The banking industry is undergoing a rapid transformation worldwide
propelled by two major factors:, global convergence and information technology.
The power of information technology is driving the banking industry as never before,
leading to faster, better and cheaper banking services. The banking sector
considers no boundary in the present economic scenario. Universal banking has
become a common phenomenon in the present economic development.
In the wake of the liberalization policies, the traditional
and conservative face of Indian banking has undergone a significant change. The
Indian banking industry is undergoing a paradigm shift in scope, context, structure,
functions and governance. The information and communication technology
revolution is radically changing the operational environment of the banks.
“Technology driven” products have now become very common in the present banking
area.
Modern Age Banking Services
Automatic Teller Machines – It is an electronic machine which
allows the user to withdraw and lodge cash, pay bills, request statement and
other banking transactions. The customer requires ATM Card and ID no. to gain
access to the machine. Some ATM cards are also debit cards which can be used in
shops and other markets. The banking transactions such as with drawl of cash up
to the daily limits, cash deposit, transfer of funds between accounts, check balances
and request for statements etc.
Tele Banking
Tele banking facility is made available with the help of a
voice response system (VRS). It is one of the most popular products. Tele
Banking i.e. the round the clock, “Bank on phone” service allows the customer
to enter phase via telephone. Customers can perform a number of transactions
from their office or home. Facilities offered by tele banking are information
on balance, Cheque book requisition. Moneytransfer, queries on new schemes etc.
Electronic Fund Transfer
The EFT automatically transfer money from one account to
another. In this system, the sender and the receiver of funds, may be located
in different cities and may even bank with different banks. This system also
makes possible payments for credit cards, private level cards, change cards,
etc. Payment of insurance premium, mortgage instalments are also electronically
transferred from the bank to respective accounts periodically.
ATM Card
It is issued to the customer by the bank in order to make
cash withdrawals at cash machines. It provides exchange services. This service
helps the customer to withdraw money even when the banks are closed.
Credit Card
The credit card is a small card containing a means of identification,
such as signature and a small photo. These cards enable the holder to buy goods
and services on credit from different outlets. The bank receives the bills from
the merchants and pay on behalf of the customer. The bank charges from the
cardholders for the services. The cardholder had not to carry money with him
when he travels or goes for purchasing.
Debit Card
A debit card is a plastic card which provides an alternative
payment method to cash when making purchases. Every time a person uses the
debit card, the merchant, can get the money transferred to his account from the
bank of the buyer, by debiting an exact amount of purchase from the card. To
get a debit card, an individual has to open an account with the issuing bank.
Point Of Sale (POS) Terminal
The point of sale is initiated by using a payment card at a
retail location. The POS system identifies the cardholders and checks whether
his account has sufficient funds to cover the purchase. This is done through
the debit card. To get these cards, the customer has to deposit money in the
bank. But there is a risk in this debit card system. If the customer losses the
card, there is the danger of emptying the account with no resources of him.
Demat Accounts
Demat accounts have been introduced by the Securities and
Exchange Board of India to regulate and to improve stock investing. The
investor opens an account called “demat account” with depository participants.
These DP transact business through electronic media. They get the shares in an
electronic form. Thus, they send the actual shares to the investor. The
investor has to pay charges for opening of account maintaining and for
collection. One of the major benefits is that, it requires less paper work, no
loss of share certificate, no bad deliveries,and lower transactions cost etc.
Online Banking
Online banking is doing banking business through home PC.
The customer demands necessary application form through the net and the bank
sends a UPP (Unique Personal Password) for accession. The complete database
that the bank has about the customer’s account is available to the customer at
his terminal. It also provides current balances in the customer’s account on
real time basis, day’s transaction in the account, details of cash credit
limit, drawing power, amount utilized etc.
Clearing House Automated Payment System (CHAPS)
CHAPS is an electronic messaging system in which all
transactions are transmitted in code to help reduce the risk of fraud. Under
this system, customers could be assured that local transfers of funds would be
cleared on the same day and this allows customers to treat amounts so
transferred to them as cash available.
Electronic Data Interchange
Electronic Data Interchange is an automated system of
business to business data exchange. Two primary areas of EDI are data
interchange and electronic funds transfer used among banks. The transfer of
information related to commercial trade through the banking system, sometimes
called financial EDI, includes payment orders, remittance information,
statements of account and message linked to documentary payments. It will be
beneficial in areas such as inventory management, transport and distribution
and cash management.
Society for World Wide Inter-Banking Fast Transfers (SWIFT)
SWIFT is a computerized message system which links banks around
the world. They are aiming to improve the speed and service in order to present
the individual banks setting up their own computerized messaging system in
operation.
Digital Payment System
Digital Payment System focuson getting a payment form a customer
to a merchant. It requires higher level of activity and commitment from
consumers and merchants. The reward for providing such systems is very
attractive. DPS services provider can earn profit each sell. Main components of
DPS are cyber cash, virtual payments and digicash.
Cyber Cash
Cyber cash offers a secure conduit to deliver payments
between customers, merchants, and banks. Since it offers safe, efficient and
inexpensive delivery of payments, across the internet practically
instantaneously, it has been described as the Federal Express of the internet
payment business. The main goal of cyber cash is to work with financial
institutions and merchants to provide an accessible and acceptable payment
system on the internet.
Shared Payment Network System (SPNS)
SPNS has been established at the behest of the Indian Banks
Association by Indian Switch Company Pvt. Ltd. The participation banks issue
universal cards to the customers for transacting on this network. SPNS is
offering the services like cash transactions, across the bank payments,
extended hour’s services, utility payments, balance inquiry, Cheque deposit,
point of sale facilities etc.
E-Cheques
The e-Cheque system uses the network services to issue and
process payments that emulate real world queuing. The payer issues a digital
Cheque to the payee and all the transactions are, done through the internet. It
consists of five primary facts; i.e. customers, the merchant, consumers bank,
the merchants bank and the clearing process. The consumer accesses the merchant
server and the merchant server presents its good to the customer. The consumer
selects the goods and purchases them by sending an e-Cheque to the merchant.
The merchant electronically forwards the Cheque to its bank. The merchant bank
forwards the e-cheque to the clearing house for e-cash. The merchant’s bank
updates his account. The consumer’s bank updates the consumer’s account with
the withdrawl information.
Real Time Gross Settlement
RTGS is a centralized system in which inter -bank payment
instructions are settled. “Real Time” what this means is that banks can settle
their payments to one another immediately. In this method, an electronic image
of the Cheque is transmitted and based on this digitally encrypted image, the
payment advice is made and the settlement done. In addition to quicker
realization of cheques for the banks customers; it is also beneficial for banks
since it lessens intra-settlement risks and volatility. It also cuts down handling costs of cheques.
Conclusion
Indian banking sector has witnessed several structural
changes from time to time. India now has a well-developed banking
infrastructure, conducive regulatory environment and sound supervisory system.
Banks have become efficient and sound which make them comparable to the best in
the world. Technology driven banks are rendering top class services to the
customers. It is equally essential to educate the customers to go at par with
the introduction of innovative products. To compete and succeed in the banking
market, new initiatives and innovations, new strategies, new delivery
mechanisms and ability to cross sell products are imperative. At the same time,
banks should align themselves with customers and become more customer-centric
with proper emphasis on relationship management. Banking
in
India is poised for exciting times ahead.
