Phenomenal Innovations In The Digital Banking Sector
In today's age of information, we are at the height of the digital era wherein technology has become a necessity in all aspects of every life. Technology has become part of the core operations for the Banking and Finances Industry, with customer experience being the central focus. The integration of digitalization into all things banking has changed the way both small and large transactions are being done. Thus it is imperative that constant and continual innovations in the banking sector are a must in order to keep up with the many requirements by discerning clientele for safe, secure, and speedy financial transactions.
With the rapid adoption of online banking applications, online transactions, blockchain technology, and an overall internet-first approach to banking, the sector has seen a paradigm shift over the past decade. In this article, we will explore some phenomenal innovations and insights into the banking sector, and discuss the ways in which digitized banking is making things easier for both the masses and individuals alike.
Paperless Banking: A decade ago, the Government of India initiated an ambitious project named India Stack to realise the vision of a Digital India. The stack provides 4 digital layers i.e. presence-less layer, paperless layer, cashless layer, and consent layer. Ever since then, platforms allow for the issuance and verification of documents and certificates in a digital format. Paperwork was a basic necessity involved in banking services and took up much of the customer's time and effort. Paperless Banking allows for easier banking transactions by the use of electronic medium and avoiding the use of paper.
Online Account Opening: Users can now open bank accounts digitally, limiting the need for human interaction and accelerating the speed at which banking is done. Technology now allows In-Person Verification (IPV) to be done through a web camera. A series of verifications like Face Match and OTP on the video recording allows the process to be completed online. Online account opening software supports multiple methods of verifying the identity of customers, each being compliant with regulatory norms and cover both Fresh KYC and accessing KYC details from depositories.
API Banking and Management: APIs offer a quick and seamless user experience to enterprises and individuals alike, allowing banks and third-party companies to augment their complementary specialties and offerings to offer a wider array of services through a single platform. Users can receive advice, receive regular notifications, fraud alerts, and a lot more in real-time. For companies especially, this helps to drastically reduce operational costs for both the corporate client as well as the banks, making banking more efficient than ever before.
Penny Drop Verification: Penny Drop checks allow immediate verification of the authenticity of a user's bank account. Through the use of IMPS, businesses can instantly fetch the primary account-holder details for transactional purposes.
Digital Lending Platforms: Gone are the days where one had to spend weeks, if not months, in an effort to secure a loan. The security checks and processes alone involved a lot of red tape and each step of the process was tedious, stressful, and time-consuming. In contrast, Digital Lending Technology thrives on process speed. Decision rules evaluate the application in seconds, not days. Background checks immediately access credit bureaus to assess the credit worth and financial strength of the borrower. Employment details are parallelly cross-checked in the background with platforms calculating the optimum loan terms based on applicant details and risk factors. Credit bureau reports throw up users' credit history and past defaults within mere seconds, which can help to reduce lender risk. Fraud analytics is also carried out using various AI-based technologies. Furthermore, within seconds of loan approval, the contract is generated which can be signed electronically. The upload of bank details and verification through penny drop ensures that the loan amount is credited to a valid bank account. The entire process is accelerated because of the seamless integration and leads to considerable cost and time savings.
These are just a few of the many technological innovations which allow for ease of access to banking and bank related services. Primarily driven by the growing use of smartphones and affordable data, technology has paved the way for banking solutions to offer digital-only propositions not burdened by traditional methods of providing financial services.
Most of all, these phenomenal innovations over recent years in the digital banking sector have led to higher interest rates and lower fees for the customer. As online banks have no need to pay overheads for as many physical branches, they don't need to house employees to staff them. Banks now pass on those cost savings to their customers while also offering a more streamlined experience that is hassle-free, saves time and effort, and serves any user with internet access. Distance is no longer an issue, allowing even the most remote users to open a bank account and avail a plethora of finance related solutions. Digitization has greatly benefited the people of India and the world, allowing everyone unfettered access to state-of-the-art banking solutions. With heavy investments still pouring in for the development and creation of newer, faster, easier methods of banking, we can look forward to innovative inventions and expect to see steady growth in the sector for the foreseeable future.