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The impact of Digital Currency on Banking Sector and customer acceptance: An Analytical
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About the book
Banking industry is going through a phase of commoditization. In today’s scenario,
differentiated and delightful customer experience has become more important than
just providing financial services. To grab a bigger piece of the cake, banking industry BANKING 4.0: DIGITALIZATION AND
has to understand the unstated needs of the customer the way airlines understands the
preferences of the frequent flyers or the retailers understand the likes/dislikes of their
TRANSFORMATION
customers, without even taking direct feedback of the customer. Digital Transformation
is far beyond just moving from traditional banking to a digital world. It is a vital change
in how banks and other financial institutions learn about, interact with and satisfy
customers. An efficacious Digital Transformation begins with an understanding of digital
customer behavior, preferences, choices, likes, dislikes, stated as well as unstated needs,
aspirations etc. And this transformation leads to the major changes in the organizations,
from product-centric to customer-centric view. The most effective way to understand
and bring the organization from traditional banking to digital banking is Omni-Channel
approach. Omni-channel is a multichannel approach to customer service where all
the channels are tightly integrated, keeping customer in the centre of the integration.

Dr. Sathyanarayana is an Associate Professor in the Department of

Studies in Commerce and Research, Davanagere University, Karnataka.
He has completed his M.Com. in Cost and Taxation from Bangalore
University, M.Phil. from Alagappa University and Ph.D. from Bangalore
University. He has 18 years of experience in teaching and research.
His active research areas include E-Banking, Costing and Taxation,
Digital economy, Direct Tax Code, Human Resource Development and
International Taxation, etc. He has authored about 28 research papers
in peer-reviewed National and International Journals. He has authored
and published two textbooks. He has attended 26 National and 29
International conferences, organised 3 workshops and 1 National
level seminar. He was working as editor for 4 International Journals.

Chief Editor
Jayvee Digital Publishing Rs. 1000 Dr. Sathyanarayana
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Bannerghatta Main Road
Bengaluru - 560083, Karnataka, India
Mob: 9742780195 / 8884822999
Website: www. jayveepublications.com
Banking 4.0: Digitalization & Transformation

Chief Editor

Dr. Sathyanarayana

Jayvee Digital Publishing

Bengaluru-560083
© 2022 Jayvee Digital Publishing

Banking 4.0: Digitalization & Transformation - Dr. Sathyanarayana

First Impression: 2022

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 COMPARATIVE FINANCIAL
PERFORMANCE EVALUATION OF SBI
29 Mr. Harish V. B. 219
AND HDFC BANKS: USING BALANCED
SCORECARD MODEL
CUSTOMER ENGAGEMENT TOWARDS Mr. Harshith Kumar Shetty N.
30 E-BANKING - A STUDY WITH SPECIAL Ms. Masuda 229
REFERENCE TO DAKSHINA KANNADA
A STUDY ON IMPORTANCE OF
Mr. Sathisha N.R.
31 FINTECH WITH SPECIAL REFERENCE 241
Mr. Mahesh V.R.
TO BANKING INDUSTRY
FINANCIAL INCLUSION & WOMEN Mrs. Mamatha N.R.
32 249
ENTREPRENEURSHIP - A STUDY Dr. Anitha H.S.
IMPACT OF VARIOUS SCHEMES
INITIATED BY GONERNMENT OF
Mrs. Naveriya Banu
33 INDIA ON BANKING BUSINESS – WITH 257
Ms. Nehabanu N.
SPECIAL REFERENCE TO PRADHAN
MANTRI JAN - DHAN YOJAYA
A STUDY ON IMPACT OF E-WALLETS ON
Mrs. Sujatha K.
34 BUYING BEHAVIOUR OF CONSUMERS 265
Dr. Anitha H.S
TOWARDS FMCG PRODUCTS
A STUDY ON USER PERCEPTION
Ms. Pragathi K.M.
35 TOWARDS CASHLESS TRANSACTION 273
Mr. Anilkumar G.
IN MYSURU CITY
THE IMPACT OF DIGITAL CURRENCY
ON BANKING SECTOR AND CUSTOMER Dr. Cirappa I.B.
36 283
ACCEPTANCE: AN ANALYTICAL Ms. Nagaveni J.G.
STUDY
GREEN BANKING AS A NEW STRATEGY
Nataraja. K
37 IN BANKING SECTOR: OPPORTUNITIES 293
Dr. Cirappa I.B
AND CHALLENGES
IMPACT OF SOCIO-ECONOMIC
38 CONDITIONS OF PEOPLE ON Pooja K. M. B. 301
FINANCIAL INCLUSION IN INDIA
FINANCIAL INCLUSION IN INDIA - A
39 Pramod. K. Kulkarni 307
CASE STUDY OF SHAHAPUR
A STUDY ON LOAN RECOVERY Rakesha H. K.
40 315
STRATEGIES OF DCC BANK TUMKUR Prof. P Paramashivaiah
FINTECH BANKING –A NEW Ramesha R
41 325
DIMENSION OF BANKING SERVICES Dr. Amruthavarshini V


The Impact of Digital Currency on Banking Sector and

Customer Acceptance: An Analytical STUDY

Dr. Cirappa I.B

Associate Professor,
Department of Studies in Commerce,
Davangere University, Shivagangothri,
Davangere-577007
Email: ibdrcirappa@gmail.com
Phone No: 9886313575

Ms. Nagaveni J G
Research Scholar & Assistant Professor,
Department of Studies in Commerce,
A.V. Kamalamma College for Women, Davangere
Davangere-577007
Email: nagaveni.g.93@gmail.com
Phone No: 9741846379

Abstract

Banking is one of the most important components of economic development because

banks have direct contact with the public as well as the country’s economic affairs. Thus, banking
institutions are regarded as one of the most influential pillars of the Indian economy, and the
banking sector has become digitalized, with the digital banking system now covering almost the
entire economy in the state. In this context, a study has been conducted to examine the effect of
digital banking acceptance on digital banking usage among elder banking customers, because
previous research has shown that older people are far away from digitalization due to a lack of
knowledge, awareness, a negative attitude caused by a lack of knowledge, and so on. However,
many reviews have revealed that older people are more eager to use technology. In this context,
the factors that lead to digital banking acceptance among elder banking customers have been
studied.

Keywords: Digital Banking, Awareness, Ease of use, Risk, Acceptability

Introduction
Banking sector is one of the most influential pillars of an Indian economy. Banking
sector is the most power full weapon to reach at customers point, because of people are
frequently contacting with banking services via offline or online. Now banking industry
is swimming on the digital platform and providing easy services and products with help
of different types of digital platforms like, Debit/credit cards, internet banking, mobile
banking, UPI transactions, cash deposit machines, core banking system etc. While looking

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into the banking sector, it could be seen that digitalization or digital banking system
is the combination of two world i.e., customer experience and digital operating model.
Here, banks are providing their digital platforms to the account holders and customers
are experiencing technological invasion in their banking life. Now majority of the bank
customers are living with digitalized banking system and this system is catching more
customers in their banking purview through different financial inclusion programs
implemented by the Government of India. An attempt has been made to summaries the
most significant factors of the study, namely, online banking, the performance of banking
institutions, and customer acceptability. This article focuses on the key dimensions
that directly or indirectly identify the impact of paperless currency on banking sector
performance, customer acceptability, and satisfaction.
Objectives of the study
1. To identify the level of awareness about digital banking in the study area.
2. To analyze the impact of comfort-ability factor, digital financial literacy, and risk
factors on the acceptability of paperless currency by bank’s customers.
Review of Literature
1. According to Yang et al. (2007), online banking is one of the world’s fastest-
growing technologies. It is defined as a service provided by banking institutions to
their customers via the internet. It is regarded as an additional channel for providing
convenient banking to customers anywhere without wasting resources such as time
spent visiting bank branches, waiting in long lines, and so on. Digital banking has
removed time constraints as well as physical and geographical boundaries from
banking services.
2. Kashyap and Sharma (2012) investigated the impact of online banking services
on branch productivity, profitability, and labour productivity between before and
after online banking periods and discovered that mobile banking and internet
banking improved the profitability of Indian financial institutions. According to
reports, financial institutions’ financial performance improved significantly after
the implementation of information technology.
3. Uppal (2011) analyzed the productivity and financial performance of Indian banks
before and after the implementation of online banking services and discovered that
the financial results of Indian banks were better after the implementation of online
banking services than before the adoption of online banking services. It is also
stated that the bank’s effectiveness has increased as a result of the performance of
internet banking services, and customers are extremely satisfied with the bank’s
services.
4. According to Singh (2017), there are three trends shaping the shape of digital
banking services in India. The first is the rapid expansion of financial and
technical players working to provide never-before-seen services. The second
factor is customer experience in other related industries such as transportation,
e-commerce, healthcare, and education, and the third, and most important, factor
is the government of the country, which pushes the cash-based economy into the
digital economy, causing a change in customer behaviour and customers to demand
more convenience from their respective banks.

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Methodology
The study is based on the primary data. Simple random sampling technique was
used to collect the data regarding the impact of digital currency on banking sector and
customer acceptance.
Research Tools: The tool for data collection is Google forms. The Google forms send
through social media like WhatsApp and Gmail. 50 Samples were collected and using
appropriate statistical tools the collected data is evaluated.
Measurement: The questionnaire was based on the literature review. The questionnaire
was divided into two sections. The first section consisted of demographic questions
pertaining to age, gender, education level, occupation, and income level. The second
section comprised of general awareness of digital currency, Ease of use, Acceptance of
digital currency by customer, Risk and Digital financial literacy.
Data Analysis: The analysis has been in conformity with the objectives of the study and
the hypotheses formulated to achieve the objectives.
E-banking Evolution
In the late 1980s, online banking was introduced. For the first time in New York,
Citibank, Chase Manhattan, Chemical, and Manufacturers Hanover launched an online
banking system using the video text system in 1981. Nottingham Building Society (NBS)
launched online banking services in the United Kingdom in 1983. It allowed customers
to pay bills for utilities such as electricity, telephone, and gas, as well as transfer money
to other bank accounts. Globally, there has been an evolution in the development of
internet banking. The evolution of e-banking can be broken down into three stages:
informational, communicative, and the evolution of e-banking can be broken down into
three stages: informational, communicative, and transactional. Under the informational
level, banks create a website to provide customers with information about their products
and services. Electronic banking allows interaction between the bank’s systems and
the customer on a communicative level. Electronic banking enables bank customers to
electronically transfer funds from their accounts, receive funds into their accounts, pay
bills, and conduct other banking transactions online. The risk at the transactional level
is higher than at other levels. Customers, on the other hand, benefit from this by being
able to handle their banking transactions without having to visit banks.
Automated teller machines are the most well-known and widely used machines
for providing customers with electronic access (ATMs). Users could use a computer to
interact with their bank through personal computer banking. Loans, brokerage, share
trading, and service bundling have been added to the e-banking facility in addition to
transferring money from one account to another and paying bills.
E-banking in India
The Indian banking industry has grown tremendously as a result of the dramatic
changes in information technology (IT). IT has been identified as a critical component
in the development of a bank’s strategy to improve productivity and customer service.
Electronic banking is the result of such a forward-thinking development.
The computerization of bank operations in India began in earnest in the late
1990s. Because of the significant increase in technology, the Government of India and the
Reserve Bank of India took several initiatives to facilitate the development of E-Banking
in India.
285
Digital Banking
Digital banking can be defined as the delivery of traditional and modern banking
services via electronic and communicative channels for smooth and efficient operation.
Limitations
1. The study is limited to Davangere, a district in Karnataka, and the findings cannot
be extrapolated to other parts of the state.
2. The study did not take into account monetary motivating factors such as cash back
when using digital currency.
DATA ANALYSIS AND INTERPRETATIONS
Table 1: Table Showing Classification of respondents based on Gender
Valid Cumulative
Valid Frequency Percent
Percent Percent
Female 29 70.7 70.7 70.7
Male 12 29.3 29.3 100.0
Total 41 100.0 100.0
The above table shows that out of total respondents, 70% of them are females
and 30% of them are male.

Table 2: Table Showing Classification of respondents based on Age

Valid Cumulative
Valid Frequency Percent
Percent Percent
Less than 20 Years 19 46.3 46.3 46.3
20 to 40 Years 21 51.2 51.2 97.6
40 to 60 Years 1 2.4 2.4 100
Total 41 100.0 100.0
The above table shows that out of total respondents, 46.3% of the respondent’s
age less than 20years, 51.2% of them are between 20 to 40 years and 2.4% of them are
between 40 to 60 years. It’s clearly shows that majority of youngsters are using mobile
banking

Table 3: Table Showing Classification of respondents based on Educational

Qualification
Valid Cumulative
Valid Frequency Percent
Percent Percent
PUC 4 9.8 9.8 9.8
Graduate 23 56.1 56.1 65.9
Post Graduate 12 29.3 29.3 95.2
Other 2 4.9 4.9 100.0
Total 41 100.0 100.0

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The above table shows the educational qualification of respondents, out of total
respondents, 9.8% of them were studied PUC, 56.1% of them are Graduates, 29.3% of
them are Post Graduates and 4.9% of them are studied other courses. In this study we
can see the majority of respondents are educated.
Table 4: Table Showing Classification of respondents based on Monthly Income
Valid Cumulative
Valid Frequency Percent
Percent Percent
Less than 10000 22 53.7 53.7 53.7
10001 to 25000 8 19.5 19.5 73.2
25001 to 40000 8 19.5 19.5 92.7
More than 40001 3 7.3 7.3 100.0
Total 41 100.0 100.0
The above table shows that, out of total respondents, 53.7% of the respondents
monthly income is less than 10000, 19.5% of them 10001 to 25000 and 25001 to 40000
respectively and 7.3% of them monthly income more than 40001.
Table 5: Table Showing Classification of respondents based on awareness about
Digital currency?
Valid Cumulative
Valid Frequency Percent
Percent Percent
No 6 14.6 14.6 14.6
Yes 35 85.4 85.4 100.0
Total 41 100.0 100.0
The above table shows the awareness of Digital currency among respondents,
out of total 41 respondents, 35 respondents are well known about digital currency and
6 respondents have lack of knowledge about digital currency.
Table 6: Table Showing Classification of respondents based on Impact of Digital
Currency and Its Acceptability by customers
Factors SA A Neutral DA DA
Dimension 1: General awareness of Digital Currency
Do you feel that you are having adequate
3 0 4 14 20
knowledge about digital currency
Percentage (%) 7.3 0 9.8 34.1 48.8
Do you feel that digital currency based banking
services should be included in essentials 1 1 8 12 19
services in India.
Percentage (%) 2.4 2.4 19.5 29.3 46.3
Do you feel that digital currency concept
should be a part of course curriculum in 24 0 2 13 2
academics
Percentage (%) 58.5 0 4.9 31.7 4.9

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Dimension 2: Ease of use
Do You feel that using Digital Currency is
6 9 26 0 0
convenient
Percentage (%) 14.6 22 63.4 0 0
Do you feel that using Digital Currency is easy 20 10 2 5 4
Percentage (%) 48.78 24.39 4.9 12.19 9.75
Do you feel that banking channels provide
2 2 5 15 17
adequate information for usage
Percentage (%) 4.9 4.9 12.2 36.6 41.5
Do you feel that navigation system of online
banking channels to use digital currency is 1 2 5 17 16
convenient for its users
Percentage (%) 2.4 4.9 12.2 41.5 39
Dimension 3: Acceptance
It Saves Time 0 0 2 10 29
Percentage (%) 0 0 4.9 24.4 70.7
It Saves Physical Energy 1 0 4 10 26
Percentage (%) 2.4 0 9.8 24.4 63.4
It helps to transformation from traditional
1 0 2 11 27
banking to advance banking system
Percentage (%) 2.4 0 4.9 26.8 65.9
Rate of acceptance of Digital Currency is low
0 4 10 8 19
in rural areas
Percentage (%) 0 9.8 24.4 19.5 46.3
Rate of acceptance of Digital Currency is low
5 3 3 9 21
in among females
Percentage (%) 12.2 7.3 7.3 22 51.2
Dimension 4: Risk
Do you feel that Digital currency is risky 1 4 14 9 13
Percentage (%) 2.4 9.8 34.1 22 31.7
Do you feel that maintaining physical cash
is having more risk in comparison to digital 1 3 8 12 17
currency
Percentage (%) 2.4 7.3 19.5 29.3 41.5
Do you feel that someone can steal your money
if you are a user of digital currency through 4 3 10 12 12
digital banking channels
Percentage (%) 9.8 7.3 24.4 29.3 29.3

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Do you feel that digital banking channels

may share your personal information to third 5 0 11 10 15
party
Percentage (%) 12.2 0 26.8 24.4 36.6
Dimension 5 : Digital Financial Literacy
Do you feel that banks enhance the digital
financial literacy level of the customers to 3 3 10 10 15
enhance adoption of digital currency
Percentage (%) 7.3 7.3 24.4 24.4 36.6
Do you feel that banks conduct the awareness
program of digital financial literacy on regular 1 0 8 10 22
bass to enhance adoption of digital currency
Percentage (%) 2.4 0 19.5 24.4 53.7
Do you feel that digital financial literate person
2 1 8 12 18
can adopt the digital currency easily
Percentage (%) 4.9 2.4 19.5 29.3 43.9
Do you feel that enhancement of digital
financial literacy level in rural areas may 2 1 9 12 17
enhance the adoption of digital currency
Percentage (%) 4.9 2.4 22 29.3 41.5
Do you feel that enhancement of digital
financial literacy level among females may 1 2 11 9 18
enhance the adoption of digital currency
Percentage (%) 2.43 4.87 26.83 21.95 43.9
Do you feel that education system in India may
2 1 0 28 16
assist the users to adopt digital currency
Percentage (%) 4.87 2.43 0 68.29 39.02

Findings
1. Majority of respondents (i.e. 70%) are female in this study
2. Out of total respondents, 51.2% of them age is between 20 to 40 years
3. Most of the respondents are educated
4. Out of total respondents, 53.7% of the respondent’s monthly income is less than
Rs.10000.
5. Out of total respondents, 85% of the respondents are well known about digital
currency and e-banking
6. Awareness
The study investigated the effect of digitalised currency awareness on bank
customers’ acceptance of cashless currency. It was discovered that awareness
of cashless currency has a significant impact on bank customers’ acceptance of
cashless currency. If customers are unaware of the existence of cashless currency,
its acceptability will be low. The first step toward accepting any changes in the
banking system is raising awareness.

289
 7. Usability
Customers accept digitalised currency because it saves time and physical
energy. Customers can conduct financial transactions without having to visit a
bank branch to withdraw funds. Customers do not need to go to the creditor’s
office to pay their financial obligations. Paperless currency allows bank customers
to conduct business from anywhere at any time.
8. Acceptance
Acceptance of digitalised currency by the majority of the Indian population
is a difficult task. The majority of Indians live in rural areas. The availability of
advanced technology is a challenge, but the more significant challenge is widespread
acceptance of digitalised currency.
9. Risk
Accepting cashless currency is risky, but banks regularly advise their
customers on the best digital banking services. Customers can conduct banking
transactions on a highly secure network provided by banks. Banks have installed
multiple checkpoints to validate the user’s identity in order to control unauthorised
access and withdrawal of funds. Banks have also restricted the sharing of personal
and financial information of bank account holders with any third party. All of the
bank’s security measures ensure that its customers can accept cashless currency
without fear.
10. Digital Literacy
Customers must have complete information about any new service before
accepting it. Cashless currency is an advanced method of transacting between
parties. Customers must first be digitally financial literate in order to understand
the various functions and steps for using innovative applications and net banking
services to complete their banking needs. In India, the proportion of smartphone
users is now very high. Customers who are digitally financially literate and use
smartphones can perform a variety of financial and non-financial transactions. As
a result, digital financial literacy is an essential component for accepting cashless
currency. Banking institutions should conduct skill development programmes to
increase customers’ digital financial literacy.
Conclusion
The incorporation of digitalization in banking is expected to impact how banks
develop financial products and services, as well as customer satisfaction and bank
performance. A few recommendations are made based on this study. Banks should hold
digital financial literacy training sessions on a regular basis. The training should also
be delivered in regional languages to improve customer understanding. The training
programme should be held in the vicinity of the customers. Banking institutions should
establish a digital fraud detection cell and shorten the time it takes to resolve issues with
digital banking services to reduce the risk of digital banking fraud.
References
• Bansal, Nitin (2021) “The Impact of Paperless Currency on Banking Sector of India
and Its Acceptability by Customers_An Analytical Study in Uttar Pradesh” theses

290

submitted to Banasthali Vidyapith University Retrieved from https://shodhganga.
inflibnet.ac.in/handle/10603/388663
• Yang, J., Whitefield, M. and Boehme, K. (2007). New issues and challenges we’re
facing are e-banking in rural areas. International Journal of Electronic Finance,
1(3), 336-354.
• Kashyap, M., & Sharma, D. K. (2012). Internet banking: Boon or Bane. Gian Jyoti
E-Journal, 1(2), 1-16.
• Uppal, R.K. (2011). E-Age technology- New face of the Indian banking industry:
Emerging challenges and new potentials. Journal of Social and Development
Sciences, 1(3), 115-129.
• Singh, A.D. (2017, April). Digital banking, New horizons in a cash-light India.
Retrieved from http://ficci.in/sector/3/Add_docs/Financial-Foresights-April-
2017.pdf (accessed on 20 November 2018).

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