A SUMMER INTERNSHIP PROJECT REPORT

On

“BANKS IN DIGITALISATION”
Completed at

STATE BANK OF INDIA

Submitted in partial fulfilment of the requirement

For the award of degree

Of

MASTER OF BUSINESS ADMINISTRATION

SESSION (2017-2019)

Submitted by

SHEEBA KOUR BALI

(51-MBA-17)

THE BUSINESS SCHOOL

UNIVERSITYOF JAMMU
 CERTIFICATE

I hereby declare that this project report titled “Banks in Digitalization” being submitted to State
Bank of India and The Business School, University of Jammu in partial fulfilment of the
requirement for the award of degree of Master of Business Administration is bona fide work
carried out by me.

Sheeba Kour Bali (51-MBA-17)

 ACKNOWLEDGEMENT

It is my pleasure to be indebted to various people, who directly or indirectly contributed in the

development of this work and who influenced my thinking, behaviour, and acts during the course
of study. I express my sincere gratitude to Prof. Alka Sharma, worthy director for providing me an
opportunity to undergo summer training at State Bank of India.

I am thankful to Mr. Gurdeep Singh AGM, RBO-II, SBI Jammu and Mr. Kumar Jee Raina Chief
Manager HR, SBI Jammu for their support, cooperation, constant inspiration, presence, blessings
and during the internship period.

I also extend my sincere appreciation to my Mr. Karan Singh Bhau Branch Manager, SBI Sainik
Colony Branch and Mr. Sunil Bhat Branch Manager, SBI Kaluchak Branch for their valuable
suggestions and precious time in accomplishing my project report.

Lastly, I would like to thank the almighty, my parents and my brother for their moral support and
my friends with whom I shared my day-to-day experience and received lots of suggestions that
improved my quality of work.

Thank You
 DECLARATION

I, Sheeba Kour Bali, student of MBA III rd Semester, studying at The Business School,
University of Jammu, hereby declare that I have done my summer internship from State Bank Of
India from June 6, 2018 to August 6, 2018 on the topic “Banks in Digitalisation”. My project
report submitted to State Bank of India and The Business School, University of Jammu in partial
fulfilment of Degree of Master’s of Business Administration is the original work conducted by
me. The information and data given in the report is authentic to the best of my knowledge. The
empirical findings in this report are based on the data collected by me and I claim no right to own
or change or transform or publish this data as it stands the personal property of the institute. This
work is humbly submitted to State bank of India and The Business School, University of Jammu
for purely academic purpose.

Sheeba Kour Bali (51-MBA-17)

 ABSTRACT

The Financial sector, of which Banking sector is the largest player, plays a dominant role in
building the economy of an individual as well as a nation. Banks have control over a large part of
the supply of money in circulation. They are the main stimulus for the economic progress of a
country. A strong banking and finance sector is, therefore, necessary for a country to emerge as a
developed one. It is vital for growth, creation of jobs, generation of wealth, eradication of poverty,
encouraging entrepreneurial activity and increasing the gross domestic product. Today banking is
known as innovative banking. Information technology has given rise to new innovations in the
product designing and their delivery in the banking and finance industries. Customer services and
customer satisfaction are their prime work. The focus is shifting from mass banking to class
banking with the introduction of value added and customized products. Technology allows banks
to create a branch without having to hire manpower for manual operations. One of the most
significant areas where technology has had a positive impact is on substitutes for traditional funds
movement services. With the advent of electronic banking, electronic funds transfer and other
similar products, funds transfer within time frames which would have appeared impossible a few
years ago has made it reality. With networking and internet connection new challenges are arising
related to security privacy and confidentiality to transactions. Finally the banking sector will need
to master a new business model by building management and customer services with a variety of
products and controlled cost to stay in the long run and services. The report attempts to present the
role of bank in digitalisation along with emerging trends and its challenges that recently emerged
in the banking sector with special emphasis on digitization. It also aims to determine service
quality improvement through digital banking. It highlights the steps taken by RBI and the
government’s move after demonetization. It also discusses convergence of technologies through
the digital banking for a smooth transition towards a transparent economy. The main target of
digitalisation is to push Indians to a less cash economy by financial rewiring with emphasis on the
new way of life for the country from informal economy to formal economy and also highlights the
initiative of State Bank of India towards Digitalisation.
 TABLE OF CONTENTS

CHAPTER TITLE PAGE

NO. NO.

1. Company Profile 1- 8

History

Branches

Logo and Slogan

Major competitors

Vision, Mission and Values

Growth of State Bank of India

Modern Banking Services Provided By State Bank of India

Objective of Modern Technology Investment in State Bank of India

Innovation in Customer Service in Banks

2. Digitalisation in Banks 9- 17

Introduction

Omni- channel Approach

Digital Banking- An Indian Perspective

Service Offerings by Banks in New Age of Digital Payments

Digital Banking – a boon or bane

Customers’ Standpoint

Status Post Demonetization

3. Digital India- Role of Banks 18- 26

Role of Banks

Strategizing Digital Roadmap

Reserve Bank of India and its vision

Driving factors in India

Banks Initiatives towards Digital Push

 SBI and its Initiatives

 SBI Digital Products
 Various Banks Digital Initiatives

4. Recent Trends in banking 27- 28

5. Government of India initiatives 29- 31

6. Opportunities and Challenges in Digital Banking 32- 36

7. Research Objectives and Methodology 37- 38

8. Results and Discussions 39- 46

9. Findings 47- 48

10. Conclusion and Suggestions 49- 50

ANNEXURES
 CHAPTER-1

COMPANY PROFILE

State Bank of India (SBI) is a multinational banking and financial services company based in India.
It is a government-owned corporation with its headquarters in Mumbai, Maharashtra. It the largest
banking and financial services company in India by assets. State Bank of India is one of the Big
Four banks of India, along with ICICI Bank, Punjab National Bank and HDFC Bank. The bank
traces its ancestry to British India, through the Imperial Bank of India, to the founding, in 1806, of
the Bank of Calcutta, making it the oldest commercial bank in the Indian Subcontinent. Bank of
Madras merged into the other two "presidency banks" in British India, Bank of Calcutta and Bank
of Bombay, to form the Imperial Bank of India, which in turn became the State Bank of India.
Government of India owned the Imperial Bank of India in 1955, with Reserve Bank of India
(India's Central Bank) taking a 60 per cent stake, and renamed it the State Bank of India. In 2008,
the government took over the stake held by the Reserve Bank of India.

History

The roots of the State Bank of India lie in the first decade of the 18th century, when the Bank of
Calcutta, later renamed the Bank of Bengal, was established on 2 June 1806. The Bank of Bengal
was one of the three Presidency banks, the other two being the Bank of Bombay (incorporated on
15 April 1840) and the Bank of Madras (incorporated on 1 July 1843). All three Presidency banks
were incorporated as joint stock companies and were the result of royal charters. These three banks
received the exclusive right to issue paper currency till 1861 when, with the Paper Currency Act,
the right was taken over by the Government of India.

Branches

The corporate centre of SBI is located in Mumbai. In order to cater to different functions, there are
several other establishments in and outside Mumbai, apart from the corporate centre. The bank
boasts of having as many as 14 local head offices and 57 Zonal Offices, located at major cities
throughout India. The Corporate Accounts Group is a Strategic Business Unit of the Bank set up
exclusively to fulfil the specialised banking needs of top corporates in the country.

Logo and Slogan

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Logo: The logo of the State Bank of India is a blue circle with a small cut in the bottom that depicts
perfection and the small man, the common man - being the center of the bank’s business. The logo
came from National Institute of Design (NID), Ahmedabad and it was inspired by Kankaria Lake,
Ahmedabad.

Slogans: "PURE BANKING, NOTHING ELSE", "WITH YOU - ALL THE WAY", "A BANK
OF THE COMMON MAN", "THE BANKER TO EVERY INDIAN", "THE NATION BANKS
ON US"

Major Competitors

Some of the major competitors for SBI in the banking sector are Axis Bank, ICICI Bank, HDFC
Bank, Punjab National Bank, Bank of Baroda, IndusInd Bank, Canara Bank and Bank of India.
However in terms of average market share, SBI is by far the largest player in the market.

Vision, Mission and Values

Vision: Be The Bank Of Choice For A Transforming India

Mission: Committed To Providing Simple, Responsive And Innovative Financial Solutions

Values: Service, Transparency, Ethics, Politeness, Sustainability

Growth of State Bank of India

The State Bank of India grew into a massive institution, separating its branches in to every corner
of India. The bank has a massive and unmatched distribution network of domestic branches
reaching every nook and cranny of the country and foreign offices spreading over countries
covering all time zones as well as a fast growing technology base providing state of the art virtual
banking channels. As a premier player in the diversified financial services market, the banks enjoy
the status of an universal bank offering an array of financial products and services under a single
umbrella leveraging its unmatched strengths in terms of capital and asset base, massive
infrastructure and a large pool of talent and committed staff to world class standards of efficiency
and professionalism.

Modern Banking Services Provided By State Bank of India

2
Apart from receiving deposits and granting loans and advances, the following are some important
modern banking services provided by State Bank of India to its customers.

i) Personal Banking

State Bank of India offers a wide range of services in the Personal Banking Segment. Deposit
Schemes, Personal Finance, Services, Gold Banking, BHIM SBI Pay, NETC Fast Tag, Aadhaar
Seeding. SBI now provides your Account Balance and Transaction details over phone round-the-
clock. Information on deposits, loan schemes and services is also available.

ii) Agricultural Development

State Bank of India caters to the needs of agriculturalists and landless agricultural labourers.
Specialised branches have been set up in different parts of the country exclusively for the
development of agriculture through credit deployment.

iii) Non-Resident Indian Services

State Bank of India offers products and services needed for the non-resident Indians living across
the globe.

iv) International Banking

International banking services of State Bank of India are delivered for the benefit of its Indian
customers. Non resident Indians and foreign entities make use of the services like corporate
lending loan syndications, merchant banking, handling letters of credit and guarantees, short term
financing, collection of clean and documenting credits and remittances.

v) Corporate Banking

State Bank of India is a shop providing financial products / services to a wide range of large,
medium and small scale sectors both domestic and international.

vi) Working Capital Financing

Assistance is extended both as fund based and non-fund based facilities to corporate, partnership
firms and proprietary concerns. Working capital finance is extended to all segments of industries
and service sector such as information technology.

3
vii) Internet Banking

State Bank of India enables its retail banking customers to operate their accounts across India,
removing the restrictions imposed by geography and time. It is a platform that enables the
customers to carry out their banking activities from their desktop, aided by the power and
convenience of the internet.

viii) Term Loans

Term loan is granted to support capital expenditure for setting up new ventures and also for
expansion, renovation etc.

ix) ATM Services

State Bank of India offers the convenience of ATM services. This means that the customer can
transact at free of cost at the ATMs of State Bank group. Customers may also transact money
through SBI Commercial and International Bank Ltd by using the State Bank ATM-cum-Debit
(Cash Plus) card.

x) ATM Debit Card

State Bank ATM cum debit card provides the services to its customers. Since there is no need to
carry cash in pocket, there is no fear of over pending.

xi) Indian Financial System Code

This is an identification code to each branch of the Bank in our country. It enables the customers
to remit the money easily to any branch of any kind in India through RTGS (Real Time Gross
Settlement) /NEFT (National Electronic Funds Transfer). It is an 11 digit code.

xii) Multicity Cheques

These cheques enable the paying bank to debit the customer’s account instantaneously. These
cheques replace the Demand Drafts.

xiii) Bank Assurance

Bank assurance means bank selling general insurance products as it gives them miscellaneous
income using the existing resources.

4
xiv) Phone and Mobile Banking

Phone and mobile banking means normal banking transaction can be transacted through telephone
and mobile. Online banks are never closed, and 24 hours access to one’s banking accounts is
allowed.

xv) Core Banking

This means the entire bank branches are networked and the customer is the customer of bank rather
than the branch. One can operate the account at any one branch of the bank.

xvi) YONO (You Only Need One)

The State Bank of India, launched India’s first comprehensive digital service platform YONO
(You Only Need One). This is an integrated lifestyle and banking digital platform from SBI, and
was launched by Union Minister for Finance and Corporate Affairs Arun Jaitley on 24th November
2017 in Delhi. Besides an array of banking and financial services, YONO also allow customers to
meet their lifestyle needs across 14 categories, including booking and renting cabs, entertainment,
dining experience, travel and stay, medical needs and so on. The bank has partnered with over 60
e-commerce players to provide customized offers and discounts to customers. Some of the key e-
commerce partners include Amazon, Uber, Ola, Myntra, Jabong, Shoppers Stop, Cox & Kings,
Thomas Cook, Yatra, Airbnb, Swiggy and Byjus, among others. YONO is a path breaking
comprehensive digital product from SBI using the world’s latest digital technologies such as
Artificial Intelligence, Predictive Analytics and Machine Learning, and can be accessed through a
mobile application and web portal.

With YONO, customers can:

 open an SBI bank account digitally in less than five minutes

 transfer funds in just four clicks
 avail of pre-approved personal loan sans any paperwork
 get overdraft facility against fixed deposit
 have one view of their banking and financial portfolio of SBI Group companies
 benefit from intelligent spend analyser
 utilise conversational banking guide through ‘Chat bot’

5
YONO is the first digital banking platform to offer customized products and offers from over 60
e- commerce players by leveraging analytics. This is first to offer online purchase and view of
insurance policies within the portal, without redirecting customer to respective service provider,
and to seamlessly access and purchase of investment products. YONO can be accessed through
mobile phones, both Android and iOS, and on the web through a browser, and allows a seamless
omni-channel customer experience.

xvii) SBI to launch branchless banking called SBI Digi Bank

The country's largest lender SBI will take the lead among state-run lenders to launch branch less
banking. The latest launch from the lender - SBI Digi Bank will have a financial superstore, a
market place and end to end digitisation for all products and services. The Digi Bank will have a
financial superstore, a market place and end-to-end digitisation for products and services. It will
be an omni-channel, omni-device digital bank which will be available to both new and existing
customers. The digital-only bank, which will be device-agnostic, will use the Aadhaar
infrastructure for not only onboard customers but also provide them services online.

State Bank of India (SBI) has been extremely successful over more than two centuries, but recently
it knew it had to change. SBI recognized that continuing to focus on its large and profitable
customer base- those in the 45-plus age bracket -without addressing the growing youth population
could threaten its leadership position. SBI needed an outside-the-box approach to expand its
customer base. It would have to embrace banking practices preferred by hyper-connected, highly
informed, value-driven young customers – the “digizens”. As a result, SBI turned to the power of
digital technologies to attract, retain and grow with these “digizens”.

It created a new sub-brand specifically to appeal to this group called SBI In Touch. To offer a
seamless digital experience to the millennial generation, SBI introduced multi-function kiosks,
interactive wall and table displays, smart ATMs and debit card printers. These devices, several
available to customers for the first time in India, now offer many advanced digital banking
capabilities, including:

 Instant account opening with immediate provision of a personalized debit card;

 Instant in-principle approvals for education, car and home loans; and
 Instant access to remote financial advisors through high-definition videoconferencing.

6
To provide a customer-centric, real-time experience, SBI has created a full-fledged integrated
technology platform using the combined power of analytics, cloud technologies, social media and
mobility.

Beginning with the first day of its launch at six branches, SBI has witnessed a high level of retail
engagement. Typically, more than 100 people on weekdays and 250 on weekend days enter each
of these locations to benefit from a truly digital banking experience.

OBJECTIVES OF MODERN TECHNOLOGY INVESTMENT IN STATE BANK OF

INDIA

 Offer services to customer, which will bring convenience and value addition to customers.
 Help the banks in retaining the existing customers and to further increase customer base.
Improve operational efficiency, decrease operational costs and to enhance the wealth of
owners (stakeholders)
 Use operational data for providing a Management Information System and Decision
Support System.
 Derive necessary inputs for Customer Relationship Management operational data.
 Provide necessary tools to launch new products and new business initiatives.
 Provide support for determining and managing risk in operation.
 Meet regulatory/statutory requirements.
 Secure information of Assets as Information is a vital resource for Bank’s continued
operation.
 Augment Non-interest income, especially through technical products such as ECS/E-
money/Money Transfer/Utility payments/Direct Taxes/Cash Management Services and so
on.

INNOVATION IN CUSTOMER SERVICE IN BANKS

“Satisfied customers are the best guarantee for stability and growth. Customers will be satisfied
only when the banks provide the customized and innovative products and services at reasonable
costs. This article focuses on the kind of services provided by developed countries and the level of
innovative services provided by Indian banks.

7
Many innovative services are currently available from Indian banks like e-banking, ATMs,
anywhere bank and so on. But there is a vast scope for improvement”. Technology is rapidly
transforming the banking industry – and expanding its ability to reach the unbanked. Banking
services are unique in the sense that diverse customers have multifaceted needs therefore,
benchmarking of banking services becomes a difficult task. No doubt, a system of Citizen’s charter
has been introduced in various banks but this only deal with the time limit within a service would
be rendered to the customers.

Are Banks Serving the Common Man?

“Banks have been changing their mindset and are offering their services effectively and efficiently.
Besides RBI’s efforts, IBA is also making efforts to improve the customer services. Banks have
been advised to review their existing policies and procedures with regard to delivering of various
services.”

Acquisition/Satisfaction

Technology encourages innovative applications with product manufacture design and control.
Thus, it means a rapid change, especially as the banks take to the fast track, besides this
development, technology of telecommunication and electronic data processing have accelerated
these changes. So, the modern technology has altered the ways of banking business through
improving product selling, customer identification, customer acquisition and customer
satisfaction.

8
 CHAPTER-2

DIGITALISATION IN BANKS

Introduction

“Digital” is the new buzz word in the banking sector, with banks all around the globe shifting
towards digitalization. Banks of all sizes and across all regions are making huge investments in
digital initiatives in order to maintain a competitive edge and deliver the maximum to its
customers. Additionally, digitalization leads to robust data analytics and intelligence, which helps
banks get closer to customers and close in on competition.

Digitization in banking industry essentially means making banking smooth and seamless for the
customers. In the recent years, there is a notable drop in the usage of branches and tremendous
increase in digital banking consumption. Most of the private banks and public sector banks are
focused on offering new technology-based services to its customers like mobile banking, mobile
banking apps and e-wallets. The biggest advantage of digital channelling in banking is its ability
to provide new propositions and customer specific business models by analysing this banking
pattern which explores the customer value to the maximum.

The top five customers’ wants in banking are:

 Reward me for my business

 Give me anytime, anyplace access to my balance
 See me as a person
 Provide me with wealth building advice
 Tell me what I am spending money on and how I can save

9
Digital banking combines the benefits of two worlds: a new customer experience on the outside
and an efficient, effective operating model on the inside- both enabled by digitalization and the
underlying technologies, processes, and structures.

The primary steps on the digital banking journey have been largely focused on adding to the
existing offering using new, technology-enabled services to increase the accessibility and value
for customers. The most noticeable examples are mobile apps, e-wallet solutions, APIs, and
personal finance management (PFM) tools. The current business priorities for banks in the digital
world are to use the new establishment for increasing profitability and revenue. In this innovative
business model, it is crucial to ensure regulatory compliance for smooth and long-term execution.
The key challenge in the digital era is to ensure all customers are safeguarded from cybercrimes,
and the most advanced cyber securities are employed. The shift to digitalization and the
continuance of it should cater to reduced cost for the industry, as this will reduce manpower and
make the system automated.

Customer convenience is the number one advantage of digital banking. Like the traditional bank’s
ATM, digital banking is available 24 hours a day, 365 days a year. However, we can do our
banking from the comfort of our own home and this improves the time taken to process all the
requests.

Digital banking is accessible everywhere and increases the customer base, online banking is
compatible with money management programs and delivers end-to-end value to customers.
Digitalization not only helps in getting more customers but also delivering top-notch services, as
efficiency counts as well.

To facilitate the digitalization of banking industry, the enablers can be grouped mainly into:
Digitalize Customer Experience, Digitalize Products & Services, Digitalize Organization and
Digitalize Operations.

1) Digitalize Customer Experience

Digitalization impacts everything, and this impact is transformative. Digitalization is about taking
full control of customer-experience and managing all the needs, existing and new, for customers
and developing a business model accordingly.

10
Customers drive this trend of digitalization, as they are aware of their needs and look for businesses
that cater to and fulfill their end-to-end requirements.

Customers have readily and effortlessly adapted to the digital world. Customers expect a seamless
multichannel experience and a consistent, global service. They judge their experience on three
levels: how well companies understand their needs; the simplicity of doing business, and; how
delightful it is. There must be an obsession with customer experience and develop ways to steadily
improve the experience and learn from every interaction.

2) Digitalize Products and Services

Traditionally, banking practice has focused on “product push” (i.e. increasing sales targets) rather
than understanding how best to delight its customers. In recent times, banks are keen to become
more customer-centric. Digital infrastructure provides billions of customers with affordable
broadband and low-cost devices. Banks need to develop new products and services that are
meeting the changing need of customers, maintain competitive edge and match with the latest
technology trends.

Moreover, there is a movement by several banks to acquire innovative payment companies as a

way to bring innovation internally and leverage new evolving technology. Banks also need to build
products based on customer segments while maintain high focus on mobile penetration.

3) Digitalize Organization

While all banks recognize the importance of multichannel integration with a unified flow of
information, they have not structured their internal organizations and governance policies
accordingly. Besides governance, traditional approaches to channels, products, and customer
segments will need to be modernized and existing silos need to be dismantled.

While most of the efforts are focused on the customer, digitalization's severe impact on the back
end often gets neglected. A complete review of existing structures will be required to support the
new digital banking journey. Back-office staff will need to develop highly efficient skills while at
the same time be able to understand new demands of the customers. The push to use big data to
improve customer relationship management (CRM) capabilities is putting pressure on data quality
and governance and dramatically increasing system performance.

11
 4) Digitalize Operations

Banks will become more digital. As customers, competitors, and even regulatory agencies push in
this direction, the promise of anytime, anywhere banking with transparency and convenience will
ultimately bring together all the elements of banking in the digital world.

Banks need to identify opportunities by looking at the overall customer life cycle, focus on
improving experiences and enable better customer services. Banking does not guarantee customer
loyalty due to customer behavior. A fluctuation of loyalty has been noticed in the industry,
furthermore loyalty is not the key answer, but it is experiences. Customer experience and customer
service needs to be enhanced in a coherent way: from cross channel and multichannel to Omni
channel. The practice of digital marketing and customer service strategies need to be engaged to
acquire, retain and delight customers.

Information Technology (IT) today has become an important tool for an efficient banking system,
and Indian banks have put in place a fairly strong infrastructure to leverage its benefits. Digitization
is not an option for banking industry rather it is enviable because every industry is being digitized
and banking sector is no exception for that. Now India as well as Indians is ready to become
cashless in this era of Digitization. It is no brainer that banks are the backbone of the economy;
they sink and sail with it. Though riddled with lot of risk, banking services steadily moved forward
with digitization to offer customer services at their fingertips and laptop screens. The 'Digital India'
campaign Started by Mr. Narendra Modi has the potential to transform the Indian banking industry.
While highlighting the progress of 'Digital India', more than 12,000 rural post office branches have
been linked into payment banking. Apart from giving licences to new payment banks, many other
policies and regulations are expected to be in place in the upcoming years which can bring a
paradigm shift in the Indian banking sector.

The Digital India vision aims to transform our country into a digital economy with participation
from citizens and businesses. Over 190 million accounts have been opened under the financial
inclusion scheme, with around 38 per cent of these being zero-balance accounts. It aims at
achieving the maximum- maximum value, maximum empowerment to people and maximum
technological penetration among the masses. India, being a nation which continues to be driven by
cash, is also moving towards a cashless economy with financial inclusion policy and ‘Digital India’
campaign by the government, with the aim of controlling the flow of black money.

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OMNI CHANNEL APPROACH

The most effective way to understand and bring the organization from traditional banking to digital
banking is Omni-Channel approach. Omni-channel is a multichannel approach to customer service
where all the channels are tightly integrated, keeping customer in the center of the integration.

As customers continue to change their channel usage patterns, banks and credit firms need to focus
on delivering a seamless customer experience across various touch points. More than just an
axiom, Omni-channel banking is a prospect to take bottom-line on higher note by gaining insights
from customers’ channels, behaviour and preferences.

Today’s customers are more sophisticated and tech savvy, and to cater to their specific needs, each
customer needs a unique experience from banking. They want the companies to understand their
unstated needs as well as their likes. So, it should come as no surprise that these customers are
expecting similar kind of response and service from banking institutions too. From researching
new services, opening an account, checking balance, conducting transactions, loans, credits,
wealth management, customer support, delivering an Omni-channel experience has become a key
to success in this competitive market place.

Espousal of Omni-channel is indispensable to ensure that customer experience is unified,

incorporated and supports customer at the right time, in the right place as the right way. It must be
as per their mobile and digital life style. Staying germane in current banking revolution entails
deep acquaintance of customers’ needs, wants and demands. It also requires the precise mixture of
IT infrastructure and innovative new technologies to certify that one remains ahead in current
market space to drive top, as well as bottom lines upwards.

DIGITAL BANKING: AN INDIAN PERSPECTIVE

Digital Banking may be viewed as adoption of various existing and emerging technologies by the
banks, in concert with associated changes in internal operations as well as external relationships
for providing superior customer services and experiences effectively and efficiently. Today we
find ourselves in a digital wonderland, where the milkman accepts wallet payment without a fuss,
a man buys a geometry set worth about Rs 100 for his daughter using a credit card and the vegetable
vendor uses QR code based “Scan & Pay” utility.

13
The new innovative digital technologies and futuristic thought processes have given birth to whole
new businesses and social dimensions. Projects such as Make in India and Digital India are now
the buzzwords to a bright and sustainable industrial and financial progress of our nation. As part
of its impetus for DIGITAL TRANSFORMATION in India, Government also encourages
technology adoption / up gradation while providing connectivity with high speed bandwidth to
every nook and corner of the country. This has exposed the full potential of the hitherto untapped
market in India.

SERVICE OFFERINGS BY BANKS IN THE NEW AGE OF DIGITAL PAYMENTS

Latest technology and service offerings in the new age Digital Payments space by the Banks, such
as Unified Payments Infrastructure (UPI) including BHIM (Bharat Interface for Money) which is
a Mobile App developed by National Payments Corporation of India (NPCI), Bharat Bill Payment
System (BPSS), mobile money, e-wallets, payment aggregation etc. have created a revolution by
themselves.

Currently there are several technologies, infrastructure and processes available to enable banks to
become super-efficient and dependable banks. Adaptation and implementation of highly capital
intensive global technologies, infrastructure and processes are decisive in order to remain ahead
of the curve. Transition and Interoperability related issues viz. from traditional banking to state of
the art digital banking such as data integrity, authentication (including third party authentication)
and trust factors in a digital banking environment are gaining importance. Digital banking provides
mission critical solutions to bankers for their short term and long term business and technological
requirements.

Today, aspects such as enhanced customer satisfaction and value through unified customer
experiences, faster output, infinite banking volumes, financial inclusion, operational efficiencies,
scale of economy etc. are being sought after, by leveraging digital banking and mobile
technologies. Becoming a digital bank can improve efficiency and provide a better customer
experience.

DIGITL BNKING- A BOON OR BANE

Going by the deep penetration within a relatively lesser turnaround time, state-of-the-art digital
payment systems are now poised to take quantum leaps in this new era that is largely driven by the

14
ubiquitous Internet. These disruptive dynamics and revenue models are literally the new game
changers – causing tangible and tactical shifts across major verticals. E-commerce and M-
commerce success is largely attributed to the phenomenal growth of various digital payment
technologies such as card payments, electronic fund transfers, payment gateways, e-Payments,
smart cards, mobile money wallets etc.

Pivotal to embracing such new age payment systems are the people, technologies, and processes
that have together created vast, robust and dependable networks and seamless systems that
guarantee humongous transactional volumes at breakneck speed, with dependable security and
counterchecks built around them. All these and rest are taking India to the threshold of the big
league and to make the country battle ready to compete with the most influential industrial and
financial powers of global businesses.

With digital banking and mobility, the need is no longer to “leap-frog” but to “deep-dive” into the
future. Going digital and mobile for a Bank is no longer an option, it’s a simple bare necessity- to
collaborate and flourish. Today’s challenging digital payments ecosystem has become a
burgeoning marketplace.

Banks have already started evaluating the reduction in number and size of branches (both the
number of units and the size of existing facilities). In addition, the investment in digital technology
to replace more expensive human interactions is also being considered. This includes, but not
limited to, tablets for universal bankers, automated teller machines and digital kiosks to facilitate
account opening and customer inquiries. To be successful in a digital environment, banks focus on
improving their digital maturity across various dimensions of customer service.

CUSTOMERS’ STANDPOINT

Banks are now increasingly worrying about their very bastions being co-shared by a string of new
age players. And the end-customer is the single largest beneficiary with a bouquet of services and
service providers to choose from and along with hugely competitive pricing models. Banks will
have to increase their operational efficiency and improve the customer experience by meeting the
customers’ expectations swiftly in order to keep their position in core markets. The level of
automation and digitalization of the account opening and on-boarding process has become very

15
crucial. The most important aspect is to improve the ability for consumers to open any new account
using digital channels and to efficiently onboard the new customer digitally.

In this area, traditional banks still differ strikingly from the new market players who offer a
convenient end to-end online process. The ability to offer basic as well as value-added content and
functionalities through digital channels is another important aspect.

Value-added content and functionalities, in contrast, will contribute strongly towards a positive
customer experience. Value-added functionalities include digital document safekeeping, access to
financial news, digital investing, personalized digital alerts, digital savings tools, online chat,
social media banking, e-lobbies etc., among others.

Simplicity of design, availability of contextual offers and ability to personalize the experience are
definitely some of the key success factors. The differentiation between competitors with regard to
design and ergonomics will decide the winner. In the coming days design will be a much bigger
differentiator, with simplicity being the overarching goal.

Elements allowing consumers to personalize their digital banking experience, such as contextual
cross-selling, the ability to set up personalized digital alerts and even the ability for the customer
to design their own digital banking app will gain prominence. It is the ability to leverage customer
insight for improved information access. All new functionalities need to be part of the same digital
banking application. Instead of having every piece of functionality, bank can dream up crammed
into one big-honking mobile banking app.

In the future, digital banking applications will be judged based on the fewer number of
touches/clicks needed to get from one screen to another. Banks are forced set a goal to improve
the individual customer experience.

The level of enhanced security available to protect identity and funds access is equally imperative.
Identity protection and account security will continue to be the focus area as hacking incidents
become more sophisticated and widespread.

Banks have to implement biometric security, including fingerprint technology, facial recognition
or voice recognition, etc as part of person identification.

16
STATUS POST DEMONETIZATION

Recent demonetization exercise of higher denomination notes by the government has really
accelerated the transformation of digital banking in India. Growth in the number of digital
transactions has been exponential since November 2016. Backed by Government thrust, people of
India finally seem to have accepted/embraced digital economy.

Demand for cash is diminishing slowly. New payment initiatives such as Aadhaar-linked cashless
payment solution which enables a merchant to facilitate Aadhaar based payment for cashless
purchases by customers called ‘Aadhaar Pay’ and ‘Bharat QR’, an integrated payment system
using the customers’ mobile phone to pay through debit or credit card by scanning a code at the
merchant’s place etc., have come to stay.

However with all these revolutionary new technologies, improvement in operational efficiencies
in order to ultimately increase bottom lines and shareholder value will remain a challenge for all
banks. Role of analytics and innovative revenue models need to be further fine-tuned. To reap
maximum advantage in an increasingly digital society, it is imperative that banks must demonstrate
superior performance in all spheres of customer service

45000000

40000000

35000000

30000000
Volume

25000000 2016

20000000 2017
2018
15000000

10000000

5000000

0
Mobile banking

Figure: Graph showing increase in the number of users of mobile banking post demonetization.
Source: RBI reports.

17
 CHAPTER-3

DIGITAL INDIA: ROLE OF BANKS

World is witnessing an accelerated pace in digitization. It multiplies the benefit of connectivity

and contributes a major role in the overall economic growth and effective governance of a nation.
Digital India is a programme towards making digitally empowered societies in India. With this
promising initiative, the Indian government has a vision to make 100 Smart Cities by 2022 and
thereby provide almost all the services electronically to the citizens. Indian government has
defined three enablers for this programme: Digital Infrastructure, Digital Service Delivery and
Digital Literacy. These are explained below:

1. It starts with building a correct ecosystem (i.e.) the Digital Infrastructure like high speed
internet and smart devices should be available at affordable prices. Day to day needs like
bank account access, purchasing consumer goods; health guide, travel plan etc. should be
on the move. Individuals should have a private space with all his identification detail on a
public cloud. And all these things should happen under a highly secured environment.
Fortunately, stiff competition is making data plan and smartphone availability at a very
reasonable price today. Each service provider is coming out with new smartphone
application for easy access.

2. Next aspect is to make all services seamlessly integrated and electronically available to
citizens. Smart cities are now being designed keeping this objective in mind. Individuals
will continuously receive notifications and messages to enable them to make the right
choice. Upcoming technologies like, Internet of Things, GPS, and Beacon etc. clubbed
with high end data crunching, would play a major role here.

3. Third aspect is to improve the Digital Literacy in India. Despite a very high mobile density
in our country, the potential for leveraging this technology remains largely untapped. A
very good indicator is that out of 900 million mobile users in the country there are only 40
million mobile banking customers. Bridging this digital divide would be a challenging task.
Companies are pouring more money to make digital channel easy and attractive. Many
digital tools are made available in multiple Indian languages to increase digital adoption
rate.

18
ROLE OF BANKS

Now what will be Banks’ contribution in making digital India’s vision come alive. Currently,
banks primarily play a niche role of money managers. In the evolved Digital India model, banks
will have actionable in each of the above mentioned three components. In fact, banks are the only
connecting link with all service providers. This will give a golden opportunity to banks to not only
get engaged customers but loyal customers and it’s illustrated below:

In the proposed digital India model, banks will elevate themselves from payment facilitator to
advisor and value aggregator. Finally, this will lead more loyal customers. The day-to-day basic
individual needs like food, home, transport, clothing, education, travel, health etc. can be captured
using the upcoming technologies like GPS, Beacons, Internet of Things. The interconnectivity
between different service providers and information through different social profiles present in
public cloud will result plethora of customer information. At this juncture, bank will play a key
role and can help customers not only in payment but also in decision making. Banks can build on
their trust with the customers by advising them on their non-financial needs. Bank will become a
key part of customer’s ecosystem and social community. Banks alliances with different service
19
providers will help them to transfer customized and attractive offers. This will be a great value add
to customers. Currently, banks are the connecting link between customers and service providers.
In near future, smart banks will leverage this to bring themselves to a next level in digital
ecosystem.

In addition to banks as a contributor to the Digital India programme, they will also be direct
beneficiaries of some initiatives. National Unified USSD Platform (NUUP), Pradhan Mantri Jhan
Dhan Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana,
Atal Pension Yojana, Aadhaar enabled payment, RuPay Card, Payment Banks are few key
initiatives by government and Banks need to plan jointly and strategically.

STRATEGIZING DIGITAL ROADMAP

The most important point is how banks need to strategize their digital road map today, in order to
achieve these milestones tomorrow. Each bank will have a different set of action items based upon
where it is lying currently in digital growth curve. Keeping this in mind, below mentioned action
items will help banks to strategize digital roadmap:

 The first and foremost step is linked with organizational mindset and structural change.
There should be a separate team for Digitization with defined goals. Digitalization should
be top management agenda and should be driven from top.
 Next is to drive on getting more customers on board under digital channel. In long run,
bank with more digitally active customer base will win this race due to their rich experience
which will attract more and more service providers to associate with them.
 Extensive high end data analysis will be the next big thing to manage. The end objective is
to track each movement of the customers and guide them in their day to day services. There
will be multiple data sources on customer insights and banks should have enough muscle
power to derive a logical conclusion from them. Today, banks need to invest big-time on
high end data analytics tool.
 Digitalization comes in two folds, that is, digital inside and outside. Though, customer
facing components are the top priority, we can achieve it in true sense if our back-end
engines are well automated. Each bank needs to introspect and pick key items both from
digital inside and outside aspect.

20
  Right partnership across all service providers will be key. Strategic tie-up will require data
sharing on customer insights from both sides. This will help to create a complete digital
ecosystem.
 Aadhaar is going to play a major role in digital India. Aadhaar based biometric
authentication, Aadhaar e-KYC, Aadhaar enabled account, Aadhaar based fund transfer
are being worked upon. With Aadhaar biometric API (Application Programming Interface)
being made available and appropriate campaign in place, there will be radical change in
banking adoption and usage.
 Another strategic move will be, making mobile as primary channels for the bank. This
means, people with smart phone can open account and start accessing banking services
without interacting with any other banking channel. This will make banking experience
very easy for customers
 With so much of digital tie-ups, security will be of major concern. All such enhancements
needs to be married with high and smart security standard and practices

Key Requirements for a Digital Bank Monetization and capturing value Compared to legacy
banks, digital banks can generate value in numerous ways:

 Digital Payments- Digital payments form the core of monetization. They include mobile
and online payments, both domestic and foreign, as well as mobile P2P interactions. Digital
payments enable banks to boost fees and interest income and reach a broader set of
customers with more diverse services; they are done more cost effectively than by
incumbent banks, allowing market share gains through competitive pricing.
 Digital wallet- Digital wallet is essential for digital commerce and ecosystems built on
value-added services. In addition, it optimizes transaction costs for customers and funding
costs for banking operations.
 Digital Sales and Banking Products- Artificial intelligence (AI) assisted sales of banking
products, such as deposits, loans, and mortgages are conducted through direct channels,
including social media. That is in line with shifting consumer preferences and behaviour
trends in e-commerce, especially directed at Generation Y and tech savvy customers.

21
  Multi channelling- An integrated and seamless multichannel approach to sales increases
the bank’s share of customers’ wallet, boosts customer loyalty, thereby making a
significant difference in customer adoption rates.
 Digital Financial Planner and Roboadvisory- AI based digital financial planner manages
monthly income, recurring payments, savings and investments, increasing interaction
between the digital bank and customers. The bank acts as a trusted shepherd defining
customer life-cycle financial needs. Logical continuation of the circle of trust between the
digital bank and customers, where customers rely on the Roboadvisory services to optimize
investment portfolios based on individual goals and preferences, regularly adjust them and
record incremental results and properly allocate resources for each phase of the customer’s
voyage towards all things digital.
 Smart Big Data- Advanced analytics allows the digital bank to transform its data into
more personalized client service aimed at data monetization.

RESERVE BANK OF INDIA AND ITS VISION

The Reserve Bank of India's "Payment and Settlement Systems in India: Vision-2018" aims at
building best of class payment and settlement systems for a 'less-cash' India.

The broad contours of Vision-2018 revolve around 5 Cs - coverage, convenience, confidence,

convergence and cost. To achieve these, focus on four strategic initiatives such as responsive
regulation, robust infrastructure, effective supervision and customer centricity is important. RBI
has periodically put forth its vision for payment and settlement systems so that the banks migrate
to electronic payments and ensure that the payment systems in India are safe, secure, authorised,
efficient and accessible. Digital banking provides mission critical solutions to bankers for their
short term and long term business and technological requirements.

DRIVING FACTORS IN INDIA

Following are three driving factors in India.

 Adoption: Post demonetisation e-commerce and m-commerce success is largely attributed

to the phenomenal growth of various digital payment technologies such as card payments,
electronic fund transfers, payment gateways, e-payments, smart cards, mobile money
wallets etc. Pivotal to embracing such new age payment systems are the people,

22
 technologies, and processes that have together created vast, robust and dependable
networks and seamless systems that guarantee herculean transactional volumes at
breakneck speed, and with dependable security and counter-checks built around them.
 Agility: Today, aspects such as enhanced customer satisfaction and value through unified
customer experiences, fastest possible throughput, infinite banking volumes, financial
inclusion, operational efficiencies, scale of economy etc. are being sought after by
leveraging digital banking and mobile technologies.
 Arrival of Players: Traditional banks should be worried about their very supporters being
co shared by a string of new age players e.g. Payments Bank, Fintech culture around. And
the end-customer is the single largest beneficiary - with a bouquet of services and service
providers to choose from and along with hugely competitive pricing models.

Banks Initiative towards digital push

 SBI AND ITS INITIATIVE

SBI urges Reserve Bank to hike monthly limit on mobile wallet spends and it waives MDR
(Merchant Discount Rate) on debit card transactions for all merchants having annual turnover of
upto Rs.20 lakh for a period of one year up to Dec 31, 2017 and the bank believes that this gesture
would go a long way in changing the perception towards the cost of using digital channels and
supplement the government’s cashless India drive.

Digitization has to happen at both an internal as well as at the customer facing front. Every bank
has 3 pillars – people, processes, and technology. SBI redefined all these 3 pillars.

SBI is doing one large project, called ‘Digital Bank’, where they created 3 streams- online
marketplace, financial superstore, and end-to-end digitization. For these three areas, SBI has
defined 300-odd journeys like customer account opening, address, transferring money, buying a
house, etc. It is completely re-orchestrating the process, so that the customer will have an omni-
channel and self-service kind of mode.

Another significant project is called ‘Office 365’, which is the world’s largest deployment in terms
of number of people using it. So far, it has been deployed for 150,000 people. This will be a
complete web-based and cloud-based solution. SBI is the first bank to adopt ‘public cloud’.

23
Another project is ‘Branch Virtualization’. Earlier, every branch had to have one server serving
the network of 40-50 people working in a particular branch. Now, servers are being removed and
applications are being put on the cloud so that the banks will only have the terminal.

Besides, this SBI is rolling out ‘Customer Relationship Management’ software that will be end-
to-end and have 365 degree view, campaign management, lead management, complaint
management, and customer wallet share management.

Internally, SBI is using integrated risk management as well. These are some of the projects that
SBI has undertaken and each one of these projects is a multi-hundred crore project.

SBI DIGITAL PRODUCTS

As part of modernization, SBI now has added another 7 digital products to their customers: SBI
Digital Village, SBI Mingle, State Bank Buddy, State Bank Scribe, SBI Digi Voucher, SBI Video
Statement and SBI Smart watch. With these additions, SBI becomes the "leader of digital
products". All these SBI Digital products are available for both rural and urban customers in India.

1. SBI Digital Village: It is a radical initiative by SBI to create a cashless ecosystem in each village
and provide access to Government supported digital initiatives in education, health, social security
and agri-schemes, subsidies and benefits. Initially Digital Village is being implemented in the
select 21 villages across the nation. Further SBI to establish 100 villages under this scheme in
various States across the country by 2017. Through Digital Village, bank can connect people by
providing Green channel banking, ATM Cards, Net banking, Mobile banking, Wallet banking,
Self-service pass book printing machines, Cash Deposit Machines, POS and Micro ATM at the
village locations. It is considered to be the part of Corporate Social Responsibility (CSR)
undertakings aiming to improve the standard of people particularly in villages.

2. SBI Mingle: It is the social banking application of SBI which enables us to perform basic
banking activities through SBI official Facebook page. To get started, users need to access SBI
Mingle from the Official SBI Facebook Page. Once the access to the page is established, users
need to register and then Sign in, in that order.

24
3. SBI Buddy: It is a mobile wallet application that allows us to send or ask money from any of
our contacts even if they do not have an SBI account. SBI Buddy is the best in market-wallet with
a unique blend of payment and banking service. State Bank Buddy has comprehensive
collaborations with merchant partners for unparalleled shopping and payment experience

4. SBI Digi Voucher: It is a green banking initiative that provides digital alternatives to paper
vouchers through a multi-channel solution and as a mobile app. It saves valuable time by allowing
us to pre-complete transaction forms online to get direct access to the teller counter.

5. SBI Video Statement: animated and voice-guided customer-level statements, complete with
analytics and customers spending patterns.

6. SBI Scribe: a solution that converts non-digital data (handwritten text) into digital data (system
readable) to drive high-level efficiencies in account opening and KYC.

7. SBI Smart Watch: It permits banking through our State Bank Smart Watch. A unique banking
experience that is in tune with the technology of the future.

8. SBI YONO: SBI YONO app is an integrated digital banking platform that enables the users
to access a variety of financial services and other services such as online shopping, taxi bookings,
travel planning, offline retail, online education, or medical bill payments. With YONO, customers
only need one application for all the mobile banking services such as cashless bill payments, loans,
fund transactions, and bank account opening, investments, insurance and daily shopping needs.

9. SBI InTouch: Its a whole different kind of banking. Now is the age of cash less branches.
Intouch branches offer personalised services. It opens account in 15-20 minutes with personalised
ATM card in minutes. This is branch for new age. Here we have ATM, cash deposit machine,
passbook printing machine which is available 24*7.

VARIOUS BANKS DIGITAL INITIATIVES

The adoption of digital payment ecosystem and use of a digital platform for repayments is clearly
seeing a shift in rural areas and enhancing digital capabilities.

25
Cosmos bank has started on biometric enabled systems and have already started putting ATMs
which are bio-metric enabled. UPI would also be another priority for the bank.

Mahindra and Mahindra financial services is encouraging all their stake olders to go
increasingly digital as it can lead to better efficiencies and lead to a win-win situation for everyone
and encouraging usage of eKYC and aadhaar and are educating the customers that usage of digital
mediums can lead to faster approval of loans and the quality of data can lead to better decision
making.

In five temples of Kanyakumari district in southern Tamilnadu HDFC bank have introduced
digital wallets and POS ( point of sales terminals), card swiping machines at counters. Temples in
Trivandrum are embracing digital mode in order to help devotees to make donations without any
hassle.

IDFC has roped in 800 merchants in 16 states to adopt the unique payment facility. It aspires to
expand its foot print into 25 states from the current 16 and would rely largely on the bank in a box
model to achieve the Aadhaar linked solution for cashless payments and retail banking expansion.
IDFC (Infrastructure Development Finance Company) bank right from the inception has been
to make everything cashless. Currently there are 1200 micro ATMs deployed and it will be
deploying additional 3000 micro ATMs in the next three months.

Finopaytech provides a wide range of financial and large scale enrolment services. Recently the
company launched the mobile wallet FINO BPAY, that will facilitate cashless payments at over
12000 Bharat petroleum corporation limited outlets.

Private sector lender ICICI bank on Nov 28, 2016 announced to transform 100 villages in as
many days to enable villagers go in cash less banking and payments transactions. ICICI banks
ambitions project is inspired on at Akodara in Sabarkamtha district Gujarat in 2015.

Axis Bank has set up micro ATMs to provide easy access of cash withdrawals and other basic
banking services to employees of the airport, CISF, airline employees, travellers and patients by
using Aadhaar card no. and finger print as an identity proof in order to leverage the contact less
technology at POS terminals for faster transactions (General stores, vegetable and milk vendors,
auto rickshaws and to accept payment digitally through QR code.

26
 CHAPTER-4

RECENT TRENDS IN BANKING

With the passage of time there has been shift in the way the banking is taking place and
demonetisation and digitalisation has led to emergence of some new trend in banking. Few of
which have been discussed below:

1. Automatic Teller Machine (ATM)

Automatic Teller Machine is the most popular device in India, which enables the customers to
withdraw their money 24 hours a day 7 days a week. It is a device that allows customer who has
an ATM card to perform routine banking transactions without interacting with a human teller. In
addition to cash withdrawal, ATMs can be used for payment of utility bills, funds transfer between
accounts, deposit of cheques and cash into accounts, balance enquiry etc.

2. Tele Banking

Tele Banking facilitates the customer to do entire non-cash related banking on telephone. Under
this devise Automatic Voice Recorder is used for simpler queries and transactions. For
complicated queries and transactions, manned phone terminals are used.

3. Electronic Clearing Service (ECS)

Electronic Clearing Service is retail payment systems that can be used to make bulk
payments/receipts of a similar nature especially where each individual payment is of arepetitive
nature and of relatively smaller amount. This facility is meant for companies and government
departments to make/receive large volumes of payments rather than for funds transfers by
individuals.

4. Electronic Funds Transfer (EFT)

Electronic Funds Transfer (EFT) is a system where by anyone who wants to make payment to
another person/company etc. can approach his bank and make cash payment or give
instructions/authorization to transfer funds directly from his own account to the bank account of
the receiver/beneficiary. Complete details such as the receiver's name, bank account number,
account type (savings or current account), bank name, city, branch name etc. should be furnished

27
to the bank at the time of requesting for such transfers so that the amount reaches the beneficiaries'
account correctly and faster. RBI is the service provider of EFT.

5. Real Time Gross Settlement (RTGS)

Real Time Gross Settlement system, introduced in India since March 2004, is a system through
which electronics instructions can be given by banks to transfer funds from their account to the
account of another bank. The RTGS system is maintained and operated by the RBI and provides a
means of efficient and faster funds transfer among banks facilitating their financial operations. As
the name suggests, funds transfer between banks takes place on a 'Real Time' basis. Therefore,
money can reach the beneficiary instantaneously and the beneficiary's bank has the responsibility
to credit the beneficiary's account within two hours.

6. Point of Sale Terminal

Point of Sale Terminal is a computer terminal that is linked online to the computerized customer
information files in a bank and magnetically encoded plastic transaction card that identifies the
customer to the computer. During a transaction, the customer's account is debited and the retailer's
account is credited by the computer for the amount of purchase.

7. Customer Touch Points

28
 CHAPTER-5

GOVERNMENT OF INDIA INITIATIVES

The Digital India programme is a flagship programme of Government of India with a vision to
transform India into a digitally empowered society and knowledge economy. Sustained by the
successful acceptance of demonetization, the Government of India (GoI) is now pushing digital
transactions.

“Faceless, Paperless, Cashless” is one of the professed role of Digital India. The vision is to
provide facility of seamless digital payment to all citizens of India in a convenient, easy,
affordable, quick and secured manner. Ministry of Electronics and Information Technology
(MeitY) has been entrusted with the responsibility of leading this initiative on “Promotion of
digital Transactions including Digital Payments”.

The GoI has set a target of 25 billion digital transactions in the financial year (FY18) through
multiple facilities, including platforms such as Aadhar Pay, Unified Payment Interface (UPI),
Immediate Payment Service (IMPS) and debit cards. GoI has also launched a mobile application
(Bharat Interface for Money- BHIM) for facilitating e-payments through bank accounts.

INCENTIVE/ PROMOTIONAL SCHEMES

To promote digital payments MeitY has launched several initiatives including monetary incentive
schemes as below:

 Promotional Scheme of BHIM Aadhaar: Incentive of 0.5% of transaction value per

transaction will be provided to merchant, for Aadhaar based biometric merchant
transactions up to Rs 2000.
 BHIM Cashback Scheme for Merchants: Merchants to get cashback on minimum 50
transactions can earn up to INR 1000 per month through this Scheme.
 BHIM- Referral Bonus Scheme for Individuals: Individuals get Referral Bonus on
completion of minimum three unique successful Transactions with aggregate value of INR
50 to any three unique users.
 Digital Jagriti: Common Service Centre is conducting Digital Financial Inclusion
Awareness and Access programme.

29
  DigiShala: Free Doordarshan DTH educational channel available in Hindi, English and
regional languages for creating awareness regarding various forms of electronic payment.

GOVERNMENT INITIATED DIGITAL PAYMENT SYSTEMS

The government has identified five digital payment systems with the aim to make them accessible
and user friendly and encouraging by way of cash awards for consumers and merchants to bring
more and more people on the digital platform and thus making more transparent. It includes

 Unified Payments Interface (UPI)

 digital or e-wallets,
 prepaid debit card or credit card that can be used at ATMs and point of sales machines
(POS)
 Aadhaar enabled payment systems (AEPS)
 Unstructured Supplementary Service Data (USSD).

The traditional banking industry is thus facing the impact of digital technology. To remain
contemporary and relevant, several commercial banks have already started aggressively innovating
digital products and services for customers. Meanwhile, India offers a unique architecture for
digital banking which is not available in the US or China. This architecture includes an existing
eKYC (know your client) system and the Aadhaar authentication framework, a signature and
digilocker, the Unified Payments Interface - which allows for swift payment across banks - and
finally, a consent architecture system, where information is made freely available to anyone else
for use. India thus today stands at the point of a banking revolution through rapid penetration of
digital banking. However, if one looks at the total payment transactions done in the months post
demonetization, it is apparent that the big digital push has not happened. RBI has started reporting
payment transaction statistics for all modes of payments since November 2016- the volume and
value of various types of transactions. Increased smart phones penetration in India will drive digital
banking in India. The key issue is that the technology interfaces and other advances are merely
enablers and not drivers for shift to digital payment. India continues to be primarily a cash
economy, suffers from intermittency in a digital infrastructure, and there is reluctance from a large
section of the population to embrace digital payments. Even spending through cards has not seen
increased traction although they have been around for over two decades. GoI may consider

30
providing a percentage cash back of value or a reduction in excise duty to buyers who buy over
digital gateways. The financial incentive has to be lucrative enough for people not to pay in cash,
while providing GoI detailed information on a person's spending to provide opportunity to bring
under the tax purview and increase net revenues for the GoI. However, to ensure the same, all bank
accounts, credit and debit cards, and other digital payment avenues available for an individual
should be linked to his Adhaar and PAN card. Thus, there is no doubt that digital banking has
brought in amazing customer experience. However, increased levels of cyber threats have the
potential for causing significant disruptions in their services apart from risks related to sensitive
customer information and internet frauds. It is therefore important to see how information
technology systems and data security risks are monitored and managed. Regulations on
digitalization in India are at a nascent stage and their evolution would also be important in charting
the way forward for disruptive innovations in the Indian banking space.

Innovation is among the most powerful forces that continue to shape human society. The
accelerating rate of technological change, combined with shifting customer preferences and an
evolving regulatory landscape, have dramatic implications for the ways in which financial services
are designed, delivered and disbursed today. Technology is overturning workflows and processes
in the financial services industry. Tasks once handled with paper money, bulky computers, and
human interaction are now being completed seamlessly entirely on digital interfaces. Banking
today has become easy and On-The Go. Gone are the days when banking was a chore, a frustrating
activity. Mobile phones especially smart phones have created more opportunities to the common
man than any other technology in the recent past. Today mobile banking and mobile wallets are
the two fastest growing segments in the payments industry. Evolution of mobile banking on the
back of mobile phone revolution in India has helped clients make faster and secure banking
transaction on the move. For banks mobile banking is the most cost efficient mode of offering
banking services. It is a win-win situation for both banks and clients.

CHAPTER- 6

OPPORTUNITIES AND CHALLENGES IN DIGITAL BANKING

31
OPPORTUNITIES IN DIGITAL BANKING

Following are some of the opportunities in digital banking:

1. Untapped Rural Markets: Contributing to 70% of the total population in India is a largely
untapped market for banking sector. In all urban areas banking services entered but only few big
villages have the banks entered. So that the banks must reach in remaining all villages because
majority of Indian still living in rural areas.

2. Multiple Channels: Banks can offer so many channels to access their banking and other
services such as ATM, Local branches, Telephone/mobile banking, video banking etc. to increase
the banking business.

3. Competitive Advantage: The benefit of adopting e-banking provides a competitive advantage

to the banks over other players. The implementation of e-banking is beneficial for bank in many
ways as it reduces cost to banks, improves customer relation , increases the geographical reach of
the bank, etc. The benefits of digital banking have become opportunities for the banks to manage
their banking business in a better way.

4. Increasing Internet Users and Computer Literacy: To use internet banking it is very
important or initial requirement that people should have knowledge about internet technology so
that they can easily adopt the internet banking services. The fast increasing internet users in India
can be a very big opportunity and banking industry should encash this opportunity to attract more
internet users to adopt internet banking services.

5. Worthy Customer Service: Worthy customer services are the best brand ambassador for any
bank for growing its business. Every engagement with customer is an opportunity to develop a
customer faith in the bank. While increasing competition customer services has become the
backbone for judging the performance of banks.

6. Internet Banking: It is clear that online finance will pickup and there will be increasing
convergence in terms of product offerings banking services, share trading, insurance, loans, based
on the data warehousing and data mining technologies. Anytime anywhere banking will become
common and will have to upscale, such up scaling could include banks launching separate internet
banking services apart from traditional banking services.

32
7. Retail Lending: Recently banks have adopted customer segmentation which has helped in
customizing their product folios well. Thus retail lending has become a focus area particularly in
respect of financing of consumer durables, housing, automobiles etc., Retail lending has also
helped in risks dispersal and in enhancing the earnings of banks with better recovery rates.

8. Increased Productivity: It takes an employee an average of 12 minutes to find the paper

document they are looking for. With a well-executed digitalization and document imaging plan,
this can be reduced to a few seconds or less. Document Imaging allows the stake holder ability to
share, collaborate, exchange and access documents in seconds, reducing the turnaround time
further increasing the efficiency for your business.

9. Cost efficiency: The cost of printing and paperwork can be exorbitant. It involves various sub
costs like equipment management, paper records maintenance and cost of space.

10. Easy to access and always accessible: Documents that have been converted can be easily
accessed through the cloud or system using any device that has internet, anywhere or anytime.

11. Enhanced security: A scanned document is track able document. If needed, only certain users
can access the documents and workflows can be set up along with permission groups for an
individual, which enhances the security and maintains the confidentiality of the document.

12. Enhanced Information Preservation: Information stored in paper formats is degradable

information, and degrades further every time it is handled manually. Document imaging ensures
that your business's most important data is saved and preserved for the future.

13. Disaster recovery: There is always a risk of disaster, whether it is natural or manmade. Fire,
flood, earthquakes or other destructive phenomenon may cause a major disaster for your paper
documents seriously affecting your business.

14. Saves space: Real Estate space is expensive, Eliminating paper storage can give you with more
space, reduction in rent, reduced off-site document storage fees or potential to open up a new
office.

15. Stay Competitive: From multinational firms to small organization, digitization has been the
mantra of the new age document management. Document digitization efforts have repaid
businesses in reduced costs, efficient workflows and satisfied customers.

33
16. Environmentally friendly: Document Imaging and overall document digitizing process adds
to your green credits and is an environment friendly initiative. It removes the needs of creating
multiple backup copies and unnecessary printing, increasing the eco-friendly quotient of company.

17. Digital Transformation: Image scanning is a first step in building a digital transformation
plan. Early adoption is the key for organizations to ensure digital success and focus on cost savings
and standardization.

CHALLENGES IN DIGITAL BANKING

Following are the challenges faced by the digital banking sector:

1. Customer Satisfaction/ Loyalty- Today, customers are more value oriented in their services
because they have alternative choices in it. Hence, each and every bank has to take care about
fulfillment of customers’ satisfaction.

2. To Provide several personnel services- The present times demanded that banks are to provide
several services for which they have to expanse in service, social banking with financial
possibilities, selective up gradation, computerization and innovative mechanization, better
customer services, effective managerial culture, internal supervision and control, adequate
profitability, strong organization culture etc. Therefore banks must be able to provide complete
personal service to the customers who come with expectations.

3. Competition- The nationalize banks and commercial banks have the competition from foreign
and new private sector banks. Competition in banking sector brings various challenges before the
banks such as product positioning, innovative ideas and channels, new market trends, cross selling
etc. Banks are restricting their administrative folio by converting manpower into machine power
i.e. banks are decreasing manual powers and getting maximum work done through machine power.
Skilled and specialized man power is to be utilized and result oriented targeted staff will be
appointed.

4. Managing Technology- Developing or acquiring the right technology, deploying it optimally

and then leveraging it to the maximum extent is essential to achieve and maintain high service and
efficiency standards while remaining cost effective and delivering sustainable return to

34
shareholders. Early adopters’ of technology acquire significant competitive advances Managing
technology is therefore, a key challenge for the Indian banking sector.

5. Security Risk- The problem related to the security has become one of the major concerns for
banks. A large group of customers refuses to opt for e-banking facilities due to uncertainty and
security concerns. Secure banking based on technology and its ramifications including cyber-
crimes in today’s digital banking landscape has to be reviewed continuously. The dark side of
being digital i.e. cyber security risks are to be taken care and risk mitigation measures need to be
strengthened.

6. The Trust Factor- Trust is the biggest hurdle to online banking for most of the customers.
Conventional banking is preferred by the customers because of lack of trust on the online security.
They have a perception that online transaction is risky due to which frauds can take place. While
using e-banking facilities lot of questions arises in the mind of customers such as: Did transaction
go through? Did I push the transfer button once or twice? Trust is among the significant factors
which influence the customers’ willingness to engage in a transaction with web merchants.

7. Customer Awareness- Awareness among consumers about the e-banking facilities and
procedures is still at lower side in Indian scenario. Banks are not able to disseminate proper
information about the use, benefits and facility of internet banking. Less awareness of new
technologies and their benefits is among one of the most ranked barrier in the development of e-
banking.

8. Privacy risk- The risk of disclosing private information & fear of identity theft is one of the
major factors that inhibit the consumers while opting for internet banking services. Most of the
consumers believe that using online banking services make them vulnerable to identity theft.
According to the study consumers' worry about their privacy and feel that bank may invade their
privacy by utilizing their information for marketing and other secondary purposes without consent
of consumers.

9. Strengthening the public support- In developing countries, in the past, most e-finance
initiatives have been the result of joint efforts between the private and public sectors. If the public
sector does not have the necessary resources to implement the projects it is important that joint

35
efforts between public and private sectors along with the multilateral agencies like the World Bank,
be developed to enable public support for e-finance related initiatives.

10. Implementation of global technology- There is a need to have an adequate level of

infrastructure and human capacity building before the developing countries can adopt global
technology for their local requirements. In developing countries, many consumers either do not
trust or do not access to the necessary infrastructure to be able to process e-payments.

11. Non- Performing Assets (NPA)- Nonperforming assets are another challenge to the banking
sector. Vehicle loans and unsecured loans increases N.P.A. which terms 50% of banks retail
portfolio was also hit due to upward movement in interest rates, restrictions on collection practices
and soaring real estate prices. So that every bank have to take care about regular repayment of
loans.

12. Automation and the future of work- One of the most important sociological challenges that
has been thrown around is the impact of AI and Robotic Process Automation on traditional
workforce. When we adopt automation, it is incumbent on us to understand the impact on jobs and
help the workforce transition to newer roles. This will not only be responsible for growth, but will
have an exponential positive impact in the future.

12. Sustainability- Post successful innovation and implementation, the next pressing challenge to
tackle effectively is sustenance. An organization’s sustainability as a leader is possible only
through synergy. Only when the users acknowledge the value of the product or service will the
organizational value skyrocket to success and remain there. In this context, the power of social
media is often overlooked. While consistently good reviews uplift the organization to a better
status, consistently bad reviews can destroy even an entire empire.

CHAPTER-7

RESEARCH OBJECTIVES AND METHODOLOGY

36
RESEARCH OBJECTIVES

1. To study the conceptual framework of digital banking.

2. To study customer perspective about digitalisation in banks.
3. To study the customer preference of the various digital services.
4. To identify the reasons for preferring digital banking.
5. To study the consumer’s perception on service quality in digital banking system.
6. To identify the purpose for which customers have been using digital services.
7. To find out the opinion of the respondents regarding the various problems of digital
banking.
8. To study SBI initiatives in Digital Banking.
9. To give valuable suggestions to improve awareness and satisfaction about digital
banking services.
10. To identify various digital banking services/products adopted by India.
11. To study the challenges and opportunities faced in digital banking.
12. To study the overall satisfaction level of the customers with the digital services of the
bank.

NEED FOR THE STUDY

Digital push is needed because India is one of the biggest markets and it also has to compete at the
global level. Further, there will be a strong correlation between business performance and smarter
technologies. The following elements form a clear model of success for banks:

 Smart management of information is vital to digital banking. Banks need to marshal online
data- the unique virtual identity for each individual that we call a Code Halo- to offer their
customers personalized attention. Banks need to act, but more important, they need to act
strategically.
 Although the ROI of digital banking is substantial, the costs are steep for not adopting
digital banking. Costs include lost opportunity, customer attrition and stagnation in new-
customer growth and product sales.
 Embracing the holistic shift to digital and its streamlined, cross channel approach requires
banks to evaluate their options carefully and select the ones that best fit their strategy.

37
  An enterprise roadmap is a key prerequisite for implementing a digital banking program.
The roadmap balances key customer values (loyalty, convenience, relevance, interaction
and mobility) against the bank’s values (profitability, loyalty, operating efficiency, market
expansion and risk mitigation).

RESEARCH METHODOLOGY

This research is based on the primary data that was collected with the help of a survey and was an
attempt to study about digitalisation in banking industry.

Sample Unit: Customers of State Bank of India in Jammu region.

Sample Size: In this research the sample size consists of 80 respondents

Sampling Method: Simple Random Sampling

Primary Source: The study is intended to cover the awareness and satisfaction about Digital
banking facility provided by State Bank of India in Jammu. Data for this investigation is collected
from primary source. The sample chosen consisted of 80 respondents. The data has been collected
during the month of June and July, 2018 by interviewing the customers of the bank, through
questionnaire and by observation with the Branch Heads of State Bank of India. The data collected
from the primary source is analyzed with the help of statistical measures such as simple percentage
analysis.

Secondary Source: Secondary data is collected from Journals, company’s website, government
web portals and monthly reports of Reserve Bank of India.

CHAPTER-8

RESULT AND DISCUSSIONS

Profile of Respondents

38
 S. No. Variable No. of Respondents

1. Gender Male 45(56.25%)

Female 35(43.75%)
2. Age ( in years) Below 20 3(3.8%)

21- 35 56(70%)

36- 50 12(15%)

50- 65 6(7.5%)

65 and above 3(3.7%)

3. Education Primary 1(1.3%)

Qualification Secondary 5(6.3%)
Graduate 41(51.2%)
Post Graduate 33(41.3%)
4. Occupation Student 23(28.7%)

Service 28(35%)

Business 8(10%)

Professional 12(15%)

Others 9(11.3%)

Source: Primary Data

Table 1: Distribution of sample respondents according to their gender, age, education

qualification and occupation. (n=80). Figures in brackets represent percentages to total.

Interpretation

 From the study, it is found that 56.25% of respondents were males and 43.75% were
females.

39
  From the study it is found that 3.8% of respondents were below 20 years of age, 70% lie
in the age group of 21-35 years, 15% lie in the age group of 36-50 years, 7.5% lie in the
age group of 50-65 years and 3.7% were above 65 years.
 The study shows that 1.3% respondents had primary level education qualification, 6.3%
were secondary qualified, 51.2% were graduate and 41.3% were post graduate.
 The study also shows that 28.7% of respondents were students, 35% were service persons,
10% were in business, 11.3% were self employed and 15% of respondents were
professionals.

Objective- 2: To study customer perspective about digitalisation in banks.

Importance of digitalization No. of Respondents

Vital 27(33.8%)

Essential 41(51.2%)

Desirable 9(11.3%)

Can’t say 3(3.7%)

Source: Primary Data.

Table 2: Distribution of sample respondents according to customer perspective about

digitalization in banks. Figures in brackets represent percentages to total.

Interpretation

 From the above table, it can be seen that 51.2% of the customers find digitalization of banks
as essential system of banking and 33.8% of customers feel that it is vital system of
banking.

Objective- 3: To identify the customer preference of various digital services.

Services Offered by Bank Personally adopted

by customers

40
 ATM 71(88.8%) 72(90%)

Internet banking 65(81.3%) 48(60%)

Mobile Banking 62(77.5%) 52(65%)

Phone Banking 41(51.2%) 26(32.5%)

Debit Cards 67(83.8%) 64(80%)

Credit Cards 58(72.5%) 34(42.5)

Digi Vouchers 19(23.8%) 6(7.5%)

Video Statements 10(12.5%) 4(5%)

Social Banking Applications 22(27.5%) 16(20%)

Source: Primary Data

Table 3: Customer preference of digital services (n=80). Figures in brackets represent

percentages to total.

Interpretation

 The above table shows the digital services offered by the customers’ bank and the services
which are personally adopted by the customer.
 From the above table it can be seen that 90% of the customers have personally adopted
ATMs, followed by debit card which is adopted by 80% of the customers.
 From the above table it can be seen that though the bank offers all the services but
customers are not aware of the few services like only 12.5% of the customers have
knowledge about video statements.
 Hence, it is required that bank need to aware customers regarding the services they are
offering and encourage the customers to adopt these services.
Objective- 4: To identify the reasons for preferring digital banking.

Motivating Features No. of Respondents

41
 Time Saving 79(98.8%)

Accuracy 72(90%)

Easy and convenient access 68(85%)

Cost saving 66(82.5%)

Security 19(23.8%)

24*7 Availability 76(95%)

Social Status 75(93.8%)

Exchange of Information 62(77.5%)

Confidentiality 51(63.7%)

Source: Primary Data.

Table 4: Motivating factors to prefer digital services (n=80). Figures in brackets represent
percentages to total.

Interpretation

 The above table shows us the various motivating factors for preferring digital banking by
the customers. From above it is seen that time saving is the most important motivating
factor for choosing digital services and 98.8% of respondents are influenced by this.
 Another important motivating factor for preferring digital banking is 24*7 availability and
95% of the respondents are influenced by this.
 Social status, easy and convenient access and accuracy are the factors influencing
customers’ preference at 93.8%, 85% and 90% respectively.
 From table it can be seen that only 23.8% of the customers are influenced by the security.
Hence, it is required that bank officials should enlighten the customers about the security
aspect of digital interface and conduct various awareness drives to educate customers.
Objective- 5: To study the consumer’s perception on service quality in digital banking
system.

42
 Service Quality Factors Score of Respondents

Time factor 77.5(62%)

Reliability 64(80%)

Convenient way of operating banking 72(90%)

transactions

Easy to Use 68(85%)

Cost effective 27(33.8%)

Preference 14(17.5%)

Awareness 8(10%)

Source: Primary Data.

Table 5: Customer perception on service quality factors. Figures in brackets represent

percentages to total.

Interpretation

 The convenience of online banking is helping people gain greater control of their finances
and contributing to changing patterns in cash withdrawal and day to day money
management.
 Another one of the very important service quality dimensions of digital banking service
quality is reliability.
 Saving time is an importance factor which influences the customers prefers to use digital
banking.
 Ease of use is another important determinant for the customer preferring the digital
banking.
 Digital banking users say that convenience is the most important factor, digital banking
lets them access their accounts from anywhere and at any time.

Objective-6: To identify the purpose for which customers have been using digital services.

43
 Purpose to use Digital Banking service No. of Respondents

Money Transfer 47(58.8%)

Balance Details 62(77.5%)

Purchase Bank Products 11(13.8%)

Source: Primary Data.

Table 6: Purpose for which customers have been using the digital services of bank. Figures in
brackets represent percentages to total.

Interpretation

 From above table we can see that most of the customers use digital banking facility to
check their balance details (77.5%).
 Followed by this is Money Transfer or bill payment by the customers which is 58.8%.
 Only 13.8% customers use digital services to purchase new products like opening an
account.

Objective- 7: To find out the opinion of the respondents regarding the various problems of
digital banking.

Difficulty No. of Respondents

Risky 61(76.3%)

Less knowledge 72(90%)

High Charges 53(66.3%)

Less adoption 55(68.8%)

Traditional Banking 66(82.8%)

Source: Primary Data.

Table 7: Difficulty for using the digital banking facility (n=80). Figures in brackets represent
percentages to total.

Interpretation

44
  The main difficulty for using the digital banking facility is less knowledge about the
operations of banking facility (90%). Respondents also feel that digital services are highly
charged (66.3%) and respondents also believe digital banking to be risky (76.3%).
 Further 82.8% of the respondents say that even today most of the customers prefer
traditional or branch banking to digital banking

Objective-10: To study the overall satisfaction level of the customers with the digital services
of the bank.

Satisfaction Level No. of Respondents

Fully satisfied 24(30%)

Satisfied 52(65%)

Somewhat satisfied 4(5%)

Not satisfied Nil

Source: Primary Data.

Table 8: Satisfaction level of the customers with the digital services of bank (n= 80). Figures in
brackets represent percentages to total.

Interpretation

 Satisfaction level of the customer is very important in banking.

 From above we see that 65% of the customers are satisfied with the digital services of the
bank.
 Rest 30% are fully satisfied with the services and only 5% of the customers are somewhat
satisfied.
 It indicates that SBI bank customers have high level of satisfaction from the services they
get.

Sources from where customers come to know about the digital services of bank

45
 Sources No. of Respondents

From bank officials 38(47.5%)

Advertisement in Print media 34(42.5%)

Television and Radio Advertisement 30(37.5%)

Online Advertisement 33(41.3%)

From family members 21(26.3%)

From Friends 26(32.5%)

Source: Primary Data.

Table 9: Sources from where customers come to know about the digital services of bank. Figures
in brackets represent percentages to total.

Interpretation: From above table it is clear that most of the customers come to know about digital
services from bank officials (47.5%) which mean that bank employees make customers aware of
the new possibilities and opportunities in digital banking.

Time Duration for which customers have been using the digital services of the bank.

Time period No. of Respondents

Less than 1 year 11(13.8%)

1- 2 years 20(25%)

2- 3 years 14(17.5%)

3- 5 years 13(16.2%)

More than 5 years 22(27.5%)

Source: Primary Data

Table 10: Time Duration for which customers have been using the digital services (n=80).
Figures in brackets represent percentages to total.

Interpretation: From above table we see that post demonetization there has been increase in the
number of customers using digital services, i.e. 25%.

CHAPTER- 9

46
 FINDINGS

Following were the findings from the survey conducted:

 From the study, it is found that 56.25% of respondents were males and 43.75% were
females.
 From the study it is found that 3.8% of respondents were below 20 years of age, 70% lie
in the age group of 21-35 years, 15% lie in the age group of 36-50 years, 7.5% lie in the
age group of 50-65 years and 3.7% were above 65 years.
 The study shows that 1.3% respondents had primary level education qualification, 6.3%
were secondary qualified, 51.2% were graduate and 41.3% were post graduate.
 The study also shows that 28.7% of respondents were students, 35% were service persons,
10% were in business, 11.3% were self employed and 15% of respondents were
professionals.
 The study shows that 51.2% of the customers find digitalization of banks as essential
system of banking and 33.8% of customers feel that it is vital system of banking.
 It is seen that 90% of the customers have personally adopted ATMs, followed by debit
card which is adopted by 80% of the customers.
 It can be seen that though the bank offers all the services but customers are not aware of
the few services like only 12.5% of the customers have knowledge about video statements.
Hence, it is required that bank need to aware customers regarding the services they are
offering and encourage the customers to adopt these services.
 The various motivating factors for preferring digital banking by the customers are Time
saving, easy and convenient, accuracy, 24*7 availability, security, confidentiality, cost
saving social status and exchange of information. It is seen that time saving is the most
important motivating factor for choosing digital services and 98.8% of respondents are
influenced by this. Another important motivating factor for preferring digital banking is
24*7 availability and 95% of the respondents are influenced by this. Social status, easy
and convenient access and accuracy are the factors influencing customers’ preference at
93.8%, 85% and 90% respectively.

47
 It can be seen that only 23.8% of the customers are influenced by the security. Hence, it
is required that bank officials should enlighten the customers about the security aspect of
digital interface and conduct various awareness drives to educate customers.
 The convenience of online banking is helping people gain greater control of their finances
and contributing to changing patterns in cash withdrawal and day to day money
management.
 One of the very important service quality dimensions of digital banking service quality is
reliability. Saving time is an importance factor which influences the customers prefers to
use digital banking. Digital banking users say that convenience is the most important
factor in digital banking lets them access their accounts from anywhere and at any time.
 From the study it is seen that most of the customers use digital banking facility to check
their balance details (77.5%). Followed by this is Money Transfer or bill payment by the
customers which is 58.8%. Only 13.8% customers use digital services to purchase new
products like opening an account.
 The main difficulty for using the digital banking facility is less knowledge about the
operations of banking facility (90%). Respondents also feel that digital services are highly
charged (66.3%) and respondents also believe digital banking to be risky (76.3%).
 Further 82.8% of the respondents say that even today most of the customers prefer
traditional or branch banking to digital banking
 Further post demonetization there has been increase in the number of customers using
digital services, i.e. 25%.
 Mostly the customers come to know about digital services from bank officials (47.5%)
which mean that bank employees make customers aware of the new possibilities and
opportunities in digital banking.
 Satisfaction level of the customer is very important in banking and it is seen that 65% of
the customers are satisfied with the digital services of the bank. Rest 30% are fully
satisfied with the services and only 5% of the customers are somewhat satisfied. It
indicates that SBI bank customers have high level of satisfaction from the services they
get.

CHAPTER- 10

48
 CONCLUSION AND SUGGESTIONS

The research report is based on primary data. According to the study, it is concluded that the most
of the bank customers are aware about all the digital banking services of State Bank of India in
Jammu.

The bank further has to take necessary steps to educate the customers regarding the new technology
and other services offered by the banks.

Banks may need to extend customer meeting time with bank officials and also friendly approach
is necessary. Definitely it will help to retain the existing customers and to attract new customers.
It will automatically improve the banking service and development of banks in India.

Also it is seen that most of the customers use ATM service only for cash withdrawal and balance
check, though digital banking provide full gamut of services. Hence, customers should be made
aware of these services and should be encouraged to adopt the same.

Advanced fraud detection mechanisms and the possibility to leverage personalized security
preferences and alerts will have to become more widespread. For any security enhancement to be
accepted and efficient will require that the user experience is not impacted.

Bank should consider investigating and implementing additional layers of security that will reduce
the level fraud. While ready to manage breaches, the goal should be to reduce the potential for
losses and customer impact.

Adoption of technology and convincing the customers to opt for self-service modes of banking is
the biggest challenge.

Also the need to reduce costs and increase efficiency is assuming more significance than ever. In
this regard, improving a bank’s digital maturity ensures higher efficiency in its processes such as
credit offering, improved interaction and customer experience.

Renewed skills development of workforce and investments into training and manpower
development is the need of the hour.

Customer segmentation is another aspect which will not only facilitate ease of interaction, but also
enable targeted product placement, thus increasing the likelihood of further acceptance.

49
Achieving financial inclusion targets by innovative use of digital banking thereby promoting rural
banking in a more comprehensive manner has to be done.

Banks should initiate schemes based on benefits in the form of additional bonus, free annual trips,
valuable gift items, awards etc. for the employee who are very friendly, experienced and aware
with Online Banking Service. (OBS)

Banks can introduce OBS in two modes such as Beginner and Expert Mode to reduce troubles of
employees while providing guidance about OBS as well as to reduce troubles of customers while
availing OBS.

Banks can collaborate with government agencies to expand their outreach exponentially and
provide doorstep banking by facilitating various advanced facilities such as apply for passport,
visa, driving license, pan card etc.

In terms of the information technology Act 2000, reasonable security practices need to strengthen
and it is a continuous exercise. Specifically in the context of growing digital payments cyber Police
personnel has to be trained fully.

TRAI (Telephone Regulatory Authority of India) and DOT (Dept. of Telecommunications) need
to enforce strong SOP (Standard Operation Procedures) for issue of duplicate SIM card. Special
cyber fraud courts are needed.

Civil court judges needed to be trained in handling cyber fraud, Convenience vs security and cyber
fraud issues. ATM cctv camera to be functional in all ATMs 24X7.

Financial literacy about the safety aspects to rural people, illiterate people and elderly people who
can fall prey to fraudsters more easily. A big awareness drive is needed. In the long run it will
accelerate the transition of the unbanked towards a cashless economy.

With the Aadhaar number, Jan Dhanyojana, unified payment interface and IMPS (immediate
payment service) India has the digital infrastructure to leapfrog and accelerate the transition.

50
 ANNEXURE I

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http://www.iba.org.in/oltas.asp
28. ICICI Bank Website, “ICICI bank launches „Pocket by ICICI bank‟”, Accessed January 25,
2015,http://www.icicibank.com/aboutus/article/icicibank-launches-pockets-by-icicibank.html
29. Business Today (2014, April 5), “Now, Access Your SBI Account via Twitter”, Accessed
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twitter/1/204918.html
30. Prema C, “A framework for understanding consumer perceived characteristics of internet
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31. International Journal of Science, Technology and Management, Vol. No. 5, Issue No. 08,
August 2016.
 ANNEXURE II

QUESTIONNAIRE

A study on digitalization in banks

Customer's Questionnaire

PART (I)

Please tick your response in the space provided. In all such cases where more than one response is
necessary under the same Question, please tick as many responses as are applicable.

1. Are you customer of State Bank of India?

o Yes
o No
2. In general, what do you feel about digitalisation in banks as a new system of delivering banking
services?
o Vital
o Essential
o Desirable
o Can’t say
3. How did you come to know about digital services? (Tick as many as applicable)
o From bank officials
o Advertisement in Print media
o Television and Radio Advertisement
o On line Advertisement
o From your family members
o From your Friends
o Any other (Please specify)
4. Which among the following digital services are provided by your bank?(Tick as many as
applicable)
o ATM
o Internet banking
 o Mobile banking
o Phone Banking
o Electronic Transfers
o Debit Cards
o Credit cards
o Digi Voucher
o Video Statement
o Social Banking Applications
5. Which one (s) among the digital services above you have personally adopted or used?
o ATM
o Internet banking
o Mobile banking
o Phone Banking
o Electronic Transfers
o Debit Cards
o Credit cards
o Digi Voucher
o Video Statement
o Social Banking Applications
6. Since when have you been using digital services?

o Less than 1 year

o 1-2 years

o 2-3 years

o 3-5 years

o More than 5 Years

7. Rank the following channels from most preferred(1) to less preferred(5)

o Face to face banking (1-5)
o Online banking (1-5)
o Automatic Teller Machines (ATMs)/debit cards (1- 5)
8. I use bank website/Internet banking to: (tick the applicable one(s))
o Know bank products advertised
o Check my account balance
o Transfer of funds
o Check bank statement
o Purchase bank product e.g. Account opening
o Order Cheque book
o Stop cheque payments
o Change Password
o After sale-service (e.g. E-mail enquiries)
9. Why do you think is it important to adopt Digital services?
i) Digital services are generally faster than traditional Banking
o Yes
o No
ii) Digital services have no time limit since we can use them at any time of the day
o Yes
o No
iii) There is high degree of convenience in accessing Digital services
o Yes
o No
iv) Digital channels are easier to use than traditional channels
o Yes
o No
v) Digital services are generally cheaper than traditional banking at the Branch
o Yes
o No
vi) Using Digital service is more prestigious than queuing at the bank halls
o Yes
o No

10. What are the possible reasons why Digital services have not been adopted by many customers?
i. Security concerns is the most discouraging factor in using Digital services
o Yes
o No
ii. Most of the customers are not aware of Digital services provided by their banks
o Yes
o No
iii. Digital services generally do not have privacy of customer's information.
o Yes
o No

iv. Most of the customers prefer traditional (Branch) banking

o Yes
o No

v. Most Banks provide few Digital services and some have not yet adopted.

o Yes
o No

vi. Some Banks charge high fees on using Digital services.

o Yes
o No

11. What is your level of satisfaction with SBI digital services?

o Fully satisfied
o Satisfied
o Somewhat satisfied
o Not satisfied

Part- II PERSONAL INFORMATION

1. Name _________________________

2. Age

o Below 20
o 21- 35
o 36- 50
o 50- 65
o 65 and above
3. Education
o Primary
o Secondary
o Graduate
o Post Graduate
4. Occupation
o Student
o Service
o Business
o Professional
o Others
5. Bank
6. Branch