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The Rise of Digital Banking in India

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Savings Bank Account article in Advisorkhoj - The Rise of Digital Banking in India
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When it comes to digital banking in India, the industry in India was lagging behind many developing nations until recently. That was because of legacy systems, huge costs of running branches, and out-dated technology that could not be upgraded and the inability to adapt to smart phones etc.

In 2016, the Government launched its Unified Payment Interface (UPI) system, a digital banking system that allows people to easily transfer money to and from a bank account or to others via a smartphone. This UPI system has started a revolution and gave birth to Mobile Banking in India. While this kind of digital money transferring was available to bank account holders before 2016 as well but it wasn’t accessible to everyone as that was not based on mobile systems. Now, with UPI, anyone in the country can open a bank account, save money and make transactions using a mobile phone.

Now the Government has also made linking of 12-digit Aadhaar number with your bank account mandatory. This proves that the person accessing the bank account is the person who owns it. This also works well for “know-your-client” formalities. The digital banking ensures that once you have an Aadhaar number and mobile number, you can easily open a bank account without visiting the bank branch with help of Mobile Banking. This works well for our country as many of our citizens cannot write or read or have a bank branch at the place they are living.

India has around 300million smartphone users. While the overall penetration is just under 30% only, but the user base is growing at a 27%annual growth rate (Source: Vserv, a mobile marketing company). It’s these smartphones, and the rapidly growing digital banking culture, that will allow the unbanked to open accounts and those with bank accounts to more easily manage their finances using Mobile Banking or get their Government benefits transferred directly to their account.

The wave of Digital Banking in India has made most of the banks in India to leverage technology by bringing an entire bank squeezed to fit into your smartphone and encourage customers for Mobile Banking.

Mobile Banking is the future of banking as only 5% of the 6 Lakhs villages in India have a commercial bank branch and only 40% of the adult population has bank accounts. However, Tele-density in rural India soared at a CAGR rate of nearly 71% during 2007-2016. Therefore, the banks, telecom providers and RBI are making efforts to make inroads into the unbanked rural India through mobile banking solutions. (Source: IBEF)

Mobile Banking allows customers to avail banking services on the move through their mobile phones and is especially critical for India, as it promises to provide an opportunity to offer banking facilities to a previously under-banked market. The growth of mobile banking has already impacted the banking sector significantly as the mobile banking transactions in India will soon cross 400 million & would result in cost savings of approximately INR 11 billion (USD230 million) – (Source: IBEF)

If you have AADHAAR Card, you can now easily open a bank account online while sitting at home. Once your account is opened, using Mobile Banking, you can deposit, withdraw and transfer money with lightning speed. Breaking away from conventional banking norms which involves onerous form-filling, physical document submission and cumbersome processes, digital banking in India is a completely paperless, signature-less and branchless banking experience.The banks leverages biometrics enabled ID 12 digit Aadhaar card and UPI (United Payment Interface)technology to ensure that there is no paperwork involved for opening the account. Anyone with a PAN Card, Aadhaar Card and a smart phone can open this savings account. Once your account is opened you can use Mobile Banking for all your banking needs and there is no need to visit any bank branch.

Today in India, we find ourselves in a digital world where the vegetable vendor accepts wallet payment without any fuss, a student can buy stationery using a debit card or a merchant uses QR code based scan and pay utility. The wave of digital banking in India helps you remain paperless and do all you wanted to do with your bank account using the new age mobile banking.The objective of mobile banking is not only to make banking accessible to all citizens of the country but also meant to bring the millions who are still unbanked into the financial system.

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Pradip Chakrabarty

Pradip is a first generation entrepreneur who has built a very successful business for distribution of financial products over last 19 yrs. He is also the Founder and CEO of www.advisorkhoj.com. Pradip is well respected in the Financial Services industry and brings deep domain knowledge and leadership skills and is considered as one of the top Investment Advisors in India. He can be contacted at pradip@advisorkhoj.com

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