Open Access Research Article
IMPACT OF SCIENCE AND TECHNOLOGY ON BANKING BY: RAJESH GOVIND DEKATE
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IMPACT OF
SCIENCE AND TECHNOLOGY
ON BANKING
AUTHORED BY: RAJESH GOVIND DEKATE
ROLL NO: 20
LL.M SECOND YEAR
SEM-I
PROGRESSIVE EDUCATION SOCIETY’S
MODERN LAW COLLEGE, PUNE
SAVITRIBAI PHULE PUNE UNIVERSITY,
PUNE 2023
Impact of science and technology on banking
The Indian banking system has come a
long way since independence from nationalization to liberalization. It has
witnessed from a slow business institution to a highly proactive and dynamic
entity. The banks have been able to generate revenue by exploring new
opportunities. This has been possible due to liberalization and economic
reforms. undertaken by the Indian Government. The need to become highly
customer focused has forced the banks to adopt an appropriate and suitable
approach. Technology has marked a turning point in the history of global
banking and services. With ever increasing availability of international
bandwidth and powerful workflow management, it is now possible to disaggregate
any banking process, execute the sub-processes in multiple locations around the
world, and reassemble it, at another location.
The development of new services and
efficient delivery channels for the banking industry has been made possible
with the application of technology. Some of the examples of technology adoption
are electronic banking, mobile banking and internet banking.
It is well recognized that,
technology holds the key to the future success of Indian Banks since it is
information technology which has brought in a sea change in the way banking is
being conducted today, which is but an indication of the future. It would be
beyond anybody's imagination to even think about
conducting banking business anywhere
in the country or using a powerful yet simple medium such as the Internet even
from roadside kiosks. But today this is the reality which owes its credit to
the rampant exploit of IT by banks. And concepts such as 'Anywhere Banking' or
'Automated Teller Machines' 'Internet Banking' and 'Mobile Banking' have become
realty due to technology implementation by banks. Such innovations have had a
positive impact on customer service efficiently and accurately over the
counters of branches.
The objective of the study is to
examine the impact of technology in banking services related to e-channels such
as ATM, Tele-banking Mobile banking and Internet banking in National Capital
Region Delhi. It also seeks to find the significant characteristics/ factors
related to technology in banking services
LITERATURE REVIEW
The adoption of technology in Indian
Banking sector commenced from the mid eighties when the Reserve Bank of India
(RBI) started promoting automation in banking to improve customer service, book
keeping, MIS and productivity. The banking sector has undergone a major
revolution due to the adoption of information technology. It was the
introduction of computer system which created right atmosphere for online
banking in India. The Indian banking sector, after economic liberalization of
1991, has been the hallmark of innovation and use of technology. This has been
facilitated by the development of world-class software and hardware system by
some of the leading Indian IT companies such as Infosys, Wipro and TCS.[1]
The massive dose of computerization
and use of technology was the result of recommendation of a "Committee on
Mechanization in the Banking Industry" formed by Reserve Bank of India in
1984. The committee was headed by Dr C Rangarajan, then Deputy Governor,
Reserve Bank of India. The banks introduced 'MICR Technology" and
standardized cheque forms and encoders after the recommendation of this
committee.
On the recommendation of
"Committee on Computerization in Banks" headed by Dr. C.R.
Rangarajan, all the settlement operation were computerized in the clearing houses
of RBI at Bhubaneshwar, Guwahati, Jaipur, Patna and Thiruvananthapuram. Further
the 'National Clearing of inter-city cheques' at Kolkata, Mumbai, Delhi,
Chennai and MICR were set up on the basis of recommendation of this committee.
Another committee on "Technology
issues relating to payments system, cheque clearing and securities settlement
in the banking industry" was set up in 1994. Mr. WS Saraf, Executive
Director, Reserve Bank of India was chairman of the committee. Funds Transfer
(EFT) system, a BANKNET communications, MICR clearing of cheque in all branches
of all banks were introduces on the recommendation of this committee.
'Electronic Fund Transfer (EFT) was made on the recommendation of
"Committee for proposing Legislation on Electronic Funds Transfer and
other Electronic Payments (1995)".
The global business environment
witnessed many changes in the last decade of the 20th century, among which is
"electronic commerce or exchange of products and services through Internet
and telecommunication networks" (Kalakota & Whinston, 1997). Most of
the industries have been influenced by this emerging technology-based approach
to business (Gunasekaran & Love, 1999). Previous literature on IT in
developing countries has focused on development of national policies (Bhatnager
& Odreda, 1992; Madon, 1992), development of manpower (Aladwadni, 2001;
Bhatnager, 1992; Kanungo, Sadavarti, & Srinivas, 2001; Montealegre, 1998;
Pawar, 1992), using tested technologies, managing IT investments (Avgerou,
1998; Heeks, 2002;), and role of consultants in deploying technologies (Palvia,
Palvia, & Zigli, 1992). However, the impact of electronic commerce has been
apparent in the banking and financial services industry when compared with
other industry segments (Bughin, 2004; eMarketer, 2000).
It is clearly evident that use of
internet banking will remain and continue to grow in Asian countries with the
further penetration of internet services. Internet usage and Internet banking
has grown to 45.4 million by 2006 in the Asia Pacific region (Jaffe, 2003). The
percentage of banks that have launched on-line banking products and services
has grown from 6% in 1998 to 75% in 2003 and the present scenario is that
almost all banks offers on line banking products and services.
According to IDC, markets like Korea
and Singapore have nearly 10% of their population banking over the Internet
during the same period. Although these markets are way ahead of India both in
terms of Internet penetration and on-line banking penetration, there is immense
potential in India for the internet penetration and banking service through
electronic channels. It is evident from the literature that banks across the
world are motivated to implement e-banking to achieve either top-line or
bottom-line benefits. This is achieved through increased market share due to
product delivery convenience and product innovation (Jaleshgari, 1999; Orr,
1999). Further, it is found from the literature that banks in the developed
markets with established telecommunications, commercial, and legal
infrastructures and possessing the necessary resources and levels of
operational efficiency in terms of costs and revenue have a greater chance of
successfully implementing e-banking (Goodman, 1999; Messmer, 1999). According
to Kalakota & Whinston, (1997) there are new opportunities for the banks in
the form of re intermediation in the e- commerce market by identifying
themselves as "trust authorities to validate and stand as security between
business and consumers".
Although the Internet is revolutionizing
the way in which companies offer their products and services, studies relating
to customer acceptance of this technology are limited (Meuter, Ostrum,
Roundtree, & Bitner, 2000). An understanding of different dimensions of
creating value to the customer through the use of new technology and its impact
on their performance in terms of return on investment is always a matter of
concern for the banking and financial services industries (Lucas, &
Spilter, 1999). Liao &Cheung, (2002) observed that individual expectations
regarding "accuracy, security, transactions speed, user-friendliness, user
involvement, and convenience" were the most important quality attributes
in the perceived usefulness of Internet-based e-banking. Trust is also one of
the important determinants of successful e- banking (Suh & Han, 2002). Many
researchers have argued that trust is essential for understanding interpersonal
behavior and is relevant to e-banking. There is generally agreement among the
researchers that trust is most significant long-term barrier for realizing the
potentials of Bto Ce-commerce and not just a short-term issue, (Gefen, 2002;
Jarvenpaa, Tractinsky, & Vitale, 2000). Different models have been proposed
by researchers to measure the impact of e-banking. A model was proposed for
evaluating the business value of e-banking channels involving an internal view,
(Stamoulis, Panagiotis, & Drakoulis, 2002) where the channel is considered
as a resource whose utilization must be maximized, and an external view, where
the channel as an interface to the bank's customer base should enable and
support customer relationship management. Previous research also reveals that
the effectiveness of Internet banking is related to the size of a bank and is
projected to have significant impacts on various elements of the banking
system, which is faced with many challenges. (Courchane, Nickerson, &
Sullivan, 2002)
There is an intense debate in the
economic literature regarding the effect of developing the information and the
communication technology (ICT) infrastructure on the pace of economic
development of a country (Baliamoune, 2004). A report of the World Bank
(McNamara, 2003) outlines that ICT development is not an end in itself, but
rather a tool that can be used to increase the capacity of poor and
underdeveloped countries to accelerate economic development, to connect to the
world, and to increase the opportunities offered to their citizens (Hadidi,
2003). On the other hand, the development of ICT has to be directed towards
areas where it can create the maximum economic and social effect; therefore,
the ICT policy has to use a strategic approach, identifying the main priorities
at national and [2]regional
levels. ICT strategies are only effective and sustainable if they are integrally
linked to broader, more comprehensive development and poverty-reduction
strategies (Steinberg, 2003).
There are mainly two role played by
information technology in the banking sector. One is related to supportive
functions as enables of different services, and second, the strategic role in
providing strategic leadership in the field. The development of new products
which may give the competitive edge using information technology platforms is
the strategic role where as preparing the platform for business process
reengineering and IT based financial products is the supportive or enables
role. Both the roles have vital importance in banking sector as it leads to
higher customer satisfaction and retaining the existing customer whereby
reducing the need and cost of attracting new customers In the emergence of
e-banking and payment system, both play a vital role as infrastructure for
ecommerce (Raihan A. 2001).
Online banking is becoming the
indispensable part of modern day banking services. It is expected that 60% of
retail banking dealings will be online in ten years' time. Most of the Indian
banking customers are likely to prefer the online banking activity but with
ensured security.
A big concern about information
technology on service delivery channels is security of transaction. According
to Buchanan and Gilles (1990), "security is the condition of being
protected against danger, loss, and criminals". In common language, we
understand that, security is similar to safety, and banks must ensure full
proof security of banking activities. The ultimate satisfaction of any value
added banking facility offered to the customer is arrived only with the
security level attached with that facility in India.
Internet banking is the newest
delivery channel to be offered by retail banks in many developed countries. It
allows customers to conduct financial transactions on a secure website operated
by their retail or virtual bank. In this case, the internet is used as a
message carrier where the customer uses a PC and a modem or local area network
to connect to the bank using its online website or software provided by the
bank. In India, Internet banking is offered to customers on the basis of their
requirements.
Boon and Yu (2000) has defined
'E-channels' as the methods of delivering service products using electronic
media such as the telephone, internet and automated teller machines (ATMs)
These delivery methods have become an increasingly important technique to
retain customers in today's dynamic banking environment since customers can
make withdrawals, deposits and access balances at their own convenience.
E-Channels are preferred by the Indian customers nevertheless of their socio
economic back ground. To enhance speed and efficiency of delivery of services
banks have equipped themselves with the latest of technology application such
as "Core Banking". Technological innovation and exposure creates a
smooth competitiveness among the nationalized and private sector and foreign
sector banks.
Major Contribution of Technology in
Indian Banking Sector
Banking is an industry that provides
vital service and support to the economic and financial sectors. It is
information technology which enables banks in meeting such high expectations of
the customers. who are more demanding and are also more techno- savvy compared
to their counterparts of the yester years. Present day customers are tech savvy
and cannot wait for their banking needs. For them the banks have to use
technology to provide instant banking facility without the constrains of branch
or time. Technology has been providing solutions to banks to take care of their
accounting and back office requirements. Core Banking Solutions (CBS): CBS
enables banks to consolidate their technology platforms across functions and
geographies leveraging cost and at the same time acquiring flexibility and
scalability to adapt to a fast changing and competitive environment. In core
banking, banks are getting their data aggregation layers in place to facilitate
projection of data in the form of static and dynamic reporting capability. The
percentages of such branches has increased by 79.4% at end March 2009 to 90% at
the end of March-2010.
Magnetic Ink Character Reader (MICR)
MICR was introduced in 1987 in the four metros cities. Initially the MICR clearing
was available only in 14 clearing centers, which included the upcoming cities
such as Pune, Trivandrum, Kanpur, Hyderabad, Japura, Nagpur, Baroda, Bangalore,
Ahmadabad Gauhati. This facility was further extended to another eight centers.
These 22 centers are the one where volume of clearing transactions is very
large and they virtually cover the majority of transactions.
Automated Teller Machine (ATM): An
ATM is an Electronic Fund Transfer terminal facilitating cash deposits, inter
and intra transfer between accounts, balance enquiries along with mini
statement of accounts, cash withdrawals and pay bills. ATM itself can provide
information about accounts of customers and also receive information's and
instructions from customers like stop instruction, auto pay, cheque drop, etc.,
Internet Banking
(I-Banking/E-Banking): Internet banking (or E-banking) means any user with a
personal computer and a browser can get connected to his bank's website to
perform any of the virtual banking functions. In internet banking system every
bank has a centralized database that is connected with other banking system
through web-based environment. All the services that the bank has permitted on
the internet are displayed in menu. Through that any service can be selected by
the customer and further the demo or working manual is provided by the nature
of service. It would be a borderless entity permitting anytime, anywhere and
anyhow banking. The intranet network connects the various locations of the same
organisation and gives connectivity to these locations with the central office.
However, intranet can be used only in the organisation which has created them.
SWIFT is a live example of intranet application.
Mobile Banking/Phone Banking: In
October, 2008, the first measure to regulate mobile banking in India was start
up. Since then, it has progressively liberalized the manner and extent to which
banks and their customer can conduct mobile banking. Mobile banking can prove
to be an important extension of banking to the far flung a[3]reas
of the country where there is neither a bank branch nor there is internet
connectivity. Today, mobile phones have enhanced the functioning of the banks
in India to facilitate intra and interbank funds transfer between bank
accounts. In telephone banking, the telephone is used as a message carrier to
enable person to person or voice activated automated communication between the
bank and the customer. Mostly telephone banking uses an automated phone
answering system with phone key[4]pad
response or voice recognition capability in India.
Credit Cards/Debit Cards: The Credit
Card holder can spend wherever and whenever he wants with his Credit Card.
However this spending cannot be beyond the credit card limit. In Credit Card
you spend first and then you pay on the due date or before it. In case of a
Debit Card, the user has to deposit in his bank account in advance and this
deposited amount become the upper limit. This limit reduces when you make
purchase using debit card and increases when you deposit the money in your
account. When the debit card is used, money is transferred from buyer's account
in the bank to the account of the seller. The bank never faces a default
because the amount spent is debited immediately from the customer's account.
Smart Card: Banks are continuously
adding new
services to their existing one to
enhance security and provide new service, this services are provided through
Smart Cards. Smart Cards are the new generation card where lot of information
can be stored, with enhanced security features and can be used for different
purposes. These card can also be used to store personal information like
medical and health history, personal banking and personal preferences. Smart
card technology is now familiarized in India.
Automated clearing House (ACH):
Automated clearing house (ACH) is an electronic network for financial
transaction. ACH processes large number ofdebit and credit transaction in
batches. Computers are deployed in clearing house to speed up the process and
clearing the operations quickly and efficiently which is voluminous work.
Electronic Fund Transfer: The
customer has adopted to electronic payments in India in big way. From less than
half a percent of transactions in the electronic mode in 2001, today the
process is close to about 30 crores transactions per year in the electronic
mode. RBI's initiative is moving "High Value Clearing" to electronic
modes. It is a step aimed at creating a safer, secure funds transfer route.
National Electronic fund Transfer
(NEFT): National Electronic Fund Transfer (NEFT) is an online system for
transferring funds of Indian Financial Institution. This facility is used
mainly to transfer funds below Rs. 2,00,000/ The NEFT system in India has been
in operation from 21 November 2005. NEFT covers all banks which were
participating in the special electronic funds transfer (NEFT) clearing. Public
key infrastructure (PKI) technique is used in NEFT for maintaining security.
Real Time Gross Settlement (RTGS)
System: It is an electronic fund transfer system where the fund transfer take
place from one bank to another on real time and gross basis. Gross settlement
means the transaction is settled on one to one basis without bunching or
netting with any other transaction. Once the transaction is processed, payment
is final and irrevocable. It also provides the means for risk- free and credit
push-based fund transfers settled on a real-time basis with the central bank
money. There are 55000 branches of different banks using RTGS for inter-bank
funds. This is the widest coverage of banking using RTGS in the whole world.
Indian Financial Network (IN FIN ET):
Institute for Development and Research in Banking Technology (IDRBT)
implemented the Indian Financial Network, the INFINET a 'one-of-a-kind'
initiative for the banking sector aimed at sharing expensive IT resources so as
to achieve economies of scale. One of the notable achievements of IDRBT's has
been the implementation of Public Key Infrastructure (PKI) based on electronic
data transfer with very high security levels. The Institute has also developed
a messaging standard known as Structured Financial Messaging System (SFMS) with
security features superior even to SWIFT.
Security in Banking: Security in an
Information Technology based transaction processing environment is also very
much essential and critical. Adequate security controls must be exercised in
place to protect the consumer interest. This includes the validation of
transactions with the maker- checker concept, transmission of encrypted form of
electronic messages over a network, due authentication by means of providing
for digital signatures and warehousing of electronic records in conformity with
the provisions of the "Information Technology Act, 2000 and amendment Act
2008".
Society for Word wide Interbank
Financial Telecommunication (S.W.I.F.T): The S.W.I.F.T provides reliable and
expeditious telecommunication facilities for exchange of financial message all
over the world. Presently Mumbai acts as the gateway for S.W.I.F.T. Soon other
cities will be joined in this network either through leased lines or public
data network. The majority of international interbank messages use the
S.W.L.F.Tnetwork.
BANKNET: It is an internet based
communication network. It provides speed of financial transaction. BANKNET had
been set up in 1991 by the RBI, and is meant to facilitate transfer of
inter-bank (and inter- branch) messages within India by Public Sector banks who
are members of this network.
Institute for Development and
Research in Banking Technology (IDRBT): The main purpose of IDRBT is to adopt
research and development as well as consultancy in the application of
technology to the banking and financial sector in the country. Reserve Bank of
India (RBI) established IDRBT in 1996.
OBJECTIVES AND HYPOTHESES
This study seeks to examine the
impact of technology on customer satisfaction in banking services related with
e-channels such as ATM, Tele- banking Mobile banking and Internet banking in
National Capital Region Delhi.
In pursuance of the above objectives,
the following hypotheses were formulated for testing:
? H01 There is no impact of technology
on customer satisfaction on banking services in NCR Delhi.
?H02 There are no significant
characteristics/ factor related to technology in banking services[5].
RESEARCH METHODOLOGY
Sampling Unit, Sample Selection and
Sample Size
The population studied here is Indian
retail bank customers in Delhi and NCR region. The sampling unit was the
customers of four selected banks, two banks from public sectors and two banks from
private sector. (i.e. State Bank of India, Punjab National Bank, ICICI bank
& HDFC Bank) who has an account in any branch located in NCR Delhi. Random
sampling method was adopted to select the customers. There was no
discrimination on the bases of occupation, age, or educational level. The
sample is broadly representative of the population for purposes of cross
sectional survey. Sample selection was to ensure generalization and validity of
findings. Total 400 respondents were selected which comprises of 100
respondents from each bank.
Sampling procedure: To obtain a
representative sample, a probability sample of population was drawn. 400
respondents were divided equally among the four selected banks. In each bank
simple random sampling method was adopted. In simple random sampling every
member of the population has an equal chance of being selected in sample.
Data Collection Method
The main instrument used for data
collection in this research was the questionnaire; the responses have been
collected by means of face-to-face interviews by the author.
Measurement Scales Employed
The overall satisfaction of the
respondents towards the provision of different services was gauged using a
questionnaire containing close-ended question, which were designed to ascertain
the satisfaction level of the respondents using a five point Likert scale with
following options: Excellent, Good, Satisfactory, Poor, Worst. Excellent being
the highest satisfaction level followed by good, satisfactory and poor. Worst
was considered as the no satisfaction level. The respondents were asked to read
the questions and then choose the option for their response. Questions were
explained to the respondent if he/she could not understand a particular
question. Prior to the final survey, the questionnaire was pre-tested using a
sample of respondents similar in nature to the final sample.
Research and Statistical Tools
Employed
The research and statistical tools
employed in this study are frequency analysis, factor analysis, and ANOVA
(Analysis of variance). SPSS 16 was used to perform the statistical analysis
The reliability of the data was carried out by using Cronbach's Alpha Value.
Frequency analysis on the main factor under study, indicated overall
satisfaction levels of the respondents with retail banking in general. ANOVA
was employed to find the significant factor which will determine the overall
customer satisfac[6]tion.
Sampling procedure: To obtain a
representative sample, a probability sample of population was drawn. 400
respondents were divided equally among the four selected banks. In each bank
simple random sampling method was adopted. In simple random sampling every
member of the population has an equal chance of being selected in sample.
Data Collection Method
The main instrument used for data
collection in this research was the questionnaire; the responses have been
collected by means of face-to-face interviews by the author.
Measurement Scales Employed
The overall satisfaction of the
respondents towards the provision of different services was gauged using a
questionnaire containing close-ended question, which were designed to ascertain
the satisfaction level of the respondents using a five point Likert scale with
following options: Excellent, Good, Satisfactory, Poor, Worst. Excellent being
the highest satisfaction level followed by good, satisfactory and poor. Worst
was considered as the no satisfaction level. The respondents were asked to read
the questions and then choose the option for their response. Questions were
explained to the respondent if he/she could not understand a particular
question. Prior to the final survey, the questionnaire was pre-tested using a
sample of respondents similar in nature to the final sample.
Research and Statistical Tools
Employed
The research and statistical tools
employed in this study are frequency analysis, factor analysis, and ANOVA
(Analysis of variance). SPSS 16 was used to perform the statistical analysis
The reliability of the data was carried out by using Cronbach's Alpha Value.
Frequency analysis on the main factor under study, indicated overall
satisfaction levels of the respondents with retail banking in general. ANOVA
was employed to find the significant factor which will determine the overall
customer satisfaction.
In order to find the impact of the
technological factors on the customer satisfaction, customers were asked to
give their responses from excellent to worse. Excellent was given the score of
5, followed by good-4, satisfactory -3 poor-2 and worse as 1. These responses
have been shown in the table-3. The mean score of two or less than two has been
taken as poor satisfaction level. The mean score between two to three has been
considered as satisfactory level. The mean score between three to four has been
considered as positive or good satisfaction and any mean score above 4 is
considered as excellent satisfaction level. Higher the mean score, higher is
the satisfaction level similarly lower the mean score (less than two) will
indicate lower satisfaction level or no satisfaction level.
Based on the mean score level as
indicated in the table-3, it was found that all the characteristics of the
e-banking channels have mean score above 2. This indicates that generally the
customers have given satisfactory score to the e-banking channels facilitated
by the technology implementation. Also there are 17 characteristics which have
mean score above 3 indicating that the customer satisfaction is positive. This
support the assumption that the technology has a positive [7]impact
on banking services and leads to the rejection of H01 and conclude that
technology has a positive impact on customer satisfaction on the banking
services in NCR Delhi
ANOVA Analysis One way ANOVA was
performed on the basis of occupation, age group education of the respondents and
the bank used by these respondents. The objective of the analysis was to find
if there are any significant characteristics related to different aspects of
technology in the banking on the basis of these demographics. The researchers
have taken occupation as a factor for ANOVA. We find that there are three
characteristics, where there is significant difference that exists among the
different occupation of the respondents. These characteristics are
"response to query, availability of cheque drop box, queues at ATM".
These differences are probably related to the availability of time, urgency of
work and the nature of business/ occupation. Similarly when we have taken the
age as a factor for ANOVA we find that there are only two characteristics
where, there is significant difference existing among the different occupation
of the respondents. These characteristics are in response to query,
availability of cheque drop box. These differences are probably due to the use
of technology driven channels by particular age group especially younger
generation and not across all age groups. When we look at education as one of
the factors for ANOVA analysis we find that there is significant difference
that exists among the respondents for the same two characteristics: "response
to query, availability of cheque drop box".
However, when we take bank as factor
for ANOVA analysis we find that there is significant difference that exists
among the of the respondents in many characteristics such as "response to
query, availability of cheque drop box, queues at ATM, availability of cash,
printed statement of transaction, time required to get a response, account
balance enquiry, security of transaction, SMS reminder/ confirmation of
transaction and different request through mobile banking. This further
strengthens the arguments that there are significant variances in customer
responses.
When we look at the overall ANOVA
analysis, we find that there are significant difference in the responses in
many characteristics such as "response to query, availability of cheque
drop box, queues at ATM" on the basis of occupation, educational
qualification of the respondents and across and banks. Whereas some
characteristics such as "time to process request, cash deposit facility,
printed statement of transaction time required to get a response availability
of Networked (shared) ATMs, account balance enquiry Security of transaction,
SMS reminder/confirmation of transaction, different requests on mobile"
are significant characteristics across the banks, which will have an impact on
customer satisfaction. Hence we reject H02 and conclude there are significant
characteristics related to technology in banking services as indicate above and
all the banks should ensure that these characteristics are taken care of in
order to enhance customer satisfaction.
The impact of science and technology
on banking has been profound, revolutionizing the industry in numerous ways.
Here's a brief overview:
Automation and Efficiency: Science
and technology have enabled banks to automate various processes, reducing the
need for manual intervention. This has significantly increased operational
efficiency, leading to faster transactions, reduced errors, and lower costs.
Digital Banking: The advent of the
internet and mobile technology has facilitated the rise of digital banking.
Customers can now perform various banking tasks online, such as checking
account balances, transferring funds, paying bills, and applying for loans.
This has led to greater convenience and accessibility for customers, as they
can bank anytime, anywhere.
Electronic Payments: Science and
technology have played a crucial role in the development of electronic payment
systems, such as credit/debit cards, online payment gateways, and mobile
wallets. These systems have made transactions faster, more secure, and more
convenient for both consumers and businesses.
Data Analytics and Personalization:
Banks now have access to vast amounts of data about their customers' financial
behavior. Advanced analytics techniques allow banks to analyze this data to
gain insights into customer preferences and behavior. This enables them to
offer personalized products and services tailored to individual needs,
enhancing customer satisfaction and loyalty.
Risk Management: Science and
technology have improved banks' ability to assess and manage risks. Advanced
algorithms and models can analyze market data and customer behavior in
real-time, helping banks identify potential risks and take proactive measures
to mitigate them.
Blockchain and Cryptocurrency:
Emerging technologies like blockchain have the potential to revolutionize
banking by providing secure, transparent, and tamper-proof record-keeping
systems. Cryptocurrencies, which are powered by blockchain technology, offer alternatives
to traditional fiat currencies and could potentially disrupt the existing
financial system[8].
Regulatory Compliance: Science and
technology have also helped banks comply with increasingly complex regulatory
requirements. Automated systems can monitor transactions for suspicious
activity, ensuring compliance with anti-money laundering (AML) and
know-your-customer (KYC) regulations.
Overall, science and technology have
transformed the banking industry, making it more efficient, convenient, and
secure for both banks and their customers. However, these advancements also
bring challenges such as cybersecurity threats and the need for continuous
innovation to stay competitive in a rapidly evolving landscape.
Digital Transformation: Banks have
undergone a significant digital transformation, shifting from traditional
brick-and-mortar branches to digital platforms. This transformation has been
driven by advancements in technology such as cloud computing, artificial
intelligence (AI), and big data analytics. Digital banking platforms offer
customers a seamless and personalized experience, allowing them to access
banking services through websites, mobile apps, and other digital channels.
Artificial Intelligence and Machine
Learning: AI and machine learning technologies are being used by banks to
improve customer service, streamline operations, and enhance risk management.
Chatbots and virtual assistants powered by AI provide instant customer support,
while machine learning algorithms analyze vast amounts of data to detect
patterns, identify trends, and make data-driven decisions.
Biometric Authentication: Biometric
authentication methods, such as fingerprint scanning, facial recognition, and
voice recognition, have become increasingly common in banking. These
technologies provide a higher level of security and convenience compared to
traditional authentication methods like passwords and PINs.
Mobile Banking: The proliferation of
smartphones and mobile devices has fueled the growth of mobile banking. Mobile
banking apps allow customers to perform various banking tasks on the go,
including account management, bill payment, and mobile check deposit. Banks are
continually investing in mobile banking technology to improve usability,
security, and functionality[9].
Open Banking: Open banking
initiatives leverage application programming interfaces (APIs) to enable
third-party developers to build applications and services that access bank
account data[10]. This
allows customers to securely share their financial information with third-party
apps for budgeting, financial planning, and other purposes. Open banking
promotes innovation, competition, and collaboration within the financial
services industry.
Cybersecurity: As banks embrace
digital technologies, cybersecurity becomes a top priority. Banks invest
heavily in cybersecurity measures to protect customer data, prevent fraud, and
ensure the integrity of their systems. Advanced cybersecurity solutions, such
as encryption, multi-factor authentication, and real-time monitoring, help
banks defend against cyber threats and comply with regulatory requirements.
Blockchain and Distributed Ledger
Technology (DLT): Blockchain and DLT have the potential to transform banking by
providing decentralized, transparent, and immutable record-keeping systems.
These technologies can be used for various applications, including cross-border
payments, trade finance, and smart contracts. Banks are exploring blockchain
solutions to improve efficiency, reduce costs, and enhance security in their operations.
Regulatory Technology (Regtech):
Regtech refers to the use of technology to facilitate regulatory compliance in
the financial industry. Banks leverage regtech solutions to automate compliance
processes, monitor regulatory changes, and ensure adherence to regulatory
requirements. Regtech helps banks reduce compliance costs, mitigate risks, and
enhance regulatory transparency.
In summary, science and technology
have profoundly impacted the banking industry, driving innovation, improving efficiency,
and enhancing the customer experience. As technology continues to evolve, banks
will need to adapt and innovate to stay competitive in the dynamic landscape of
modern banking.
Conclusion:
Analysis of the customer responses
indicates that technology has a positive impact on the customer satisfaction on
banking services in NCR Delhi. It indicates that inclusion of technology driven
channels such as ATM Internet banking. Tele- banking and Mobile banking has
helped the banks to improve the customer satisfaction and increased retention
of customers which is a win-win situation for both banks and customers. The
study has found that there are characteristics which will have an impact on the
satisfaction levels of the customers. The most significant characteristics are
"response to query, availability of cheque drop box, queues at ATM"
across occupation, educational qualification of the respondents and across
banks. Other characteristics such as "time to process request, cash
deposit facility, printed statement of transaction time required to get a
response, availability of Networked (shared) ATMs, account balance enquiry,
Security of transaction, SMS reminder / confirmation of transaction, different
requests on mobile" are significant characteristics across the banks. In
general, today's people live in an IT era, so the technological advancement and
interaction in banking service industry is completely inevitable and most
invited. The technological development has enhanced all the segments to update
their business and individual operations in a simplified and most convenient
manner and banking industry is not a exception to it. The technological
advancement and intervention in the banking sector not only facilitates the
banks to offer value added financial services to its customers but also helps
to maintain the bulk volume of daily financial transactions and constructing a
wide range of data warehousing, so that the bank can construct, develop and
maintain a complete data base of the customer. This database will be used to
build up strong customer relationship management. The technology enables retail
delivery channels such as ATM, Internet banking, Mobile banking. Tele- banking
which has helped the banks to reduce their transaction cost and enhanced the convenience
to the customers to a great extent. The 24x7 banking was made possible because
of technology enabled services and one click banking is the result of the
technology.[11]
[1] https://www.linkedin.com/pulse/impact-technology-banking-kaustuva-pradhan#:~:text=One%20of%20the%20most%20significant,comfort%20of%20their%20own%20homes.
[2] https://www.linkedin.com/pulse/impact-technology-banking-kaustuva-pradhan#:~:text=One%20of%20the%20most%20significant,comfort%20of%20their%20own%20homes.
[3] https://www.researchgate.net/publication/269738960_Impact_of_Technology_on_Banking_Sector_in_India
[4] https://www.sciencedirect.com/science/article/pii/S1877042811018283
[5] https://www.openteqgroup.com/blogs/impact-of-it-on-banking-sector
[6] https://www.iibf.org.in/documents/Dr.%20Bansal%20Final%20Report.pdf
[7] https://www.icommercecentral.com/open-access/the-impact-of-technological-innovation-on-bank-performance.php?aid=87293
[8] https://indiafreenotes.com/technological-impact-in-banking-operation/
[9] https://www.icommercecentral.com/open-access/influence-of-technology-on-the-performance-of-indian-banking-sector--a-review.php?aid=85794
[10] https://www.bankingfinance.in/impact-of-information-technology-in-indian-banking-industry.html
[11] https://core.ac.uk/download/pdf/162155908.pdf
Article Information
IMPACT OF SCIENCE AND TECHNOLOGY ON BANKING BY: RAJESH GOVIND DEKATE
Authors: RAJESH GOVIND DEKATE
- Journal IJLRA
- ISSN 2582-6433
- Published 2024/04/20
- Issue 7
About Journal
International Journal for Legal Research and Analysis
- Abbreviation IJLRA
- ISSN 2582-6433
- Access Open Access
- License CC 4.0
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