Use of Technology in the Banking Operations

 Digitalisation of Banking

• We all know computerisation in Banking has led to Digitalization of the sector.
• In 1998 the RBI - set up a Computerisation Committee which was chaired by Dr. C. Rangarajan.

 The Quest for Excellence Continues 

• Manual Ledger Posting
• Standalone Computer System
• Core Banking Solution
• E-Banking Digital Ranking

 CORE - Centralized Online Real-time Exchange

• It is the ability of CBS to process Loans and Deposits (Assets & Liability) with interface to General Ledger system and reporting tools. 
• Through this banks offer services across platforms namely Branch banking ATM’s, Internet Banking Mobile banking to its customers. 

 What does the Core Banking Technology do

It is a service provided by a Bank through a connection of networked Branches through which the customer can access their bank accounts and perform basic transactions from any of the branch offices.  

 Digital Banking

Banking services delivered over the Internet is referred to as Digital Banking

1. Providing more convenient and faster banking  services
2. Involves high level of process automation and 
3. Web based services may also include 
4. deploying of API – Application Programming Interface.

 Regulators role in Digital Banking 

Purpose?  

To address competition arising from Opening of the economy in early 1990 – 1991 – 92 from private sector banks and Multinational banks.

 Digital Banking does away with

• Banks repetitive nature of 
• the “Services” offered wrt “Processes”
• “Reduce errors” addressing the 
• “Scale” 
• “Geographical coverage” and to offer 
• “Competitive Advantage”

What does the CBS technology do

1. It reduces cost – Refer below Example 
2. Increases Agility
3. Transforms operations
4. Opens new channels for growth
5. Data driven decisions  

Branch Banking  - Rs. 70/- Rs. 75/-

 ATM  Txn Cost - Rs. 14/- Rs. 15/- 

 Note - wef 1.8.21 increased interchange fee per transaction from Rs.15/- to Rs.17/-

 Online Banking - Rs. < or = Rs. 2/-

Mobile Banking  -Rs. < or = Rs. 1/-

 Digital Banking Products, Delivery Channels and Payment Systems

 Digital Banking Products / Alternate Delivery Channels 

• ATM
• Cards
• Internet Banking
• Mobile Banking
• Mobile Wallet
• POS
• Cash Deposit Machines
• Cash Recyclers

  Brief Description of Products

 ATM - Automated Teller Machines ( ATMs ) 

 Banking Services offered are

Withdrawing and Depositing of Cash 

Balance Inquiry

Mini Statement

Making of a Term Deposit

Password Reset etc.

Update Mobile number etc.

 Types of ATMs

Onsite ATM

Offsite ATM

Worksite ATM

Mobile ATM

 Benefits of ATMs

24X7 and 365 days a year service available anywhere

Offer quicker and efficient service

Allow privacy in Transaction  Mostly Error free

 Cards - Various types of Card which allow users to make an electronic payment.

 Debit Card - It allows the card holder to withdraw money directly from his bank account using an ATM, also used at POS device at Merchant locations and also for e-commerce transactions

 Credit Card - Card holder is allowed to use the card against the line of credit approved by card issuing bank .It is mainly used at POS devices or e- commerce transactions.

 ATM Card - It is restricted only for withdrawal of cash at ATMs unless it is Debit cum ATM card

 Pre-Paid Card - It is pre loaded with a definite amount of monetary value for usages and is programmed to be used at specific outlets . It can be singled purpose or multipurpose card.

Stored –Value Card - It is a type of prepaid card where the card issuer is service provider and not the bank

Charge Card - It is similar to credit card but payment has to be made in one go and not in parts.

Mobile  Banking - Banks are offering certain banking services through mobile banking by using various channels such as SMS, USSD and through mobile banking applications. Most important service offered through this channel is real time inter bank mobile banking services through IMPS and operated by the NPCI.

SMS – Short Messaging Services

USSD- Unstructured Supplementary Service data

Mobile banking services

Balance Enquiry 

Mini statement

Cheque Book request

Transaction alerts

Fund Transfer

Mobile/DTH recharge

Bill Payments etc. 

 Internet or Online Banking

Under the Internet banking services offered by banks , a customer is able to operate his account for various services through internet link available on his laptop/PC/mobile etc.

 Various services offered are  :-

• Account Details
• Remittances and Fund Transfers
• Request Services
• Bill Payment services
• Investment through internet banking
• Shopping
• Recharging pre- paid phones etc,

Mobile  Wallets

A mobile wallet is a mobile based virtual container , where the user can preload a certain amount in his/her account created with the mobile wallet service provider ( most famous Paytm) and spent it online and offline merchants listed with the mobile service provider.

 Mobile Wallets can either be bank owned or non bank owned .Non –bank Institutions should have a PPI license ( Prepaid Payment Instruments)

 There are three types of PPIs- closed, semi-closed and open.

 Closed Instruments are payment instruments issued by provider to be used for purchase of goods & services from it

 Semi – Closed Instruments can be used with provider and list of merchants mentioned.

 Open Instruments can be used with any merchant.

 Types of e-Payment and Settlement Systems

 Gross Settlement System – RTGS

• Real Time Gross Settlement 

• It is the fastest possible transfer mechanism for payments and settlements through the banking channel.

• Minimum value of transaction Rs.2,00,000 and maximum. Rs.10,00,000/ on retail Internet portal.

• Customers can use the RTGS facility 24 hours on their internet banking

•  

 Net Settlement Systems - NEFT

National Electronic Fund Transfer

• It is used to transfer funds from one financial institution to other in India 
• Transfer basis executed in hourly batch
• no minimum or maximum fund transfer limit

 NECS - National Electronic Clearing Service (Cr & Dr)

Credit - Handles bulk & repetitive payment & settlement requirements such as salary, interest, commissions, dividend payments of corporate and other institutions.

 Debit – it facilitates payments of small value from entities/individuals to big organizations or companies. It facilitates routine payments by individuals/entities such as telephone bills, electricity bills, card and online payments and payment of insurance premiums.

IMPS - Immediate Payment Services 

Its builds a robust and cost effective real-time retail payment service available round-the-clock (also on holidays)

UPI – Unified Payment interface

Is a system that powers multiple bank accounts into a single mobile application (of any participating bank) merging several banking features, Seamless fund routing and merchant payment into 

 NPCI- National Payment Corporation of India

• It is an initiative of the RBI and the IBA Under the provisions of the Payment and Settlement Systems Act, 2007. NPCI was set up for operating retail payments and settlement systems in India.
• The ten core promoter banks are SBI, PNB, Canara Bank, BOB, Union Bank of India, BOI, ICICI Bank, HDFC Bank, Citibank N. A. and HSBC.
• In 2016 the shareholding was broad-based to 56 member banks to include more banks representing all sectors.
• The NPCI started its role as a payment system provider by operating the ATM network when IDRBT handed over to it the National Financial Switch (NFS).
• Thereafter, the RBI requisitioned the NPCI to operate the Cheque Truncation System (CTS) on its behalf. 

Digital Lending

Digital lending is a platform where one can borrow within a short period of time. Digital Lending permits borrowers to apply for any consumer or business loan product from any internet-working device at any location. Consumer or Business loan products are credit cards, business loans, or mortgages. Through a digital lending platform, the process of loan sanctioning is just a click away.

 Digital lending refers to the online disbursal of loans where all processes, even loan approval and recovery, take place remotely, typically through mobile apps. The shift is part of the digital transformation pushed by the pandemic.

 Digital Lending is an advanced platform which offers financial institutions an opportunity to improve productivity and increase the revenue per loan to deliver faster services.

 Digital Lending Process

1. Borrower applies for Credit facility through Website/ Mobile App

2. Information flows to Loan Origination System

3. Proof of Identification & Address verification

4. Financial, Employment details submission and Credit Scoring Analysis

5. Video PD for Underwriting

6. Loan approval

7. Video KYC

8. Loan agreement and E-Sign & Registration for E NACH ( ECS)

9. Disbursal

10. Servicing of Loan

11. Collection

PSBLoans in 59 Minutes

 In-Principal Approval

• Business Loan:-
• In-principal approval : Rs 1 lac to Rs 5 cr.
• Rate of interest : 8.5% onwards. 
• Integrated with CGTMSE to check eligibility of borrowers.
• Mudra loan : Rs 10,000 to Rs 10 lacs
• Personal Loan : upto Rs 20 lacs
• Home Loan :  upto  Rs 10 cr 
• Auto Loan  :   upto  Rs  1 cr

Business Loan : How it happens in 59 minutes

GST Identification

Number

Income Tax

Return in 

XML Format

Bank Statement for last six months in PDF  format

Directors/ Owners details: Basic, Personal, Educational & ownership details