UNIT V

RECENT TRENDS IN INDIAN BANKING

SECTOR
 E-BANKING

E-banking, is an electronic payment system

that enables customers of a bank or other
financial institution to conduct a range of
financial transactions through the financial
institution's website.
 Components of E- Banking
•Electronic Data Interchange (EDI)
• is the computer-to-computer exchange of business documents in a standard electronic format between business partners.

•Magnetic Ink Character Recognition (MICR)

• Magnetic ink character recognition (MICR) is a technology used primarily to identify and process checks. The MICR on a check is the

string of characters that appears at the bottom left of the check. It consists of three groups of numbers, including the bank routing

number, the account number, and the check number.

•Electronic Clearing Services (ECS)

• ECS is an electronic mode of payment / receipt for transactions that are repetitive and periodic in nature. ECS is used by institutions for

making bulk payment of amounts towards distribution of dividend, interest, salary, pension, etc., or for bulk collection of amounts

towards telephone / electricity / water dues, cess / tax collections, loan instalment repayments, periodic investments in mutual funds,

insurance premium etc. Essentially, ECS facilitates bulk transfer of monies from one bank account to many bank accounts or vice versa.

ECS includes transactions processed under National Automated Clearing House (NACH) operated by National Payments Corporation of

India (NPCI).
• Phone Banking
–  It has made life easy as account holders can initiate
transactions as well as complete some of the
transactions from the convenience of their mobile
phone. Customers can enjoy the flexibility of time
with 24-hour phone banking service. The account
holder can enquire about account balance, make
bill payments, transfer funds to another account
and do much more with phone banking facility.
Smart Card
• Electronic Funds Transfer (EFT)
• Real Time Gross Settlement (RTGS)
• Automated Clearing House (ACH)
• Infinet
• Banknet
• Society for Worldwide Inter-bank Financial
Telecommunication (S.W.I.F.T.)
Advantages of E-banking to customers

1. Convenience: 
2. Low cost banking service:
3. Higher interest rate: 
4. Transfer services: 
5. Ease of monitoring: 
6. Ease of transaction:
7. Discounts: 
8. Quality service:
9. Any time cash facility.
10. Other benefits
Advantages of E-banking to
banks
1. Larger customers coverage
2. Reduced cost of operation
3. Promoting the products and
services internationally
4. Increasing customer satisfaction
5. Providing a personalised
relationship with customers.
 Opportunities and challenges
• Opportunities • Challenges
 Increasing internet  Low broadband Internet
users and computer penetration
literacy  Customer’s preference for
 Initiatives taken by traditional branches
Government agencies  Fear of online threats
for financial literacy scams
 Competitive advantage  Impersonal
 Difficult for first timers
 Security fraud
 Internet banking

a method of banking in which transactions are

conducted electronically via the Internet.
"the payment can be made through Internet
banking"
Different types of internet banking:

• 1. Informational internet banking:

• 2. Communicative online banking:
• 3. Transactional internet banking:
Growth in internet banking
• Cost effectiveness
• Intensity of competitions
• Scope of increase in revenue
• Geographical reach
• Brand equity
Electronic banking in India
 RTGS
• Real-time gross settlement (RTGS) systems are
specialist funds transfer systems where the
transfer of money or securities takes place from
one bank to any other bank on a "real time" and
on a "gross" basis.  "Gross settlement" means
the transaction is settled on one-to-one basis
without bundling or netting with any other
transaction. "Settlement" means that once
processed, payments are final and irrevocable.

• As of 1985, three central banks had

implemented RTGS systems, while by the end of
2005, RTGS systems had been implemented by
90 central banks

• At present 237 banks uses RTGS system.

 NEFT

• National Electronic Funds Transfer (NEFT) is a

nation-wide payment system. Under this Scheme,

individuals can electronically transfer funds from

any bank branch to any individual having an

account with any other bank branch in the

country participating in the

Scheme. NEFT transactions are settled in batches.

• SBIN0003823-IFSC code (Indian Finanancial

System Code)

• SBIN0008034- Konaje branch

 SWIFT
• Society for Worldwide Interbank Financial

Telecommunication code. An internationally-

recognized identification code for banks around

the world. SWIFT codes are most commonly

used for international wire transfers and are

comprised of 8 or 11 alphanumeric characters.

The International Organization of

Standardization (IOS) was the authoritative body

that approved the creation of SWIFT code.

• SBININBB354
Reasons for application of M-
Banking(Advantages)
Challenges and issues in mobile banking

• Customer awareness
• Security issues and privacy
• Virus and malware attack
• Wireless network
• Risk in SMS mobile banking
• Authentication issue
 Trends in M-Banking
• Elimination of ATM cards for withdrawing the
cash
• Biometric authentication to use the app
• AI-Supported customer service
• A-B-C-D verification process
• Mobile apps to execute banking activities
• Convenient debt management
• Voice banking facility
Retail Banking