Raj N, Founder, Zaggle

Raj is a seasoned professional with over 24 years of experience working in India and the US. He is a Serial Entrepreneur and has built and sold businesses in areas such as Financial Services, Prepaid Internet Retail, Loyalty, Merchandising, Reward and Recognition, Open Banking, and Expense Management. Raj is currently the Founder and Chairman of Zaggle, an award-winning FinTech Company which helps companies digitize spends and automate processes related to payments. Being a 5x Startup Founder, he is part of multiple Founders and Angel Investor Groups and being part of the group, he
learnt about the challenges faced by Founders to access credit, to meet their business expenses.


Digital banking refers to the shift of banking services from an in-person methodology to an online format, which not only increases the efficiency of banking processes but also offers a glitch- free experience to customers.

When was the last time, you physically visited a bank, stood in a queue and deposited your money- Few weeks/ a month/ 3 months? Difficult to remember right! Well you aren’t alone, as per a 2020 survey by FIS, 68% of Indians now use digital or mobile banking to conduct financial transactions. With use of online banking and digital payments surging during the pandemic, alongside the desire to curb human contact the introduction of new technologies such as AI, Big Data and blockchain in banking services are increasingly changing the relationship of banks with its clients. 

The pandemic has reshaped our lives in terms of: how we work, travel and shop and has also impacted how we bank, with online surveys increasingly demonstrating customer reluctance to visit bank branches and instead relying on digital tools. Furthermore, the global health crisis has radically changed the socio-economic landscape and customer needs also have become quite dynamic in nature, with customers increasingly demanding digital experiences, accelerating the need for banks to offer banking services and products online. Realising how customers have adopted online channels banks are too increasingly offering a personalized portfolio of digital products and services to remain competitive against new- age FinTech and neo-banks. 

Traditionally India has been a cash- driven society, with about 190 million Indians lacking access to proper banking systems according to a World Bank report. However, the advent of FinTech and neo- banks has changed this dynamic with them offering financial inclusivity to a large section of the unbanked population. Government decisions such as demonetisation and digitalisation too have acted as catalysts in the digital evolution. The launch of United Payments Interface and Bharat Interface for Money by the National Payments Corporation of India have been significant steps for innovation and digitalisation in terms of payment, with UPI further letting people make instant bank transfers between accounts. 

The beginnings of digital banking in India can be traced to the late 1990s with ICICI bank being the first to offer such services to its retail clients. While the transition from traditional banking to digital banking in India is ongoing, its growth can be highlighted by way of an increasing number of banks offering an extensive portfolio of products and services. For majority of traditional Indian banks, lower costs, higher return on equity and security are solid motivators for opting towards a digital route. 

A McKinsey Personal finance survey reveals that with increasing smartphone penetration digital banking has grown between 1.5-3 times in Asian countries such as India, Indonesia, Philippines among others.  Another online statistic reveals that bank branches account anywhere between 12-21 percent of monthly transactions, with customers preferring digital banking for routine transactions such as transfers, checking their balance and bill payments etc. Overall, customers are now increasingly adopting digital interactions for their daily banking needs, as compared to pre- pandemic times with banks contemplating on the future of their physical branches. 

One of the first banks to move in this direction is India’s largest lender- SBI that launched its YONO app in 2017 to service its customer’s banking, shopping and investment needs online. The YONO app offers an array of products right from banking and loans to paperless account opening. Furthermore, the app has a tie-up with e-commerce merchants, thereby facilitating customers shopping requirements digitally. Such has been its runaway success that the app crossed a milestone of 51 million downloads and 32 million registered users in December 2020. 

These numbers stand as a testament to the response shown by customers of the digitisation measure undertaken by SBI. Similar to other service sectors, the banking sector has seen rapid advancements in technology. The National Electronic Fund Transfer (NEFT) is probably the most commonly used electronic payment methodology for fund transfers between bank accounts anywhere in the country. Similarly, other electronic payment methodologies such as RTGS, IMPS, Electronic Clearing System and Cheque Truncation system have gained wide acceptance among traditional Indian banks. Mobile Banking Systems, Prepaid Cards, Debit Cards and Credit Cards too have bought a digital revolution in the Indian banking sector.

Overall, the primary functions of banks may have not changed but the methodologies to conduct them have significantly altered. While the 20th century was about manual processes, the 21st century has ushered in the era of information technology. Hence, the digital transformation helps the banking industry in the following ways: –

1) Low-cost customer acquisition- Banks and clients are co- dependent on each other for their needs.  With a digital model in place, banks can place emphasis on customising products as per client requirements rather than a ‘one size fits all approach’, allowing them to target a pool of clients at fraction of the cost. 

2) Streamlined operations- Digital banks simplify the traditional banking process, by eliminating unnecessary processes and paperwork. Which not only saves time but also reduces daily operation costs. Furthermore, with streamlined operations banks can offer a good customer experience and attract larger no of clients, thereby improving overall profitability. 

3) Quick Customer Service- In the banking industry, good customer service holds tremendous value and traditional banks to realise this as a key to winning/ attracting/ retaining clients. So, when it comes to digital banks, they not only offer quick service but also a good experience resulting in an increased customer-base. 

To summarise, the global pandemic has acted as a catalyst towards driving digital transformation in the banking industry in India. The movement to online banking seems to be our new reality. Many private banks are actively tapping onto business analytics and AI to offer better services. Advanced technologies such as Invisible Payments, Biometric Authentication and Voice- enabled payments too are gaining interest in the banking industry, hence the future of banking seems digital in the long-run.

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