Digitalization of Banking – Mobile Banking, Internet Banking, Digital Payment System Commerce YouTube Lecture Handouts Part 3

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Digitalisation of Banking – Mobile Banking, Internet Banking, Digital Payment System | Commerce

Mobile Banking

  • Mobile banking allows customers to conduct financial transactions remotely using a mobile device such as a smartphone or tablet.
  • It uses an app, provided by the financial institution for the purpose. Mobile banking is usually available on a 24-hour basis.
  • Mobile banking is dependent on the availability of an internet or data connection to the mobile device.
  • Some financial institutions have restrictions on which accounts may be accessed through mobile banking, as well as a limit on the amount that can be transacted.
  • Transactions through mobile banking depend on the features of the mobile banking app provided and typically includes –
    • P2P payments
    • remote check deposits
    • electronic bill payments
    • obtaining account balances and lists of transactions
    • funds transfers between a customer՚s or another՚s accounts
    • Some apps also enable copies of statements to be downloaded and sometimes printed at the customer՚s premises.

Money Transfer

  • NEFT (Available )
  • UPI (Instant Mobile Money Transfer)
  • IMPS (Immediate Payment )
  • Cards - Millennia Cards, Credit Cards.
  • Bill Payments, Electricity Bill Payment, Mobile Post-Paid.
  • Recharge, Broadband & Data Card, Mobile Pre-Paid Recharge.
  • Payment Solutions - FASTag - Toll Payment. Cash, cheque, Demand Draft.
  • Recognizing the potential of mobile as a channel for offering financial services in the country, the Reserve Bank issued the first set of guidelines on mobile banking in October 2002.
  • In the year 2002 Mobile Banking was started in India by way of SMS Banking.
  • Now it is becoming a new generation platform in India. Mobile Banking is useful for the customers for making inquiries about their balances on mobile phones.
Mobile Banking

From the Bank՚s Point of View

  • Mobile banking reduces the cost of handling transactions
  • by reducing the need for customers to visit a bank branch
  • for non-cash withdrawal and deposit transactions
  • Paperwork, operations cost, authencity, transparency, employee strong work ethics, no delays, etc.
  • Using a mobile banking app increases ease of use, speed, flexibility and also improves security because it integrates with the user built-in mobile device security mechanisms.
  • Many apps now have a remote deposit option; using the device՚s camera to digitally transmit cheques to their financial institution.
  • Mobile banking differs from mobile payments, which involves the use of a mobile device to pay for goods or services either at the point of sale or remotely, analogously to the use of a debit or credit card to effect an Electronic funds transfer at point of sale (EFTPOS) payment.
  • Mobile banking does not handle transactions involving cash, and a customer needs to visit an ATM or bank branch for cash withdrawals or deposits.
Mobile Banking Apps

Internet Banking

  • Online banking, also known as internet banking or web banking 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.
  • It connects to or be part of the core banking system operated by a bank
  • Some banks operate as a “direct bank/virtual bank,” where they rely completely on internet banking
  • Internet banking software provides personal and corporate banking services offering features such as
    • viewing account balances
    • obtaining statements
    • checking recent transactions
    • transferring money between accounts and making payments

ECS (Electronic Clearing Services)

  • Telebanking
  • Mobile Banking
  • Internet Banking
  • Door-step Banking

Advantages of Digital Banking

  • Control over spending habits
  • Reduced money laundering and tax evasion
  • Lower crime rates
  • Reduced possibility of corruption
  • Easier exchange of money
  • Quick access to payments
  • Convenience
  • Reduced transaction costs
  • Economic development
  • Saves time, energy and resources
  • Improved standard of living
  • Easy foreign exchange

Disadvantages of Digital Banking

  • Prone to cybercrime
  • Hacking and data theft
  • Greater band with is essential
  • Increased business costs
  • Technical gliches based on telecommunication infrastructure
  • Control over keys: transactions can՚t be undone
  • Complex processing system
  • Technological awareness
  • Older generation might face difficulty

MCQs

Q. ________ differs from mobile payments, which involves the use of a mobile device to pay for goods or services either at the point of sale or remotely, analogously to the use of a debit or credit card to effect an EFTPOS payment.

Answer: Mobile Banking

Q. In 1998, ________ Bank introduced internet banking to its customers.

Answer: ICICI

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