Digitalization in Banking Sector

Abstract

In order to improve the customer service, book-keeping and MIS reporting, the need for computerization was felt in the Indian banking sector in late 1980s. Reserve Bank of India set up a Committee headed by Dr. C. Rangarajan on computerization in banks in 1988. Conversion of data into a digital format with the adoption of technology is called as digitization. By implementation of digitalization, banks can provide enriched customer services. This provides convenience to customers and helps in saving time. Digitalization decreases human error and thus builds customer reliability. A new wave of technology is revolutionizing the way customers engage with their finances. From social to mobile capabilities, banks have to rethink the way they do business to deliver a better customer experience and remain competitive. The recent introduction of open banking and the Payments Services Directive 2 (PSD2) regulation is hastening this transformation by placing power in the hands of customers. Banks must now allow customers to share their financial data, such as spending habits and regular payments, with authorized third-party providers if customers wish to do so. In addition, until the past few years, banks were not visualizing the tremendous shift in consumer behavior that occurred as a result of the millennial generation now become the largest consumers of financial products. With the increasing usage of smart-phones, digitization of banking sector is predictable to catch up the increasing expectations of the world. It indeed reduced human errors and increased convenience. Now, cyber threats are on the rise hence, banks must be very vigilant and should be prepared to handle cyber-attacks.