Digital technology in the realm of banking: A review of literature

Abstract

This paper reviews the theoretical literature on the growth of digital and information technology in the Indian banking industry. The stupendous advancements in digital technology have transformed the way banks operate. The commencement of the age of digital business has been disrupting the business environment and breaking out innovative and singular ways of doing business. One of the latest outcomes of this is digital banking. Digital banking technologies have escalated over the years, with the availability of a large portfolio of products such as deposits, ATMs, debit cards, mobile payments, and the like. There is an immense possibility of using the infrastructure of the digital age to create opportunities-both local and global. The increase in competition and various other challenges in the banking sector are pushing the banks to adopt new digital models that present unique sources of value to them. This paper examines the extent and the direction of the effect of digital technology in the domain of Indian banking. 1. Introduction The world has been stunned by the rapid advances in technology over the past several decades. It has touched and has left an indelible mark on everything and anything that human beings can fathom. There are innumerable instances of technology creating and breaking lives and businesses-one of these being the business of banking. The intrusion of digital technology into the sphere of banking has brought about a paradigm shift in banking-creating what is now referred to as Digital Banking. In a broad sense, digital banking refers to the employment of technology to conduct banking transactions in a smooth manner. It, therefore, includes online banking, electronic banking and mobile banking-the terms that are of common usage. Contrary to traditional banking, digital banks aim at developing adaptable digital products and services to meet the needs of their digital customers. While traditional online banks use pre-designed software to increase their reach, presence and respond to customer needs, digital banks use IT experts to understand and comprehend their customers, and design their products accordingly. Needless to say, the infusion of technology has now become indispensable for any industry, and lagging behind can have severe repercussions. Embracing the challenge is what an industry should aim for, especially when that industry is highly dependent upon its clientele. The aim of this paper is to examine the extent and the direction of the effect of digital technology in the domain of Indian banking. An extensive review of relevant literature available in journals, papers, and research articles has been undertaken, along with data and information from secondary sources such blogs and sites. The layout of the paper is as follows: Section II provides insights into the evolution of technology in the banking sector in India, and the digital transformation that followed. Section III throws light on the scope of digital banking and the ground that it covers. Section IV and V examine the perspective of banks and customers, respectively, in this area. The challenges faced by India in adapting its banking sector to the peculiarities of technology have been highlighted in section VI. Finally, section VII gives the concluding remarks.