Today banking is known as
Innovative banking. Current banking sector has come up with a lot of
initiatives that oriented to provide a better customer services with the help
of new technology. The use of technology has brought a revolution in the
working style of the banks. Customer expectations, competition from other banks
and technology has changed the way of the entire banking system. The use of
technology in banking has brought the biggest paradigm changes in their
Review of Literature
and Mr.G.Anbalagan (2012),
studied, “A study on innovation and challenges in Banking industries in India”
and discussed significant changes in the Indian banking sector, concluded that
banks need to restructure themselves and identified the practices which needs
to be adopted.
kumar (2015), studied, “A study
on New Innovations in Banking Sector|” and highlighted the innovations in
banking sector at national and international level. She also concluded that in
future, technology will make the engagement with banks more multi-dimensional
and Indian banks will continue to develop and expand banking services.
(2016) studied, “Top
trends in Banking – 2017” with the aim to understand and analyse the trends
that are exposed to drive the dynamics of the banking ecosystem in the near
future and highlighted the growing tendency of banks focusing on innovation, by
leveraging new technologies.
Objectives of the Study
To study various innovations that will
contribute to the growth of Indian Banking Sector.
Being an exploratory research, it is based
on secondary data from journals, articles, newspapers and magazines.
Evolution of the Indian
1921, state-owned Imperial Bank of India was the only bank existing
1935, RBI was established as the central bank of country and Quasi central
banking role of Imperial bank came to an end.
1936-1955, Imprerial Banks expanded its network to 480 networks and in order to
increase penetration in rural areas, Imperial Bank was converted into State
Bank of India.
1956-2000, Nationalisation of 14 large commercial banks in 1969 & 6 more
banks in 1980 and entry of private players such as ICICI intensifying the
2003, Kotak Mahindra Finance Ltd received a banking license from RBI and become
the first NBFC to be converted into a bank.
2009, the government removed the banking cash transaction tax which had been
introduced in 2005.
sanctioned US$ 2.84 billion loan to National Water Development Agency for 50
irrigation projects in October 2016.
per RBI, as of December 29, 2017 India recorded foreign exchange reserves of
approximately US$ 409.37 billion.
Transition from Manual Banking
to Technology Driven Banking
The process started
gingerly with Rangarajan committee recommendations I and II in 1980 with lots of resistance to accept
change, however gaining momentum when the Reserve bank of India issued a set of
bank licences in 1993 and few private sector banks were set up who had the
advantage to make a fresh start with
technology driven banking. The technology driven banking has its own share of
pains. It unleased a considerable unfair competition amoung the banks in the
industry, which led to considerable number of banks in the industry, which led
to considerable number of banks being merged and wherever possible closed.
Southern Indian banks were faster
compared to north, central and eastern Indian banks in adopting and
The biggest gain from
technology has been that banking has become increasingly easy and comfortable
for the customer in doing business. Today it is not at all necessary for a
customer to visit any bank branch for doing business, it can be done from home,
office and while travelling etc. Amoung all the pros and cons of Indian banking
industry transiting through the maze of constantly changing technology scenario lies the heartening story is that
Indian banking is not only at par with and sometimes even ahead of the world.
The job connecting almost 90 percent of hundred thousand branches with online
banking with state of the art technology is an incomparable feat in the world
of technology. And more than the bank employees it is the
illiterate/semi-illiterate customers who are driving the banks to be more and
more technology driven.
Banking Reaping Benefits
from Increased usage of Technology
the last few years, technology is being increasingly used by Indian banks.
Banks are using technology at various levels such as, back office processing,
convergence of delivery channels, IT-enabled business process reengineering as
well as communication with customers.
banks currently devote around 15% of total spending on technology
on technology is expected to increase at an annual rate of 14.2 per cent.
banking and securities companies will spend USD8.89 billion on IT products and
services in 2015, an increase of nearly 15.2 per cent over 2014.
has taken several steps to enable mobile payments, the central bank has
recently removed the transactions limit of INR 50,000 and allowed banks to set
their own limits
mobile wallet transactions value in India, Stood at US$ 72.6 Billion as of
of November 2017, total number of ATMs in India increased to 2,06,694 and is
further expected to increase to 4,07,000 ATMs in 2021.
Current Strategies adopted
in Indian Banking Sector
use of technology
March 2016, ICICI bank launched Host Card Emulation (HCE) for its debit &
credit card holders, to make contactless payments at stores by waving their
phones across NFC enabled machines.
State Bank of India unveiled ‘SBI Mingle’ as social media banking platform for
twitter & Facebook users.
protect margins by promoting usage of efficient technologies like mobile &
Bank of India has created SBI Digi Bank, which has a financial superstore, an
online market place and a digital bank for end to end digitization for all
products and services.
of July 2017, Microsoft Corp. launched Skype with Aadhaar Authentication to
allow access to bank accounts using webcams.
banks tend to increase income by cross selling products to their existing
banks have been to grow business, despite a much lower customer coverage.
in unbanked rural regions helps banks to garner deposits.
tele-density and support of regulators have aided rural expansion.
of November 2017, State Bank of India is
planning to set up more branches in Nepal and re-enter Vietnam under its
three-year aim of growing its international operations to 15 per cent of its
at a nascent stage, private & public banks are gradually expands operations
banks target India – based customers & investors, settled abroad.
Innovative Use of
Technology in Indian Banking Industry
Next Generation Banking
is about achieving customer delight by delivering a rich customer experience.
This can be achieved through the use of innovative technology solutions. The
key to success is the ability to technology to deliver hyper customised experiences
to its customers. Another dimension is ensuring customer trust with the highest
level of security.
institutions are leveraging many cutting-edge technologies. The launch of
mobile –only banks, contactless payment cards, use of gesture and voice
recognition of securing transactions are a few innovations that banks have
of Intelligent Robotic Assistant (IRA) in branches to service customers
The robot can sense the
presense of the customers, greet customers, provide service related information
to the customer and guide them personally to their respective counters for the
and preventing fraud using location look up technology
Bank is able to map
customer location, using customer mobile phone against the location of the
transaction and detect any anomalous transaction.
Banks are deploying
natural language processing based Artifical Intelligence chat bot on Facebook
messenger, which provides e-commerce services. Chat bots can also be configured
to provide banking transactional services.
Bank is using block chain
technology is vendor financing to optimize the working capital cycle. The
technology has enabled real-time capture and authentication of information from
different sources, thereby reducing processing time and enhancing working
of Software Robotics
Banks are using
robots that emulate human actions to automate and perform repetitive, high volume
and time consuming business tasks. Software robots reduced the response time to customers by up
to 60% with increased accuracy. bank is
using robots for over 200 business process functions across the organisation,
including retail banking operations, agri-business, trade and forex, treasury
and human resource management amoung others.
The Banking sector has improved manifolds in terms of
Technology, infrastructure, products and services, information systems etc..
Nowadays, the new technology is sure that the future of banking will introduce
more offers and services to the customers with the bust banking product and
Customer preferences and
Corporate business models have changes drastically in past few years and it is
important for the banks to realign themselves with the new landscape. Redefined
corporate and customer strategy should drive innovation. This alone will lead
to the successful implementation of Next Generation Technologies in Banking.
Globally, there are an estimated 2.51 billion
users of social networks (250 million from India alone) Therefore, social media
should be a part of any innovation strategy to have an impact at scale. In
addition to customers in the upper half of the income pyramid, banks needs to
use innovative technology solutions to provide low cost and secure banking to
customers at the bottom of pyramid.