Government Initiatives are Boosting the India Digital Banking Industry Growth
Rising smartphone adoption,
increasing usage of mobile payment services, and government initiatives are the
leading factors driving the growth of India digital banking industry.
According to
TechSci Research report, “India Digital Banking Industry– Opportunities, 2015-2022,” the rising awareness among
consumers regarding the digital banking solutions, growing need for
convenience, increasing smartphone penetration in the country, etc., are some
of the factors fueling the digital banking industry in India. Digital banking
is defined by the Reserve Bank of India (RBI) as all current and future
electronic banking services offered by a bank with a license for the completion
of financial, banking, and other transactions, instruments through electronic
devices or equipment over websites (online banking), mobile phones (mobile
banking), or other digital channels that involve a high degree of process
automation, and cross-institutional service capabilities operating under
improved technical architecture and differentiated business strategy.
Along with traditional brick
and mortar banking locations, digital banking services are expanding, and the
RBI has announced the creation of Digital Banking Units to meet these demands
and expand the penetration of banking services across India. Each Digital
Banking Unit would include digital infrastructure and function as a specialized
fixed point business hub. Digital banking units do not use any paper,
unlike a conventional bank branch. The DBUs provide users with a full digital
experience in addition to cash withdrawal/deposit through ATMs/CRMs, including
the opening of bank accounts, fixed deposits & recurring deposits, printing
of passbooks, mobile banking, internet banking, issuing of debit cards, credit
cards, mass transit system cards, etc. The whole processing of paperless loans
for businesses and MSMEs is also included in services offered.
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Customers are able to
access banking services year-round in a cost-effective, accessible, and
paperless manner owing to DBUs, which hold the majority of critical
financial services in a secure and connected environment. Although these services are offered in self-service mode,
manual assistance is accessible during few hours of the day. Clients from
rural, semi-urban, tier III and below locations, older individuals, or
customers with little to no digital expertise are benefiting from
this assistance when it comes to using digital banking services. This exposure
is consequently raising the general public's understanding of digital
payments.
Moreover, these DBUs
are increasing customer convenience for tech-savvy customers by
enabling them to accomplish basic banking tasks quickly, easily, and securely
online. Customers in remote locations, particularly those with low banking
penetration, are also profiting from this because it drastically
reduces the cost of establishing and maintaining bank offices. Digital
Banking Units have a lot of advantages for banks as well. Banks are constantly
aiming to minimize their physical footprint in the current digital era in order
to achieve economies of scale. By establishing DBUs, banks can scale back the
size of their physical branches and improve their digital capabilities to
provide a wide number of self-service banking facilities. This will lower the
cost of the resources and infrastructure needed for a standard banking setup,
lowering operational costs.
On October 17, 2022, 75
digital banking locations in 75 Indian districts became operational. Each of
the 29 states and eight union territories currently has at least one digital
banking branch established (UTs). With four digital banking units each,
Karnataka, Tamil Nadu, Uttar Pradesh, Odisha, and Rajasthan are followed by
Gujarat, Kerala, Madhya Pradesh, Maharashtra, Punjab, Sikkim, and Telangana.
The India digital
banking industry is segmented based on total number of banks in India, total
deposits in India, total digital lending in India, total transactional value
paid digitally in India, total number of transactions paid digitally in India, total
number of ATMs in India, and competitional landscape. In terms of total digital
lending, the market is divided into bank type and segregated into public sector
banks, private sector banks, foreign banks and NBFCs. Out of which, private
sector banks held the majority of share as of 2022, due to their wide offerings
to customers. Also, the private sector banks are expanding their customer base
by launching new digital solutions. For instance, in 2022, ICICI Bank launched
iLens, a digital lending solution, powered by the TCS lending platform. Customers
can digitally avail housing loans in a hassle-free process through iLens. This
includes loan disbursement, uploading of documentation, quick sanctions, and
on-boarding via paperless login.
Key market players in the India
digital banking industry include:
- HDFC Bank Limited
- ICICI Bank Limited
- Bank of India Limited
- State Bank of India
- Axis Bank Limited
- Punjab National Bank
- IndusInd Bank Limited
- Bank of Baroda
- Kotak Mahindra Bank Limited
- Yes Bank Limited
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"The rising awareness
among people regarding the benefits offered by digital banking is fueling the
growth of this industry across the nation. Also, the government initiatives
such as launch of digital banking units, are contributing to the overall growth
of this industry. The RBI states that these digital banking units will
"allow clients to enjoy efficient, paperless, secured, and linked access
and better digital experiences of such products and services with the majority
of services being offered in self-service mode at any time, all year
round." said Mr. Karan Chechi, Research Director with TechSci Research, a
research based global management consulting firm.
India Digital Banking Industry By Total Number of Banks
in India (Bank Type), By Total Deposits in India (Deposit Type, Bank Type,
Region), By Total Digital Lending in India (Bank Type), By Total Transactional
Value Paid Digitally in India (Value, ), By Total Number of Transactions Paid
Digitally in India (Volume), By Total Number of ATMs in India (Bank Type), Opportunities, 2015-2022,” has
evaluated the growth of digital banking industry in India and provides
statistics and information on industry structure. The report is intended to
provide cutting-edge market intelligence and help decision-makers take sound
investment decisions. Besides, the report also identifies and analyzes the
emerging trends along with essential drivers, challenges and opportunities present
in digital banking industry in India.
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