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A Study On Innovative
Banking Products In India |
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| Paper Id :
19198 Submission Date :
2024-08-15 Acceptance Date :
2024-08-24 Publication Date :
2024-08-25
This is an open-access research paper/article distributed under the terms of the Creative Commons Attribution 4.0 International, which permits unrestricted use, distribution, and reproduction in any medium, provided the original author and source are credited. DOI:10.5281/zenodo.13621943 For verification of this paper, please visit on
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| Abstract |
Banking sector is an important area of any country. The development of
banking sector depends on what kind of services it provides to its customers. There is
increasing competition in the banking sector, according to the changing
expectations of the customer, the bank is providing its services. Revolution in
banking sector due to Automated Teller Machine (ATM), Debit Card and Credit
Card, Check Truncation System (CTS), NEFT (National Electronic Fund Transfer),
RTGS (Real Time Gross Settlement), Mobile Banking, internet banking, Cash Deposit Machine
(CDM) etc. started. In the same way, technology has developed in all areas of
the world, in the same way, in the banking sector, our technology has
developed, in the same way, it is necessary to develop technology according to
the time, in India, which new products or services have been launched in the
banking sector. We will discuss all the changes that have happened in banking
industry. Innovative banking products strengthen the economy of our country. |
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| Keywords | ECS, Plastic Money, ATM, Internet Banking, Mobile Banking, Retail Banking, Technological Changes. | ||||||
| Introduction | A healthy economy cannot be created without a good banking system. Productivity enhancement, innovative products, real time information system, and efficient risk management are some of the advantage derived through the technology. There is a wide scope of banking sector in India, and the opportunities created around each vacancy incorporate a professional certificate, degree of training. This sector has a huge potential to bring an international exposure to candidates. Modern banking in India originated in the mid of 18th century with many goals. The first bank was the Bank of Hindustan, which was established in 1770. The largest bank which is still in existence is the State Bank of India (SBI). The term "innovation" refers to the process of creating something new. Banks no longer limited themselves to typical banking activities, but sought out new opportunities for broadening and market penetration. Banks of the future will be reachable via mobile devices. For example, your phone will be persistently learning about investing opportune time and delivering them to you. One of the clearest examples of innovation is product creation, which banks utilize considerably nowadays. From the start of the financial variation, innovations have been analytical in reducing financial exclusion and enhancing the way banking services are delivered to individuals. Financial innovation is a term that is regularly used in the banking industry. These terms are used to refer to any change in the size, scope, or delivery of financial services.
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| Objective of study |
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| Review of Literature | Gowripeddi Hari Kumar or N. Ramanjaneyulu (2022)
studied the continuous technological advancements worldwide and the growing
rivalry among participants has resulted in a fundamental change in the Indian
banking industry. Numerous government
banks as well as state-owned banks have already embraced technological
advancements in the way they conducts their business been experiencing
significant growth in recent years .evolved ,yet banking service users have not
advanced however, completely embraced the new approach to banking. As time
passes increased understanding among bank clients, resulting to improve the
reception of the new style of banking. The text needs to be provided in the
order to be paraphrased .The outlook for the Indian banking industry is
optimistic as additional investment are being made increasing numbers of
individuals are enjoying the advantages of progress in this sectors. K.Pranathi or R. Meena Shanthi (2020)
The capital and customer base of the banking sector in India has increased,
making its stronger. It has evolved into a competitive and diverse environment
worldwide, focusing on increased productivity and efficiency. Global competition
and deregulation in India’s financial sector has resulted in increased
exposuere. Development of higher quality goods and services. Reforms have
transformed the appearance of India .Financial services. The banking industry
has made significant advancement in terms of technology, Deregulation, Goods
& Services, information systems and so on. Abdul Muntakim Khan or Manoj Kumar Sahoo (2022)Technology
plays a crucial role in enhancing banking and operational processes offerings
key advancement in the progress of modern payment methods in India involve the
availability of card-based transaction, debit and Cedit cards, Electronic
clearing Service (ECS), and real-time gross settlement (RTGS). Implementation
of NEFT (National Electronic Funds Transfer) and enhancement of cheque
truncation system are being planned. IN brief, the upcoming years in the
banking sector will involve a shift towards digital payment apps among other
developments. The 21st century is characterized not only by significant changes
from a seller market to a consumer market but also by a dramatic shift in
dynamics, from local to global operations. T. Uma Maheshwari Rao and L. Himawati stated in his review the importance of the innovation in providing banking services worldwide and its importance in the Indian customer perspective. Banks are ongoing their functions electronically while changing themselves to successfully counter the present competition. This change indicate to regular banking to online banking, permit their customers to conduct online, while saving on various factors. Normal Banking events still demolish in developing countries like India. Sanchita Sikka and Upadrasta Venkata Srinath stated that “Innovations in Banking Products and Services” and strengthen the situations that banks deciding to effect technology to provide suitable and cost effective technical facilities in order to have more customer holding rates. |
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| Methodology | This study has been done with the help of secondary data so that you can
get deep knowledge of different innovative banking products. For this, reports,
research papers, articles, newspaper articles, websites, case studies have been
used. The purpose of writing this paper is to give more understanding of
innovative banking products that are helpful for fast working and save the time
that are making healthy economy. |
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| Analysis | Innovative Banking Products
In modern years the marketing features of the banking sector have become stronger, mostly among new private sector and foreign banks. Retail Banking is widely known for collecting deposits from individuals and providing them with loans in the form of home loans, car loans, credit and debit cards, etc. Innovative and realistic banks are trying to compromise this market while having a series of new products, services, technology, and marketing strategies have been added to their product bins. Net banking: Internet banking provides personal and commercial banking services offering such as making electronic payments, estimate account balances, obtaining statements, checking current transactions and transferring money between different accounts. It means banking on the internet. Banking is now easier. Private Bank offers free online banking to their customers. At present the customers can do banking activities easily from bedroom or hotel room or any places during holidays. Additionally, customers can check their balance, make and stop payments, inquiry about their cheque status, request for a cheque book, transfer funds through different modes like NEFT, RTGS,IMPS or UPI and access demat account. Mobile Banking: It is a service provided by a bank or other financial institution that give permission its customers to conduct financial transactions somehow using a mobile device such as a smartphone or tablet. All the transactions through mobile banking depends on the features of the mobile banking app provided and generally includes secure account balances and list of latest transactions, electronic bill payments, P2P payments, and funds transfers between a customer or another accounts to make it easy. Blockchain Banking: Blockchain banking enable the tokenization of assets, such as real estate, stocks, and bonds, allowing discrete ownership and easier transferability. Banks can issue tokenized assets on blockchain application, facilitating faster settlement and increasing liquidity in financial markets. Blockchain provides secured records of all financial transactions and improves transactional visibility and security. Additionally, it improves trade efficiency through transaction mechanization as well as efficient manual and paper-based operations. Smart contracts computerized financial transactions and improve the performance of financial contracts to make it easy. Digital Wallets: An innovation in online banking, have spread in universality over the past few years. These services allow users to store their payment card details on their mobile tools and pay at point-of-sale terminals using their mobile devices. Digital wallets provide a more appropriate and secure method of payment, and many banks now provide their own digital wallet solutions to their customers. Smart Card: Smart card is a prepaid card. Smart card is the same with VCC (Virtual calling cards) and cash or SIM cards proceed by mobile phone companies. In this program, the customer buys the card and uses it until it becomes zero. The card works with a secret PIN (Personal Identification Number) allowed to the cardholder. This card can be refilled. ATMs: An automated teller machine (ATM) is an electronic communications device that enables customers of financial sector to perform financial transactions, such as cash withdrawals, deposits, funds transfers, account information inquiries and without the need for direct interaction with bank employees. Additionally to withdrawing cash, ATMs agree cash and cheque deposits. Particularly banks have now applied for ATMs on wheels and off-site ATMs for customer support. Demat Account: Banks are providing online platforms to their customers for the online trading of shares. Banks are providing facility of demat accounts by which they can buy and sell shares through online and invest their money in the stock market for more profit. A customer can preserve its shares, bonds, debentures and securities from theft, loss, and damage if he or she has a demat account. Credit card: A credit card is a payment card to make easy transactions, generally issued by a bank, giving permission its users to buy goods or services or withdraw cash on credit. Using the card thus arises debt that has to be repaid later in future time. Credit cards are one of the most broadly used forms of payment across the worldwide. A credit card also differs from a debit card I many ways, which can be utilized like currency by the owner of the card. Debit Card: A debit card is a plastic card also known as a check card or bank card. It is a payment card that can be used in place of cash to make purchases of goods and services. The card basically includes of the bank's name, a card number, the cardholder's name, and an expiration date, on either the front or the back side of the card. The debit card is a card issued by a bank institution to checking account holders that is used to process their funds in the account. We can use a debit card to access cash from an ATM or to buy goods or services at any place. Neobanking: Neobanking enables a digital-only existence for banks, minimizing capital and operating expenses. It offers a perfect and integrated banking experience to customers through supercomputing, open API, and more applications. In addition, neobanks support a range of services from automated rectification and payroll management to consolidated workflow management. RTGS: Real Time Gross Settlement (RTGS) is an electronic system of fund transfer where the communication takes place on a real time basis. 'Real Time' refers to the process of information that are implemented at the time they are received, rather than at some later time. On the other way "Gross Settlement" means the settlement of funds transfer informations happens individually (on an instruction by instruction basis). The settlement of funds literally takes place in the books of RBI and thus the payments are considered as final and irreversible. The fascination of RTGS is that the payee banks and their customers receive their funds with reliablity and completeness during the same day facilitating them to use the funds at that time without revealing themselves to risk. NEFT: National Electronic Funds Transfer (NEFT) is an Indian system of electronic payment from one bank or bank branch to another bank at other places. It is an electronic funds transfer system maintained by the Reserve Bank of India (RBI). Started in November 2005, the setup was started and regulated by Institute for Development and Research in Banking Technology. NEFT helpful to their bank customers in India to transfer money between any two NEFT-enabled bank accounts on a one-to-one basis. NEFT is providing electronic messages. Electronic clearing services: ECS is a retail payment tools that can be used to make mass payments and receipts of same nature especially where every individual payment is of a repetitious nature and of corresponding smaller amount. This facility is meant for companies and government sectors to pay and receive large amount of payments rather than for funds transfers by their individuals. Challenges faced by Indian banking sector: The Indian banking industry, even with its expansion and updates, faced many challenges that are following as under: Non-Performing Assets (NPAs): Banks are greatly affected by high levels of NPAs, which significantly impact profitability and operational efficiency. Non-performing assets negatively impact banks' financial well-being and result in higher provisioning needs. Regulatory Compliance: Compliance with regulations is essential for banks to adhere to guidelines set by the Reserve Bank of India (RBI) and other regulatory bodies in order to navigate a challenging and changing regulatory environment. This may require a lot of resources and present difficulties. Fraud and cyber security risk: The increasing popularity of digital banking leads to a rise in both fraud and cybersecurity risks. Banks must protect against advanced cyber threats while also maintaining customer data privacy. Financial Inclusion: Despite advancements, achieving financial inclusion continues to be difficult. Overcoming infrastructural and educational barriers is necessary to reach underserved populations in rural and remote areas. Technological Adaptation: Banks must constantly improve their systems and processes to keep up with the fast rate of technological advancements. Remaining competitive involves both adopting new technologies and mitigating the risks that come with them. Operational Efficiency: Banks frequently face challenges with inefficiencies stemming from outdated systems, elevated operational expenses, and complex procedures. Improving efficiency and optimizing operations is a continuous struggle. Competition and Market Forces: Traditional banks are feeling pressure to innovate and provide customer-focused products and services due to rising competition from new players like fintech firms and non-bank financial institutions. Customer Expectations: Expectations from customers are on the rise for seamless, personalized banking experiences, so banks need to constantly improve their customer service and digital interfaces to keep up with changing demands. |
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| Conclusion |
The Banking sector in
India has become secure in terms of capital and the number of customers and
their retention. It has become universally competitive and multiple aiming, at
higher innovativeness and efficiency. Showing to worldwide competition and
liberalism in Indian financial sector has led to the disclosure of better
quality products and services. The banking sector has improved multiform in
terms of innovative technology, Liberalism, Product & Services, Information
Systems, Etc. It is significant that technology plays a vital role in
improving banking and operational services. Major developments in the
innovation of new payment systems in India including access to card based
payments, debit card, credit card, Electronic Clearing Service (ECS,) real-time
gross settlement (RTGS), NEFT (National Electronic Funds Transfer), Plan for
execution of cheque truncation system, upgrade payment apps, etc. In short, the
future in the Indian banking sector will not only be a change towards the 21st
century but also marked by a reasonable change from the seller market to the
consumer market. These IT services are utilized. The banking services will be
significantly improved. Improvements in services for customers will persist
through the introduction of new product and process innovations. Hence, it is
true to say that innovation has led to the evolution of "traditional
banking into convenience Banking habits are shifting from "mass
banking" to "class banking," especially in developing countries
like India. |
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| References |
Websites |
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