Digital Banking: Issues and Challenges

Abstract

With the introduction of new technologies vis-a-vis the increase in use of internet in banking sector, the operating style of Banks have changed considerably, especially the most important being the change of mode of payment from physical payments to online payments, where there is no need to be present physically for effecting the said transactions. And this introduction of internet has modernized the banks. The retail electronic payment system is progressing like anything in various countries and India is no way ahead in terms of adopting such modernized technologies in their banking system. E-banking is knowledge-based and scientific in nature by using electronic devices of computer resolution through extensive use of IT without direct resources to the bank by customer. It has significant advantages attached to it but the endorsement of such banking is still not matching at par with the scale with which other countries are as more than half of the population of India resides in rural areas. There has been an increase in internet banking diffusion in recent days in India, but it is required to know the issues and challenges pertaining to it, thereby causing low penetration. The benefits are many, both for the banks as well as for customers, but the banks that are activated in the internet are susceptible mainly to systematic, area of law and to its reputational risk whereas the customers of electronic banking channel are puzzled about safety of their transactions and infringement of personal data. The present paper aims to understand the basics and working of internet banking simultaneously by studying the benefits accruing to banks as well as the customers. Later, this paper talks about the present scenario of the Indian banking sector, which provides discussion on recent technologies, re-shaping our banking economy by using and citing some of the recent initiatives being introduced and then challenges in the form of adopting such technology, its dissemination, legal bar, etc., are discussed. At the end, the views of the author are depicted as Conclusion where the whole discussion concludes that slowly and steadily, the idea of digital banking is growing among the present generation (the youths specifically) and started gaining acceptance where reasonable efforts are being made by our government to increase this idea and adopt it in our normal day-to-day transactions with banks.