Digital Banking: Different Channels, Objectives and Advantages

Digital banking is the process of ensuring customer delight by offering various services and products through digital channels.  Digital Banking: Definition and Evolution 

What are the objectives of digital banking?

By offering digital banking facility, banks aim to reduce operational expenses and improve business opportunities by concentrating on three aspects:
•    Establish appropriate conversation with the customer through various touch points
•    Anticipate customer demands and offer tailor made solutions
•    Ensure customer delight

Physical network of branches and related expenses have been causing a negative impact on the balance sheet of banks. Now, through digital channels, banks are capturing data and pattern of interactions of customers with bank.  With the use of analytical framework, the captured data is being converted to useful information and customers are being offered customer specific products.  Customer specific data is being pushed to physical network too so that they can have face to face interaction with customers to generate more business thereby improving efficiency and effectiveness of physical networks.

What are the channels through which digital banking is offered?

Digital banking is offered through different channels to bring maximum customers under its ambit. Different channels are needed as the preferences vary from customer to customer. There are mainly four digital channels for customers to carry out their transactions and interactions with the bank. They are
i.    Automated Teller Machines (ATM), Cash Dispensing Machines (CDM) and Payment Cards
ii.    Online (Internet) applications
iii.    Mobile (including UPI based) applications and  SMS and
iv.    Contact Centre/ IVR

Normal usages can be categorized as shown below
1.    Automated Teller Machines (ATM) and Cash Dispensing Machines (CDM) are the preferred choices of majority of customers for withdrawal and remittance of cash respectively.
2.    Online  (Internet channel), Mobile (SMS) channel, Contact Centre/ IVR Channel  for
a.    Opening and closure of accounts, enquiry and finding out eligibility of loans, application of loans and for seeking financial advice.
b.    Carrying out transactions, gathering transaction details and  service requests like request for debit/credit cards, stop payments, chequebook request etc related to account
c.    Availing third party services like Income tax filing, ticket booking, hotel booking etc
d.    For receiving alert and  for paying bills,

e.   Payments and settlements 
3.    The customers who prefer interaction with a person opt for Contact Centre/ IVR   for reporting a problem or inquiries about a fee or service charge or transactional details.

All the above activities are extended through highly secured channels and environment.

The above services are offered through physical branches too. But some banks are following a policy of charging customers if they approach branches for availing certain services. This indirectly prompts customers to shift to digital banking.

What are the benefits that customers derive from digital banking?

•    Convenience of banking anywhere and anytime
•    Simplified transactions
•    Secrecy of transactions, even without intervention  of bank staff
•    Innovative  products and services offered by banks
•    No trips to branches or queues leading to reduction in expenses and time saving

What are the benefits that banks derive from digital banking?

•    Customer delight through innovative products and services
•    Better customer focus by harnessing technology that predicts customer  demands and preferences
•    More customer loyalty by offering  personalized offers and services at the convenience of customers
•    More business by offering customer specific products by adopting analytics
•    Better profitability by reducing dependence on physical branch network
•    Meeting regulatory requirements through transparency and disclosures
•    Facing the challenges being caused by innovative fintech solutions.
•    Achieving businesses targets and reach in a highly cost effective manner.
•    360 degree view of customers by collating data from banks records, social media and other public domain.
•    Acquiring new customers, especially young to ensure future business prospectus
•    Operational efficiency by maintaining accurate data and reliable management Information System

It is true that Digital banking has found its place in the pocket of the customer.  Still, it is just the beginning and the exciting digital journey will continue in coming years too. Digital Banking: Definition and Evolution