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European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 05
May 2019
Available online: https://ejbss.org/ P a g e | 71
A Study of Growth Perspective and Challenges Involved In Digital Banking
Neeraj Kumar1,
Research Scholar, Jaipur National University, Jaipur
Dr. Muktak Vyas2
Associate Professor, Jaipur National University, Jaipur
Abstract:
Drastic changes have been noticed in banking industry in 21st century due to deportment of
customers. A rapid transmute in financial services made it compulsory for the banking sector to
promote digital banking in lieu of traditional banking. Information technology and global
convergence are two major factors in transforming banking system. A paradigm shift has been
observed in Indian banking scope, structure, functions and context. With the increasing thrust of
secure and expeditious financial services digital banking is most assertive decision by RBI. The
information and communication technology revolution changed the banking environment.
“Technology driven products “are now pillars for the banking industry in the present era to make
the banking feasible for those who were lacking behind due to distance or unavailability of bank
branches in the area. This study endeavors to explore the digital banking services provided by
Banks of India in addition to analyzing the growth of different digital banking channels by
amassing the data from secondary sources. The research found the favorable increase in volume
and value of transactions through alternate channels of digital banking.
Key words: Digital banking, ATM, POS, Mobile banking, Growth rate, CAGR
Introduction:
Digital banking is the advancement of all the traditional banking activities and programs that
historically were only available to customers only inside the bank branch. It includes activities
such as Money Deposits, Withdrawals, Fund Transfers, mobile banking, Point of sale, E-
Page 2 of 12
European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 05
May 2019
Available online: https://ejbss.org/ P a g e | 72
ticketing, Online shopping. Digital banking is a move from “Brick and Mortar” banking to
internet banking. Customers and bankers both get advantage by convenient and faster banking
services. It is possible due to various electronic banking channels such as ATM, Mobile banking,
Mobile wallets, and POS machines.
The digital banking commenced in the form of ATM machines and cards which were launched
in1960. With the advent of internet in 1980 the retailers connected with suppliers and consumers.
The internet comes forth by 1990 and it made the online banking a norm. The improvement of
broadband and e-commerce systems in early 2000s led traditional banking to modern digital
banking world today.
The advent of smart phones in the next decade opened the shutters for transactions go beyond
ATM machines because the smart phones used as a mode of digital banking. April 11, 2016 was
a historical day for India when Government launched its Unified Payment Interface (UPI), a
digital banking system that allows people to easily transfer money to and from a bank account to
others through a smart phone. It’s these smart phones, and a growing digital banking culture, that
allow the unbanked people to open accounts and those with bank accounts can easily manage
their finances now. Some of the important channels of digital banking are:
Card: Different types of cards are in existence but most used cards are Debit card, credit card
and ATM card. Debit card allows the customer to withdrawal cash, to swipe the card on point of
sales (POS) machines, online shopping and e-commerce transactions.
Credit card allows the card holder to use the card against amount of credit approved by card
issuer. It can be used at point of sales (POS) machines, for online shopping and e-commerce
transactions. Advance cash facility is also available on the prescribed interest rate.
An ATM card is one whose could use only for cash withdrawal. Online shopping and e- commerce transactions facilities are not available in it.
Automatic Teller Machine (ATM): ATM is treated as a mini bank branch which performs
functions such as cash withdrawal, balance enquiry, mini statement, cheque book request, fund
Page 3 of 12
European Journal of Business &
Social Sciences
Available at https://ejbss.org/
ISSN: 2235-767X
Volume 07 Issue 05
May 2019
Available online: https://ejbss.org/ P a g e | 73
transfer, mobile recharge, insurance premium payment, update mobile/aadhar number, cash
deposit and cheques deposit.
Point of sales machines (POS): Point of sales terminal is payment device initially installed by
IBM in 1970s. These are installed at merchant location through which customer can pay for
goods and services purchased to merchant by swiping or inserting the Debit/ Credit card at POS
terminal. POS terminals process the transaction at merchant location by accepting the plastic
cards with magnetic strips or chip based cards.
Literature Review:
Sujata T.Lata (2017) concluded that bank should provide effective and tailored services to its
customers. Pre demonetization banks were making efforts to make consumer aware about new
channels of digital banking. But post demonetization digital banking usage became necessity of
customers. People of higher and middle class both were captured by digital banking channels.
Santani Tanya (2017) revealed many new online payment wallets entered and usage of wallet
like paytm got pace post demonetization. Digital banking got momentum and it found reliable,
speedy and easy to use. Despite many benefits security is founded still a big problem. Digital
transactions have authentic record, save paper and found quick and efficient.
Veena K.P, Suheel (2016) observed that the internet banking provider must understand their
customer attitude towards technology. The e-banking has replaced the traditional banking and
customers have been converted from paper banking to card or e-banking. The various channels
of e-banking like debit card, credit card, mobile banking, net banking, EFT and ECS are the
result of revolutionary changes in digital era. Bill payment which is followed by funds transfer is
the e-banking services which satisfy the customers most.
Reddy D.N.V Krishna & Reddy M Sudhir (2015) investigated that people are aware of e- banking services. Mostly consumer use it because of its 24/7 feature. People found e-banking
