A STUDY ON THE RECENT TECHNOLOGY DEVELOPMENT
IN BANKING INDUSTRY
Abstract:
The banking industry plays a key role and is the backbone of Indian Economy. This study
focuses on the recent technology development in the Banking Industry. Technology has
changed people's life easier. It has paved the way for the growth of various industries as such.
Some of the technologies that were introduced have contributed to great success. The data used
for the study is Secondary Data. Data collected were analyzed and interpreted into meaningful
inferences.
Introduction:
In the present digital era, everything is revolving around technology and has proved that it is
necessary for the successful functioning of any activity. Banks have benefited from
Digitalization, where the transactions involved are now easier and convenient. One of the major
objectives of the banking sector was to increase the banking standards and introduction of
technologies into the banking sector has impacted the industry at a great extent.
Objectives of the Study:
The objective of the study is:
To know about the recent technological development in the Banking Industry.
To study about the benefits, issues of these technologies in the Banking Sector.
Research Methodology:
The data used for the study is Secondary data. It has been collected from the RBI (official
website), RBI reports, other reputed websites, and newspapers.
Blockchain Technology:
The digital transformation has paved a way for the implementation of BlockChain technology
in the banking industry to encrypt the banking transactions. Blockchain technology is a
decentralized system that allows only those parties who have access to the shared ledger to use
it. Only verified “blocks” of transactions can be added to the ledger, thus breaking the need for
re-examining the authenticity of any transaction. Many banks have started launching block
chain-linked loan system in India. This promotes trust and transparency where verified multiple
participants can view the transactions in the distributed public ledger.
UPI (Unified Payments Interface):
There has been a rise in digital payment via UPI following demonetization. UPI is the latest
online money transfer method enabling it between two bank accounts. It allows usage of many
bank accounts in a single UPI app. One of the benefits of UPI is that the rewards and cash-
backs UPI apps provide. To attract more customers, many UPI based mobile apps provide more
rewards and cash-back offers for making transactions.
Digital Wallets:
Digital wallet is one such development to make the transaction process easier and convenient.
Many banks as such have introduced digital wallets to help customers have access to instant
payment mode. For instance, ICICI banks have introduced ICICI Pockets, a digital banking
service, an e-wallet that helps users to transact money, recharge their mobile, pay bills, and
other services.
RTGS:
RTGS stands for Real-Time Gross Settlement System, which is a payment system by which
money can be transferred quickly and in a secured manner. As the name implies, the transfer
of funds in RTGS takes place on a real-time basis. RTGS reduces the risk in high-value money
transactions and the minimum amount transaction in RTGS is Rs. 2 lakhs.
NEFT:
NEFT is National Electronic Fund Transfer system, it is the most reliable electronic fund
transfer system in the country, which is guided by the Reserve Bank of India. Under this
scheme, an individual can transfer their money from one bank branch to other bank branches
in the country participating in this scheme. NEFT will be the better transfer option for a smaller
amount of money and there is no urgency to transfer it immediately.
Cheque Truncation System:
Cheque Truncation System makes the entire cheque clearance process much easier one.
Cheque Truncation involves elimination of physical movement of cheque, instead an electronic
form of the cheque will be circulated along with the necessary details. It reduces the physical
movement and cost involved in processing the cheque.
Data Analysis:
Chart showing Volume of UPI transactions (in Millions) recorded in the last three financial
years.
UPI
600
482.3
Volume (Million)
500
400
300
200 104.8
100 0.2
0
2016 2017 2018
Financial year
Source: The Economic times
Interpretation:
From the above chart, it can be interpreted that there has been a rise in UPI based transactions.
Data Analysis:
Chart showing Volume of Transactions of Various Digital Payment (in Millions)
Source: Reserve Bank of India
Interpretation:
From the above chart, it can be interpreted that there is a gradual increase in the usage of digital
wallets.
Data Analysis:
Chart showing the volume of RTGS transactions (in trillions) recorded in the last three financial
years.
Growth in Electronic Payment - RTGS in India
200 172
Volume (in trillion)
150 120
100 83
Volume of transaction (in
50 trillion)
0
2015-2016 2016-2017 2017-2018
Financial year
Source: Reserve Bank of India
Interpretation:
From the above chart, it can be interpreted that there is an increase in the transaction volume
by 18.8% in the year 2017-2018.
Data Analysis:
Chart showing the volume of NEFT transactions (in trillions) recorded in the last three financial
years.
Growth of Payment System - NEFT
200 172
Volume (in trillion)
150 120
100 83
50 Volume of transactions (in
trillions)
0
2015-2016 2016-2017 2017-2018
Financial year
Source: Reserve Bank of India
Interpretation:
From the above chart, it can be interpreted that there is an increase in the transaction volume
by 43.3% in the year 2017-2018.
Data Analysis:
Chart showing the Volume of CTS transactions (in millions) recorded in the last three financial
years.
Growth of Payment System - CTS
1200 1138
Volume (in millions)
1150 1111.9
1100
1050
1000 958.4
950 Volume (in millions)
900
850
2015-2016 2016-2017 2017-2018
Financial year
Source: Reserve Bank of India
Interpretation:
It can be interpreted that there is a slight increase in the transaction volume in the year 2017-
2018.
Suggestions:
Some people are not aware of some facilities provided by banks with respect to technology
such as Blockchain technology, Chatbots. So, Banks need to create awareness of the facility
available and the instructions or guidelines for making use of them. Another big concern is the
Security issue; however, steps are being taken to monitor the activity and to secure the
transactions.
Conclusion:
The development of technology has transformed the Banking Sector to a great phase and has
facilitated the growth of country's economy. It has paved the way for many opportunities,
solutions to problems and many innovations. It is evident that the Banking System in India has
grown and has increased the accessibility of a common person to the bank for requirements.
Bibliography:
1. www.economictimes.com
2. www.forbes.com
3. http://cashlessindia.gov.in/upi.html
4. www.rbi.com
5. https://www.icicibank.com/Personal-Banking/bank-wallet/pockets/pockets.html
