you the option of accessing your bank accounts and banking profile 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.

Digital-only Banks
 

A fresh and smart strategy of new-age banks is digital-only banks. 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 environment hassle-free and favourable for consumers. As a result, younger generations are inclined toward 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:

Open Banking
 

In open banking, banks merge their financial data, strategies, and programs with third-party software. Then, a common interface for the customers is created through which they get access to the bank's services. This banking technology has been gaining an appreciation for the services it provides, such as the advancement of loans, credit cards, consultancy, fund remittance, etc. Open banking is based on Application Programming Interfaces (APIs). It helps customers to monitor all their finances in one place and manage their accounts.

Blockchain
 

Blockchain is a record-keeping technology that helps to keep customer bank details secure. It is suitably customised and implemented by the banking sector and can deter hackers from gaining confidential information. Data are stored in blocks and digitally chained together. This high-tech security system is used by banks to manage and store data in the form of digital ledgers.

Biometrics
 

Biometric authentication in banking is a way of measuring one’s physical characteristics (such as face, fingerprints, retina, or voice) to confirm one’s identity. This technology is helping to secure the payments made through mobile/online banking.

Cloud Banking
 

Cloud-based operating models help the banks to 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. 

Artificial Intelligence and Machine Learning
 

To augment the customer base, the banking sector needs to keep upgrading its services with high-end security. The implementation of Artificial Intelligence (AI) has helped banks to administer high-speed data to get valuable information regarding their customers. The importance of AI ranked high after the shockwave of the COVID-19 pandemic hit the world. 

The banking industry is applying AI in various ways such as;

• Chatbots: Using machine learning and AI, banks have started providing many services to their customers. Research says that chatbots help in saving about four minutes for every transaction, which is a huge time saving overall. Chatbots can handle customer requests and queries like fund transfers, mini bank statements, balance inquiries, etc. This decreases the burden on other channels such as internet banking and contact centres. 
• Robo Advisors: Just like any financial advisor, Robo advisor is a new technology in banking that is equipped to answer any financial queries that customers may have. Smart technology ensures that robo advisors can also identify customers’ financial health.
• Cybersecurity: AI has the potential to learn the patterns and indicators from any previous frauds and cyber threats. This enables them to prevent future attacks by leveraging the data.

Conclusion
 

In addition to the technologies mentioned above, various other new technologies in banking are gaining momentum to help provide the ultimate banking environment for consumers. New-age banking is thereby transforming the traditional banking system by digitising most processes. By doing so, it is adding to the customer’s banking experience and enhancing the security infrastructure within the processes. 

The IDFC FIRST Bank mobile app is a testament to this new-age banking transformation and continues to stay at the forefront of the banking revolution.

Disclaimer

The contents of this article/infographic/picture/video are meant solely for information purposes. The contents are generic in nature and for informational purposes only. It is not a substitute for specific advice in your own circumstances. The information is subject to updation, completion, revision, verification and amendment and the same may change materially. The information is not intended for distribution or use by any person in any jurisdiction where such distribution or use would be contrary to law or regulation or would subject IDFC FIRST Bank or its affiliates to any licensing or registration requirements. IDFC FIRST Bank shall not be responsible for any direct/indirect loss or liability incurred by the reader for taking any financial decisions based on the contents and information mentioned. Please consult your financial advisor before making any financial decision.