A Strategic Analysis On Digital Banking With Reference To HDFC Bank

A STRATEGIC ANALYSIS ON DIGITAL BANKING WITH REFERENCE TO HDFC BANK
CHAPTER 1
INTRODUCTION
Digital banking is part of the broader context for the move to online banking, where banking
services are delivered over the internet. The shift from traditional to digital banking has been
gradual and remains ongoing, and is constituted by differing degrees of banking service
digitization. Digital banking involves high levels of process automation and web-based
services and may include APIs enabling cross-institutional service composition to deliver
banking products and provide transactions. It provides the ability for users to access financial
data through desktop, mobile, and ATM services.
A digital bank represents a virtual process that includes online banking and beyond. As an
end-to-end platform, digital banking must encompass the front end that consumers see, the
back end that bankers see through their servers and admin control panels and
the middleware that connects these nodes. Ultimately, a digital bank should facilitate all
functional levels of banking on all service delivery platforms. In other words, it should have
all the same functions as a head office, branch office, online service, bank cards, ATM and
point of sale machines.
The reason digital banking is more than just a mobile or online platform is that it includes
middleware solutions. Middleware is software that bridges operating systems or databases
with other applications. Financial industry departments such as risk management, product
development and marketing must also be included in the middle and back end to truly be
considered a complete digital bank. Financial institutions must be at the forefront of the latest
technology to ensure security and compliance with government regulations.
Banks in India as a whole were very reluctant to adopt the changes brought about by
technological advancement. A number of factors brought about the mechanization and
digitization in banking industry in India. The putting in place standard cheque encoders was
the first step forward in digital transformation in banking. Magnetic Ink Character
Recognition (MICR) helps in the sorting and processing of cheques with each bank branch
having an MICR code. The next step was more of a necessity than an innovation. Banking is
a repetitive job, and therefore a labour intensive one where the worker is prone to making
mistakes. In order to minimize errors and speed up the process, banks began using computer
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technology with standalone personal computers and then set up their own local area networks
(LAN).
Benefits Of Digital Banking

1. Customer Service: With internet freely available everywhere, all a customer needs to
access his account is a device and internet connectivity. It saves him time and expense as
he no longer has to travel to a bank to carry out transactions. He does not have to wait in
unending queues only to find that he will have to go to a different counter to get his job
done. Online services make it possible for him to sit in the comfort of his home or office,
or in fact even in a vehicle while travelling, and carry out transactions without having to
wait for anything.
2. 24/7 Availability: The customer is able to check his bank records anytime he wishes and
a number of banking services are available to him round the clock. Transferring money is
easier, quicker, and safer.
3. Time Constraint: A number of services required waiting for considerable periods. Banks
had boards put up at their branches specifying the time required for different services.
Even simply cashing a cheque took time. But with digital banking it is instant, with no
time constraints.
4. Online Bill Payment: This is a feature that saves customers a lot of time and expense.
Customers do not have to carry cash and queue up to pay their utility bills or other bills.
5. Lower Overheads: Digital banking has drastically reduced the operating costs of banks.
This has made it possible for banks to charge lower fees for services and also offer higher
interest rates for deposits. Lower operating costs have meant more profits for the banks.
6. Banking Benefits: With the increased convenience of anytime, anywhere banking, the
number of customers has increased for banks. Human error in calculations and
recordkeeping is reduced, if not eliminated. With records of every transaction being
maintained electronically, it is possible to generate reports and analyse data at any point,
and for different purposes.
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History of Digital Banking

The earliest forms of digital banking trace back to the advent of ATMs and cards launched in
the 1960s. As the internet emerged in the 1980s with early broadband, digital networks began
to connect retailers with suppliers and consumers to develop needs for early online catalogues
and inventory software systems.
By the 1990s the internet became widely available and online banking started becoming the
norm. The improvement of broadband and ecommerce systems in the early 2000s led to what
resembled the modern digital banking world today. The proliferation of smartphones through
the next decade opened the door for transactions on the go beyond ATM machines. Over 60%
of consumers now use their smartphones as the preferred method for digital banking.
The challenge for banks is now to facilitate demands that connect vendors with money
through channels determined by the consumer. These dynamic shapes the basis of customer
satisfaction, which can be nurtured with customer relationship management (CRM) software.
Therefore, CRM must be integrated into a digital banking system, since it provides means for
banks to directly communicate with their customers.
There is a demand for end-to-end consistency and for services, optimized
on convenience and user experience. The market provides cross platform front ends, enabling
purchase decisions based on available technology such as mobile devices, with a desktop or
Smart TV at home. In order for banks to meet consumer demands, they need to keep focusing
on improving digital technology that provides agility, scalability and efficiency.
1993 - Temenos AG is founded, a provider of banking software systems to retail, corporate,

universal, private, Islamic, microfinance and community banks.
1994 – (1) Online Banking is built into Microsoft Money. 100,000 households begin
accessing their bank accounts online.
- (2) Stanford Credit Union begins offering banking services via their website, paving
the way for credit unions and banks across the country.
1997 - Tangerine launches, becoming the first digital-only bank in Canada.
1998 - First Internet Bank launches, becoming the first digital-only bank in the U.S.
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2001 - Online banking hits 20 million users, with 8 different U.S. banks achieving at least a
minimum of 1 million online users.
2002 - Avoka was founded to help banks and financial institutions in their digital
transformations.
2007 - (1) The launch of the iPhone begins shifting digital banking from desktop computers
to smartphones.
(2) Kony, Inc. is founded to help banks transform their banking operations with a
cloud-based mobility, omnichannel and internet-of-things systems and services software
platform.
2009 - Online banking hits 54 million users in the United States.
2016 - Millennials succeed in fundamentally shifting digital banking preferences, signaling to

banks that they must move all services online.
2018 - Temenos acquires Avoka, the leading provider of digital customer onboarding
solutions for financial institutions.
2019 - (1) Temenos launches Temenos Infinity, a breakthrough digital front office product
with the most advanced cloud-native, cloud-agnostic, API first technology and design led
thinking.
(2) Temenos acquires Kony, the leading provider of mobile banking apps that support
conversational interfaces, artificial intelligence, augmented reality and wearable
technologies.
(3) According to Temenos’ 2019 state of digital banking report, 65% of digitally

active large banks reach the ‘Digital Promised Land’.
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What Digital Banking means for Banks?

A study conducted in 2015 revealed that 47% of bankers see potential to improve customer
relationship through digital banking, 44% see it as a means to generate competitive
advantage, 32% as a channel for new customer acquisition. Only 16% emphasized the
potential for cost saving.
Major benefits of digital banking are:
1. Business efficiency - Not only do digital platforms improve interaction with customers
and deliver their needs more quickly, they also provide methods for making internal
functions more efficient. While banks have been at the forefront of digital technology at
the consumer end for decades, they have not completely embraced all the benefits of
middleware to accelerate productivity.
2. Cost savings - One of the keys for banks to cut costs is automated applications that
replace redundant manual labour. Traditional bank processing is costly, slow and prone to
human error, according to McKinsey and Company. Relying on people and paper also
takes up office space, which runs up energy and storage costs. Digital platforms can
future reduce costs through the synergies of more qualitative data and faster response to
market changes.
3. Increased accuracy - Traditional banks that rely mainly on paper processing can have an
error rate of up to 40%, which requires reworking. Coupled with lack of IT integration
between branch and back-office personnel, this problem reduces business efficiency. By
simplifying the verification process, it's easier to implement IT solutions with business
software, leading to more accurate accounting. Financial accuracy is crucial for banks to
comply with government regulations.
4. Improved competitiveness - Digital solutions help manage marketing lists, allowing
banks to reach broader markets and build closer relationships with tech savvy consumers.
CRM platforms can track customer history and provide quick access to email and other
forms of online communication. It's effective for executing customer rewards programs
that can improve loyalty and satisfaction.
5. Greater agility - The use of automation can speed up both external and internal
processes, both of which can improve customer satisfaction. Following the collapse of
financial markets in 2008, an increased emphasis was placed on risk management. Instead
of banks hiring and training risk management professionals, it's possible for risk
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management software to detect and respond to market changes more quickly than even
seasoned professionals.
6. Enhanced security - All businesses big or small face a growing number of cyber threats
that can damage reputations. In February 2016 the Internal Revenue Service announced it
had been hacked the previous year, as did several big tech companies. Banks can benefit
from extra layers of security to protect data.
Back-end Banking Architecture
A key in which digital banks can gain a significant competitive edge is developing a more
robust IT architecture. By replacing manual back-office procedures with automated software
solutions, banks can reduce employee errors and speed up processes. This paradigm shift can
lead to smaller operational units and allow managers to concentrate on improving tasks that
require human intervention.
Automation reduces the need for paper, which inevitably ends up taking up space that can be
occupied with technology. By using software that accelerates productivity up to 50%, banks
can improve customer service since they will be able to resolve issues at a faster pace. One
way a bank can improve its back-end business efficiency is to divide hundreds of processes
into three categories:
1. Full automated
2. Partially automated
3. manual task
It still isn't practical to automate all operations for many financial firms, especially those that
conduct financial reviews or provide investment advice. But the more a bank can replace
cumbersome redundant manual tasks with automation, the more it can focus on issues that
involve direct communication with customers. The obstacles currently preventing banks from
investing in a more digital back-end environment are:
1. Banks have traditionally prioritized launching new products that are still difficult to
automate
2. Mergers and acquisitions, new products and government regulations have already
established complex IT architecture difficult to revise
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3. IT teams do not always grasp business priorities

4. Many banks lack the in-house IT expertise beyond traditional mainframe environments
Direction towards Digital Cash

Digital cash eliminates many problems associated with physical cash, such as misplacement
or the potential for money to be stolen or damaged. Additionally, digital cash can be traced
and accounted for more accurately in cases of disputes. As consumers find an increasing
number of purchasing opportunities at their fingertips, there is less need to carry physical
cash in their wallets.
Other indications that demand for digital cash is growing are highlighted by the use of peer-
to-peer payment systems such as PayPal and the rise of untraceable cryptocurrencies such as
bitcoin. Almost anything imaginable that can be paid with physical cash can theoretically be
paid with the swipe of a bank card, including parking meters. The problem is this technology
is still not omnipresent. Cash circulation grew in the United States by 42% between 2007 and
2012, with an average annual growth rate of 7%, according to the BBC.
The concept of an all-digital cash economy is no longer just a futuristic dream but it's still
unlikely to outdate physical cash in the near future. All digital banks are possible as a
consumer option, but people may still have a need for physical cash in certain situations.
ATMs help banks cut overhead, especially if they are available at various strategic locations
beyond branch offices.
Emerging Digital Solutions

Emerging forms of digital banking are:
1. BaaS – Banking as a Service (allows for third party integration)
2. BaaP – Banking as a Platform (for integrating core systems with software)
3. Cloud based Infrastructure (allows less reliance in IT staffs)
4. White Label Banking (such as co-branded credit card)
These solutions build on enhanced technical architectures as well as different business
models.
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Future of digital Banking

The decision for banks to add more digital solutions at all operational levels will have a major
impact on their financial stability. While not all banks are in a position to make quick
changes to IT infrastructure or the architecture on top of it, banks aiming to be disrupters can
move toward broad end-to-end automation can do so over about a six-month time frame.
What Is the difference between online and digital banking?
For the most part, these two words are synonyms. But we define online banking a bit more
narrowly than digital banking: online banking primarily focuses on remote deposits, money
transfers, bill pay and basic online management of accounts. Other synonyms for online
banking include internet banking, virtual banking and e-banking.
So, online banking focuses on digitizing the “core” aspects of banking, but digital banking
encompasses digitizing every program and activity undertaken by financial institutions and
their customers.
Risk and Challenges

1. Legacy Platforms
Legacy cores tend to be older and hold important information regarding banking, and
those can become obsolete and inaccessible with the shift to digital banking. These files
can be transferred and uploaded, however that takes a lot of manual labour and sometimes
institutions aren’t able to upkeep those files.
2. Finding the right people Transform
Some people are just used to the old school ways of operating and prefer in-person
banking. It can be complicated and some may not understand it well, so shifting to a
completely digital platform can cause a barrier of accessibility to certain audiences.
3. Winning and retaining customer’s Trust
With word of fraud, digital attacks, and cyber threats, winning and retaining customer
trust can be difficult. Even with smaller instances or one big one, this can derail any
momentum on gaining the trust of customers and they may turn to another method of
banking quickly.
4. Meeting regulatory system
With new regulations and rules in place as the shift to online banking continues, it is
sometimes difficult to maintain compliant to these rules as they are new, difficult to
understand, and may cost more capital to upkeep.
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Digital Banking Solutions

There are many different digital solutions which help cater to different customers’ needs.
These solutions come from the difference in loan software. ??Loan software puts into view
the design and facilitation of the service of providing loans.
There are multiple types of banking products and services. To qualify as a Digital Banking
Platform/Solution they must contain the following things:
1. Delivery of digital services through different channels

2. Be able to facilitate the services for quality consumer communication and service
3. Management of lending and non-lending products within a digital platform
4. Design use specifically for online banking
5. Support for third-party systems and networks
Digital Banking for Traditional Banks

These solutions relate to the most basic and popular form of digital banking. These are the
solutions that take brick and mortar banking options and shifting to their digital counterpart.
Whether that’s use online, or through a mobile app, switching gears to the digital counterpart
of their banking system could be a solution.
Finastra
An example of a single platform that helps consumers, businesses and employees, Finastra is
a scalable solution to help grow with their clientele. Including in house or hosted solutions,
Finastra is a quick innovative company that helps use design and scalability to help create an
easier online banking solution.
Cryptocurrency
An example of a single platform that helps consumers, businesses and employees, Finastra is
a scalable solution to help grow with their clientele. Including in house or hosted solutions,
Finastra is a quick innovative company that helps use design and scalability to help create an
easier online banking solution.
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What are digital banking platforms?
Digital banking platforms are financial services provided solely online—as opposed to online
banking which refers to specific online banking components that also have brick-and-mortar
operations (known as traditional banking). Digital banking platforms rely on process
automation, web-based services, and APIs to create fully digital banking services.
Many digital banking platforms encourage cross-institutional services by connecting their

services with other financial providers to offer customers complete digital banking services—
for example, by adding a third-party debit card to a digital bank’s products list. However, at
the core of digital banking platforms are the customers and the user experience. Striving for
convenience in a fast-paced world, digital banking platforms enable customers to potentially
manage all of their finances from their smartphone and other online channels including
payments, investments, spending analytics, and more.
Some of the features and capabilities digital banking platforms offer customers and
businesses include:
1. Checking and savings accounts
2. Competitive interest rates compared with traditional banking
3. Mobile apps
4. Financial management tools
5. Real-time transaction alerts
6. Digital wallets
7. Virtual cards and cardless payments
8. Person-to-person payments
9. Remote deposits
10. Deposit insurance
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11. Free ATM transactions with participating branches
12. Competitive FX rates or even zero rates
13. Fully compliance with regulators and deposit insurance
Digital banking platforms focus on modular infrastructure
The way people and businesses manage their money is changing. Digital banking platforms
are designed to be highly adaptive to accommodate changing customer needs and to
futureproof banking services against what comes next. By using modular services, digital
banking platforms can customise the offerings and add new functionalities faster and more
easily compared to legacy banking systems. This is made possible by creating banking
solutions independent of each other and in a way that supports adaptability to ongoing
changes. This cuts down on back-office resources and the cost of development, as well as
enabling digital banking platform providers to stay up-to-date with the latest user trends.
Adding digital assets to digital banking platforms
Some digital banking providers are now integrating digital asset solutions into their services.
Integrating digital asset services with other fiat services—such as payments, wallets, and
transfers—offers end-users even more flexibility and options for spending and managing
their money. Indeed, some investors, fintech’s, and venture capital funds are beginning to
make a sustained commitment to cryptocurrency, regarding it as the future of money. With
their fully digital services and modular approach, digital banking platforms can quickly adapt
and add new and upcoming services (such as digital assets) to their architecture—especially
compared with the adaptability and rate of adoption among traditional banks.
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CHAPTER 2
INDUTRY PROFILE AND COMPANY PROFILE
Banking Industry:
Banking is the lifeblood of a country and its citizens. Banking has aided in the development
of critical economic segments and ushered in a fresh era of development in the Indian
horizon. The ambitions and dreams of millions of individuals have been realised thanks to
this industry. Indian banks are now comfortably vying with the world's sophisticated banks.
Banking in India began in the first decade of the 18th century, with the establishment of The
General Bank of India in 1786. The Bank of Hindustan came in second. Both of these banks
have now gone out of business. Following this, three presidential banks were founded in
India: The Bank of Bengal, the Bank of Madras, and the Bank of Bombay. Following that,
the three presidential banks merged to become the Imperial Bank of India, which is currently
known as the State Bank of India.
The market grew in the 1900s with the formation of private-owned banks such as Punjab
National Bank in Lahore (1895) and Bank of India in Mumbai (1906). Since 1935, the
Reserve Bank of India has been responsible for overseeing the Indian banking sector. The
reserve bank was nationalised and handed wider responsibilities after India's independence in
1947. The Indian government nationalised 14 significant commercial banks in 1969, with
Bank of India being one of them. Six more private banks were nationalised in 1980.
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The Indian Banking sector is broadly classified into scheduled and non-scheduled banks:
The unit's scheduled banks are those that fall under the Reserve Bank of India Act, 1934's
2nd schedule. The scheduled banks have been additionally divided into Indian and
international banks, with Indian banks being further divided into public and private sectors.
Nationalised banks flourished at a pace of roughly 4% until the 1990s, which was close to the
average growth rate of the Indian economy. With the LPG changes of the 1990s, banks were
liberalised, and India embraced a different economic agenda for the country 's advancement.
For the very first instance, new private banks were granted a licence to provide banking
facilities. The New Generation tech-savvy banks became distinguished as a result of their
efforts. Global Trust Bank (later merged with Oriental Bank of Commerce), UTI bank (now
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known as Axis bank), ICICI bank, and HDFC bank are among the banks established as a
result of the new liberalisation approach.
FUNCTIONS
Banks as financial intermediaries are party to a transfer of funds from the ultimate saver to
the ultimate user of funds. Often, banks usefully alter the terms of the contractual
arrangement as the funds move through the transfer process in a manner that supports and
promotes economic activity. By issuing tradable claims (bank deposits) against itself, the
bank can add a flexibility to the circulating media of exchange in a manner that enhances the
performance of the payments system. These deposits may support the extension of personal
credit to consumers (retail banking) or short-term credit to nonfinancial businesses
(commercial banking). If so, the bank aids the management of liquidity, thus promoting
household consumption and commerce. By facilitating the collection of funds from a large
number of small savers, each for a short period, the bank promotes the pooling of funds to
lend out in larger denominations for longer periods to those seeking to finance investment in
larger capital projects. Financing investment may take the form of underwriting issues of
securities (investment banking) or lending against real estate (mortgage banking). By
specializing in the assessment of risk, the bank can monitor borrower performance; by
diversifying across investment projects, the bank minimizes some types of risk and promotes
the allocation of funds to those endeavours with the greatest economic potential. By
extending trade credit internationally (merchant banking), the bank can facilitate international
trade and commerce. As one last example, by lending to other banks in times of external
pressures on liquidity, the bank can manage core liquidity in the financial system, thus
potentially stabilizing prices and output (central banking).
To discharge its various functions, banks of all types manage highly leveraged portfolios of
financial assets and liabilities. Some of the most crucial questions for the banking industry
and state regulators center on questions of how best to manage the portfolio of deposit banks,
given the vital role of these banks in extending commercial credit and enabling payments.
With bank capital (roughly equal to the net value of its assets after deduction of its liabilities)
but a small fraction of total assets, bank solvency is particularly vulnerable to credit risk,
market risk, and liquidity risk. An increase in non-performing loans, a drop in the market
price of assets, or a shortage of cash reserves that forces a distress sale of assets to meet
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depositors’ demand can each, if transpiring over a period of time too short for the bank to
manage the losses, threaten bank solvency.
ORIGINS OF MODERN BANKING
The modern banking industry, offering a wide range of financial services, has a relatively
recent history; elements of banking have been in existence for centuries, however. The idea
of offering safe storage of wealth and extending credit to facilitate trade has its roots in the
early practices of receiving deposits of objects of wealth (gold, cattle, and grain, for
example), making loans, changing money from one currency to another, and testing coins for
purity and weight.
The innovation of fractional reserve banking early in this history permitted greater
profitability (with funds used to acquire income earning assets rather than held as idle cash
reserves) but exposed the deposit bank to a unique risk when later paired with the
requirement of converting deposits into currency on demand at par, since the demand at any
particular moment may exceed actual reserves. Douglas Diamond and Philip Dybvig have,
for example, shown in their 1983 article “Bank Runs, Liquidity, and Deposit Insurance” that
in such an environment, a sufficiently large withdrawal of bank deposits can threaten bank
liquidity, spark a fear of insolvency, and thus trigger a bank run.
Means of extending short-term credit to support trade and early risk-sharing arrangements
afforded by such devices as marine insurance appear in medieval times. Italian
moneychangers formed early currency markets in the twelfth century CE at cloth fairs that
toured the Champagne and Brie regions of France. The bill of exchange, as a means of
payment, was in use at this time as well.
Over the course of the seventeenth and eighteenth centuries, the industry transformed from a
system composed of individual moneylenders financially supporting merchant trade and
commerce, as well as royalty acquiring personal debt to finance colonial expansion, into a
network of joint-stock banks with a national debt under the control and management of the
state. The Bank of England, for example, as one of the oldest central banks, was a joint-stock
bank initially owned by London’s commercial interests and had as its primary purpose the
financing of the state’s imperial activities by taxation and the implementing of the permanent
loan. This period was also marked by several experiments with bank notes (with John Law’s
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experiment in France in 1719–1720 among the most infamous) and the emergence of the
check as simplified version of the bill of exchange.
Eighteenth-century British banking practices and structures were transported to North

America and formed an integral part of the colonial economies from the outset. The first
chartered bank was established in Philadelphia in 1781 and in Lower Canada in 1817.
Experiments with free banking—as a largely unregulated business activity in which
commercial banks could issue their own bank notes and deposits, subject to a requirement
that these be convertible into gold—have periodically received political support and have
appeared briefly in modern Western financial history. Public interest in minimizing the risk
of financial panics and either limiting or channelling financial power to some advantage has
more often, however, dominated and justified enhanced industry regulation.
BANK REGULATION
Various forms of bank regulation include antitrust enforcement, asset restrictions, capital
standards, conflict rules, disclosure rules, geographic and product line entry restrictions,
interest rate ceilings, and investing and reporting requirements. The dominant view holds that
enhanced regulation of this industry is necessary because there is clear public sector
advantage, or for protecting the consumer by controlling abuses of financial power, or
because there is a market failure in need of correction.
Where public sector advantage justifies the need for regulation, government intervention may
appear in the form of reserve requirements imposed on deposit-taking institutions for
facilitating the conduct of monetary policy or in the various ways in which governments steer
credit to those sectors deemed important for some greater social purpose. Limiting
concentration and controlling abuses of power and thus protecting the consumer have
motivated such legislation as the American unit banking rules (whereby banks were limited
physically to a single centre of operation) and interest rate ceilings (ostensibly designed to
prohibit excessive prices), as well as various reporting and disclosure requirements.
The latent threat of a financial crisis is an example of a market failure that regulation may
correct. Here, the failure is in the market’s inability to properly assess and price risk. The
systemic risk inherent in a bank collapse introduces social costs not accounted for in private
sector decisions. The implication is that managers, when constructing their portfolios, will
assume more risk than is socially desirable; hence, there exists a need for government-
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imposed constraint and control. State-sanctioned measures designed to minimize the threat of
bank runs include the need for a lender of last resort function of the central bank to preserve
system liquidity and the creation of a government-administered system of retail banking
deposit insurance.
Regulation explicitly limiting the risk assumed by managers of banks includes restrictions
that limit the types and amounts of assets an institution can acquire. A stock market crash will
threaten solvency of all banks whose portfolios are linked to the declining equity values.
Investment bank portfolios will be, in such a circumstance, adversely affected. The decline in
the asset values of investment banks can spill over to deposit banks causing a banking crisis
when the assets of deposit banks include marketable securities, as happened in the United
States in the early 1930s.
The Bank Act of 1933 (the Glass-Steagall Act) in the United States as well as early versions
of the Bank Act in Canada, for example, both prohibited commercial banks from acquiring
ownership in nonfinancial companies, thus effectively excluding commercial banks from the
investment banking activities of underwriting and trading in securities. This highly regulated
and differentiated industry structure in twentieth-century North America contrasts sharply
with the contemporaneous banking structures of Switzerland and Germany, for example,
where the institutions known as universal banks offer a greater array of both commercial and
investment banking services. The question for policymakers then is which industry structure
best minimizes the risk of banking crises and better promotes macroeconomic stability and
growth.
BANKING AND MACROECONOMIC ACTIVITY
The relationship between credit, bank notes, bank deposits, and macroeconomic stability has
been the focus of much debate in the history of Western monetary thought. This debate grows
more vigorous in the wake of financial panics and crises, when its focus turns to causality
between banking crises and economic downturns.
Between 1929 and 1933 more than 40 percent of the American banks existing in 1929 failed.
With no deposit insurance, bank failures wiped out savings and forced a severe contraction of
the money supply. Milton Friedman and Anna Schwartz (1963) maintain that inaction by the
American central bank permitted the sudden contraction of liquidity and magnification of real
economic distress. Ben Bernanke (1983), too, believes that monetary conditions lead real
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economic activity, arguing that bank failures raise the cost of credit intermediation and
therefore have an effect on the real economy. Charles Kindle Berger (1986) alternatively
suggests that non-monetary forces lie at the root of the problem, but that it was the failure of
the Credit-Anstalt bank in Austria that proximately forced a sudden withdrawal of credit from
the New York money markets and, in domino fashion, a contraction of credit throughout
the United States. For Hyman Minsky (1982), the evolving margins of safety between the
streams of asset income in relation to the contemporaneous changes in the cost of credit both
characterize and explain financial instability.
Whichever the direction of primary causation, there is substantial agreement on the fact that
there exists an important relationship between a sudden contraction of credit and liquidity and
a considerable decline in economic activity. Consensus arises also around the likelihood that
central bank last resort lending, in the manner suggested by Henry Thornton (1802) or
by Walter Bagehot (1873), had it been exercised, might have substantially mitigated these
effects.
Despite being subjected to similar nonmonetary shocks, and despite existing in an economy
that roughly mirrored the American economy at the time, the Canadian banking system of the
1930s proved itself less vulnerable to collapse. Two factors may explain the relative stability
of the Canadian banking sector: a lower level of integration of commercial and investment
banking activities and a much more highly concentrated industry, with only a few large banks
dominating the Canadian banking landscape. While Richard Sylla (1969) suggests that
monopolistic elements in the post-bellum U.S. banking industry were present and may
explain the apparent inefficiencies he observes in the data, Michael Bordo, Hugh Rockoff,
and Angela Redish (1994), for example, argue for an absence of evidence in support of any
similar claim that Canadian bank cartels created gross differences in pricing. Contrary to
common suspicion, stability, it appears, was not at the cost of any significant loss in
efficiency, at least in the Canadian industry. Nevertheless, American apprehension about
concentrations of financial power continued to prevail. Legislation designed to minimize the
future possibility of such crises focused instead on enforced portfolio adjustments.
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Company Profile:
HDFC BANK
Background
As part of the Reserve Bank of India's (RBI) liberalization of the Indian Banking Sector in
1994, the Housing Development Finance Corporation Limited (HDFC) was one amongst the
earliest to gain a "in principle" authorization to establish a bank in the corporate domain. The
bank was established in August 1994 under the name 'HDFC Bank Limited,' with its official
headquarters in Mumbai, India. In January 1995, HDFC Bank began functioning as a
Scheduled Commercial Bank.
HDFC, India's leading housing finance provider, has an immaculate track history in both the
domestic and international markets. The company has achieved a strong and constant
development in its operations since its foundation in 1977, allowing it to retain its position
as industry leader in mortgages. HDFC has acquired a strong competence in retail mortgage
loans to a variety of market segments, as well as a sizable corporate clientele for housing-
related lines of credit. HDFC was best placed to develop a bank in the Indian context because
due to its expertise in the financial marketplaces, excellent industry image, huge shareholder
foundation, and distinct customer franchise.
Mission
The goal of HDFC Bank is to become a world-class Indian bank. The bank's goal is to create
strong client franchises spanning various industries in order to become the chosen distributor
of banking solutions for targeted retail and wholesale consumer categories, as well as to
produce robust profit expansion aligned with the bank's risk appetite. The bank is dedicated
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to upholding the finest ethical principles, professional transparency, corporate governance,

and legislative conformance possible.
HDFC Bank's business concept is built on five basic values:

1. Operational Excellence
2. Customer Focus
3. Product Leadership
4. People and sustainability
The marketing strategy of HDFC Bank emphasizes the following:
1. The Bank aims to enhance its market share in India's growing banking and financial
products and services industry by adhering to a structured development approach that
prioritises quality over quantity and provides excellent consumer experience.
2. Resolve problems in the Indian financial system and create revolutionary goods and
services that appeal to certain customer segments.
3. Proceed to create products and services that minimise the Bank's cost of funding;
concentrate on rapid income generation with minimal fluctuation.
4. Retain its prevailing excellent asset quality levels using controlled credit risk managing.
5. Retain its prevailing excellent asset quality levels using controlled credit risk managing.
In addition, HDFC Bank adopted the Japanese Kaizen technique for seamless work flow and
optimum workspace structure. The five ‘S' strategy is employed in any company for a simple
and systematic workforce, as well as the elimination of unneeded items.
Work Culture
HDFC Bank concentrates on delivering regimented defined operating hours to its workers in
a respectable working culture. The bank gives its staff a lot of room to grow and develop, as
well as increasing their capacity to respond to pressure.
When new workers are hired, the bank performs an induction programme in which they are
instructed to achieve proficiency in their area of employment. The bank's HR practices are
based on the belief that its people are its most significant asset. HDFC Bank promotes a
healthy working environment by cultivating relationships with its workers at all levels, and
motivates them to voice their opinions and communicate their suggestions in order to
enhance the organisation and reach a collective objective. The Bank makes every effort to
promote a productive culture throughout the organisation.
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The Brand Promise

The brand promise of HDFC is "We Understand Your World." This means that: • Each client
has a distinct pattern of behaviour and attitude;
1. The client's behaviour that "strays from the norm" is recognised.
2. The Bank sees this as a potential to have a discussion with him/her, which prompts a
customer relationship manager to take initiative.
The brand claims to develop strong customer franchises across many businesses and to
provide its clients with the most up-to-date banking technology for convenience of banking.
Company History:
One of India's most prestigious banks is HDFC Bank Ltd. HDFC Bank is a modern era
private sector bank headquartered in Mumbai that offers a variety of financial services,
including commercial and investment banking on the wholesale front and
transactional/branch banking on the retail front. The bank's distribution system includes 4787
branches and 12635 ATMs in 2691 cities and towns as of March 31, 2018. HDFC Bank also
has an office in Bahrain, a branch in Hong Kong, and two representative offices in the United
Arab Emirates and Kenya. HDFC Securities Ltd and HDB Financial Services Ltd are two of
the Bank's subsidiaries. Banking, wholesale banking, and treasury are the three main business
sectors of the bank. Retail customers are served by the consumer banking sector through bank
branches as well as additional distribution mechanisms. This sector collects deposits from
clients and uses specialised product divisions to create loans and deliver additional products
to them. Corporate public sector units, government organisations, financial institutions, and
medium-scale firms are served by the wholesale banking segment, which offers credit, non-
fund amenities, and transaction facilities. The treasury sector contains the Bank's net interest
profits on its investment portfolio. All local and international Visa/MasterCard Visa
Electron/Maestro Plus/Cirrus and American Express Credit/Charge cardholders can use the
Bank's ATM facility. The Bombay Stock Exchange Limited and the National Stock
Exchange of India Ltd both list the Bank's shares. The Bank's American Depository Shares
(ADSs) and Global Depository Receipts (GDRs) are traded on the New York Stock
Exchange (NYSE) and the Luxembourg Stock Exchange, respectively. Housing
Development Finance Corporation Ltd established HDFC Bank Ltd on August 30, 1994. In
January 1995, HDFC Bank began functioning as a Scheduled Commercial Bank. The bank's
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first office, the Ramon House Church Gate branch, opened on January 16, 1995. In March
1995, HDFC Bank issued a Rs 50-crore initial public offering (IPO) (5Crore equity shares at
Rs 10 apiece at par), which was oversubscribed 55 times. On May 19, 1995, HDFC Bank was
launched on the Bombay Stock Exchange. On November 8, 1995, the bank was floated on the
National Stock Exchange. The NSCCL authorized the Bank as a clearing bank in the year
1996. The company began offering retail financial advisory services in 1997. They
introduced their first retail lending product, Loans against Shares, in 1998. The Bank
pioneered online real-time Net Banking in 1999. Times Bank Ltd, held by Bennett Coleman
& Co. / Times Group, merged with the Bank Ltd in February 2000. In India, this was the
country's first merging of two new generation private banks. The bank was the pioneer to
partner with VISA to develop an international debit card (Visa Electron). They began their
credit card operations in the year 2001. They were also the earliest private sector bank to be
authorised to collect direct taxes by the Central Board of Direct Taxes (CBDT) and the
Reserve Bank of India (RBI). During the year, the Bank formed a strategic partnership with
Tally Solutions Private Ltd, a Bangalore-based business solutions software provider, to build
and sell products and services that help SMEs with on-line bookkeeping and financing.
HDFC Bank's American depositary receipt (ADR) was first launched on the New York Stock
Exchange on July 20, 2001, with the symbol HDB. They've also partnered with LIC to offer
clients the option of paying their insurance premiums online. The number of outlets climbed
from 171 to 231 in 2002-03, and the ATM network grew from 479 to 732. They also
increased their 'merchant acquisition' operations. The number of branches climbed from 231
to 312 during the 2003-04 fiscal year, and the capacity of the Bank's ATM network climbed
from 732 to 910. They started the housing loan sector in September 2003 through a
partnership with HDFC Ltd, through which they market HDFC Home Loans. The number of
branches climbed from 312 to 467 during the 2004-05 fiscal year, and the volume of the
Bank's ATM network rose from 910 to 1147. During the 2005-06 fiscal year, the Bank
introduced the "no-frills account," a no-frills savings account. The distributing channel was
also improved, with the number of branches rising from 467 to 535 in 211 cities and the
number of ATMs rising from 1147 to 1323. The distribution network was expanded in 2006-
07, with the number of branches rising from 535 to 684 (in 228 cities) and the count of ATMs
rising from 1323 to 1605. They started lending directly to Self-Help Groups. In Thudiyalur
village, they have established a specialized facility for funding SHGs (Tamil Nadu). The
Bank upped its shareholding in HDFC Securities Ltd from 29.5 percent to 55 percent on
September 28, 2005. As a result, HDFC Securities Ltd became a Bank subsidiary. The Bank
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opened 77 new branches in 2007-08, bringing the total number of branches to 761. In
addition, 372 additional ATMs were introduced, bringing the total number of ATMs in the
network to 1977. With effect from August 31, 2007, HDB Financial Services Ltd became a
subsidiary company. In Delhi and the National Capital Region, the Bank launched 19
branches in one day on June 2, 2007. (NCR). The Bank's distribution network grew from 761
branches in 327 cities to 1412 branches in 528 Indian cities during the 2008-09 fiscal year.
During the year, the number of ATMs at the bank climbed from 1977 to 3295. Centurion
Bank of Punjab Ltd was merged into the Bank on May 23, 2008, under the strategy of
amalgamation. The merging was set to take place on April 1, 2008. HDFC Bank benefited
from the merger in respect of expanded branch network geographical coverage and clientele,
as well as a larger supply of trained personnel. The bank launched its first foreign commercial
office in Bahrain in October 2008. The branch provides the bank's full range of banking
services, encompassing commercial treasuries and trade finance products as well as asset
managing services for non-resident Indians. The Bank extended its distribution system from
1412 branches in 528 locations to 1725 branches in 779 cities in 2009-10. During the year,
the number of ATMs at the bank climbed from 3295 to 4232. The Bank's distribution
network grew from 1725 branches in 779 cities to 1986 branches in 996 Indian cities during
the 2010-11 fiscal year. The number of ATMs at the bank has expanded from 4232 to 5471.
The missed call banking service was introduced by HDFC Bank in 2014, enabling users to
access banking services without needing to visit the bank or login online. HDFC Bank
became the first in the retail lending market to completely streamline the credit authorization
and pay-out procedures when it debuted the 10-second personal loan approvals system on
June 16, 2015. In 2016, HDFC Bank became the first bank in the nation to launch loans at
ATMs, transforming ATMs into Loan Dispensing Machines (LDMs) and expanding the
capabilities of the bank's ATMs.
Competition Overview
Clients' preferences for several private banks were surveyed, and it was discovered that
HDFC and ICICI Banks are the city's top two private banks. The explanation for this is that:
• These two banks were the first private players to operate branches in the city; and
• The bank's brand name plays a significant influence in its success because consumers
choose to go with the brand name.
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The ground of distinction is determined by a number of factors, one of which is the banking
framework, particularly that of public sector banks. If you look carefully, the services given
by these banks are nearly same; what differentiates is the banking culture and the manner in
which they provide their services. The following are the factors that distinguish:
The following are the factors that distinguish:
2. Change management that is effective and timely.
3. There are a lot of transactions and changes going on.
4. Dedication from inside.
5. Sufficient financial resources are available.
6. Improvements in human resource strategy.
7. Public sector undertakings (PSUs), which dominate the Indian banking system, lacks a
constructive HR climate. However, with the introduction of new industries and greater
pressure from emerging banks in the industry, a lot has shifted. There is a growing
recognition that skill improvement is critical for employee retention and labour quality.
8. The bank treats its customers differently by offering them the imperia customer
programme, classic client scheme, and valued client initiative. This aids the bank in acquiring
more customers for retail products, which is referred to as Priority banking.
According to consumers, the following characteristics distinguish HDFC bank from other
banks:
• Because HDFC bank has distinct divisions for different services given, the customer
perceives the bank's service to be different from that of other banks
• Clients who have had a longstanding association with the bank place a high value on the
investment services and guidance provided by the bank, since the bank strives to reward its
customers in some way.
• The bank is also considered as a pioneer in integrating technology into its services,
distinguishing it from other financial institutions.
• Customers call HDFC bank as friendly and reliable because of its CRM services.
• The bank has grown in size as a result of different programmes introduced for the benefit of
its customers.
• The bank has established a reputation for trust and integrity.
• The bank has established itself as more than merely a bank as a result of these initiatives. It
is already known as a "complete financial supermarket," and clients claim that HDFC has
turned the internet into a virtual bazaar.
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•Customers have praised HDFC Bank's ATM services. Because of the large number of
HDFC card customers, the bank addresses grievances quickly and efficiently.
• In a nutshell, what sets HDFC apart is its "capacity to add value," "global image," and
"personality," which includes being active, creative, and lively.
Products of the Bank

HDFC Bank offers a variety of goods and services to meet the banking needs of every client.
With its retail banking solutions, the bank offers the following goods and services:
Accounts and Deposits

To satisfy the needs of its customers, HDFC Bank provides a variety of accounts and deposit
accounts. The HDFC bank offers a variety of accounts, including simple savings accounts,
current accounts, fixed deposit accounts, and recurring deposit accounts.
Loans
HDFC Bank is the market leader in home loans and also caters to a wide range of personal
requirements. With the bank, you can get the following types of loans:
1. Personal loan
2. Auto loan
3. Gold loan
4. Business loan
5. Loan against asset
6. Home loan
7. Education loan
8. Consumer durable loan
9. Car loans
10. Two-wheeler loans
11. Loan for professionals
12. Loan against security
13. Rural loans
14. Loan on credit cards
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Credit Card
Clients can choose from a variety of credit cards that give specific discounts and benefits on
eating, cinemas, lounge accessibility, and airport access, among other things. The card also
gives the bearer loyalty points for every dollar spent, which can be exchanged for great deals.
The following are the many credit cards that the bank offers to its customers:
1. Money Back
2. Jet Privilege HDFC bank signature
3. Platinum Times Card.
4. Diners club black
Credit cards come with a slew of perks and are quite useful. They are widely acknowledged
and allow for cashless purchases at millions of merchant locations worldwide. The user can
utilise the credit card to purchase online and pay bills online. It eliminates the necessity to
maintain cash because cash may be withdrawn at ATMs. A credit card can also be used to
lengthen a loan and allow customers to pay in EMIs. Additionally, using a credit card can
result in savings and rewards.
Debit Card
Customers who open a savings account with the bank are given a debit card, which is secure
than having to carry cash because it requires a PIN each time it is used, provides great
discounts and cash back on gas, shopping, dining, recreation, and other items, could be used
at just about outlet for payment.
The bank currently provides the following debit cards:
1. Times Point Debit Card
2. Easy Shop Platinum Debit Card
3. JetPrivilege HDFC Bank Signature Debit Card
4. HDFC Bank Rewards Debit Card
5. Easyshop Titanium Debit Card
6. Easyshop Debit Card
7. Easyshop Business Debit Card
8. Easyshop Women’s Advantage Debit Card
9. Easyshop NRO Debit Card
10. Easyshop Imperia Platinum Chip Debit Card
11. Easyshop Gold Debit Card.
12. RuPay Premium Debit Card
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13. Easyshop RuPay NRO Debit Card

Forex Card
Whenever clients fly internationally, HDFC Bank prepaid ForexPlus Cards provide a secure,
quick, and cashless alternative to carry foreign money, guaranteeing that you are not
inconvenienced. They're safer than cash, more convenient than traveller’s checks, and less
expensive than credit or debit cards. These ForexPlus Cards can be used to make purchases in
any of the world's major currencies. They are generally approved and safeguard clients from
foreign exchange swings.
The Bank offers a variety of FOREX Cards, including:
1. Multicurrency Forex Plus Card
2. Hajj Umrah Card
3. ISIC student Forex Plus Card
4. Regalia Forex Plus Card
DMAT Card
For a dynamic and customizable alternative, HDFC Bank offers DMAT accounts to investors
such as dealers, long-term investors, and novices. The bank's DMAT account is secure and
reliable for purchasing and maintaining a client's equities, investment, mutual funds, initial
public offerings (IPOs), ETF exchange traded funds (such as Gold and Index), bonds, and
NCDs. The account can also be created electronically, and there are several different varieties
of DMAT accounts available:
 DMAT ACCOUNT
 2 IN 1 ACCOUNT
 3 IN 1 ACCOUNT
Insurance
HDFC life insurance company ltd is the organization that issues the life insurance policies.
Non-life insurance products are also offered in collaboration with HDFC ergo. The following
are the different types of insurance and their policies:
 LIFE INSURANCE
For the selling of life insurance commodities, HDFC Bank is an authorized corporate
representative of HDFC Standard Life Insurance Co. Ltd, Tata AIA Life Insurance Co. Ltd,
and Aditya Birla Sun Life Insurance Co. Ltd. Customers can now select from a variety of life
insurance products offered by HDFC Bank, depending on their needs.
 HEALTH INSURANCE
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Health insurance falls under the purview of general insurance and 4 types of health insurance
plans are offered by the bank which is as follows:
1. Health Suraksha
2. Critical illness silver plan
3. Critical illness platinum plan
4. Individual accident plan.
Investment
HDFC Bank offers a variety of investment options to round out a consumer's financial
portfolio, including mutual funds, life insurance, and general insurance. The following
categories are used to categorise financial instruments:
1. Mutual Funds
2. Equities and derivative through HDFC securities trading account
3. IPO application through ASBA (application supported by blocked amount)
4. Investment in gold through Mudra pure gold bars which come as 24 carat pure gold bars
with AASAY certification and tamper proof packaging.
5. 8% saving bond which is risk free and can be bought with minimum investment of 1000
Rs.
BUSINESS PROFILE OF THE ORGANIZATION

HDFC bank caters to a wide range of banking services covering commercial and investment
banking on the wholesale side and transactional branch banking on the retail side. The bank
has three key business segments:
Wholesale Banking
The bank’s target market is primarily large, blue-chip manufacturing companies in the Indian
corporate sector and to a lesser extent, small and mid-sized corporate and agro based
businesses. For these customers, the bank provides a wide range of commercial and
transactional banking services, including working capital finance, trade services, transactional
services cash management, etc. The bank is also a leading provider of structured solutions,
which combine cash management services with vendor and distributer finance for facilitating
superior supply chain management for its corporate customers.
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Based on its superior product delivery/service level and strong customer orientation, the bank
has made significant inroads into the banking consortia of a number of leading Indian
corporate including multinationals, companies from the domestic business houses and prime
public sector companies. It is recognized as a leading provider of cash management and
transactional banking solutions to corporate customers, mutual funds, stock exchange
members and banks.
Retail Banking
The objective of the retail bank is to provide its target market customers a full range of
financial production and banking services, giving the customer a one stop window for all his
banking requirements. The products are backed by world class service and delivered to
customers through the growing branch network, as well as through alternative delivery
channels like ATM’s, phone banking, Net banking and mobile banking.
The HDFC Bank prefers program for its high-net-worth individuals, the HDFC Bank Plus
and the Investment Advisory Services programs have been designed keeping in mind the
customers who seek distinct financial solutions, information and advice on various
investment avenues. The bank also has a wide array of retail loan, products including auto
loans, loans against marketable securities, Personal loans and loans for two wheelers. It is
also a leading provider of Depository Participant (DP) services for retail customers, providing
customers the facility to hold their investments in electronic form.
HDFC Bank was the first bank in India to launch an International Debit Card in association
with VISA (VISA Electron) and issues the MasterCard Maestro debit Card as well. The bank
launched its credit card business in late 2001. By March 2015, the bank had a total card base
(debit and credit cards) of over 25million. The bank is also one of the leading players in the
“merchant acquiring” business with over 235000 Point-of-sale (POS) terminals for
debit/credit cards acceptance at merchant establishments. The bank is well positioned as a
leader in various net based B2C opportunities including a wide range of internet banking
services for Fixed Deposit, loans, Bills Payments etc.
Treasury
Within this business, the bank has three main product areas – Foreign Exchange and
Derivatives, Local Currency Money Market & Debt securities, and Equities. With the
liberalization of the financial markets in India, corporate needs more sophisticated risk
management information, advice and product structures. These pricing on various treasury
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products are provided through the bank’s Treasury team. To comply with statutory reserve
requirement, the bank is required to hold 25% of its deposits as government securities. The
Treasury business is responsible for managing the returns and market risks on this investment
portfolio.
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DIGITAL FOOTPRINTS
The ‘Digital Footprint’ or ‘Digital Shadow’ refers to the unique set of traceable digital
activities, actions, contributions and communications that are manifested on digital devices. It
can be said that, it is a trail of data which is created while using the internet. It includes the
websites visited, e-mails sent, and information submitted to online services.
While using internet, there are also data trails which are left unintentionally. These are called
as “Passive digital footprints”. For example, when a customer visits a website, the web server
may log the IP address which identifies the ISP (Internet Service Provider) and approximate
location of the customer. While the IP address may change, and may not include any personal
information, it is still considered as part of digital footprint. A more personal aspect of
passive digital footprint is the user’s search history, which is saved by the search engines
while the user is logged in.
On the other hand, an “Active Digital Footprint” includes data that are intentionally
submitted online. Sending an e-mail contributes to the active digital footprint, as the sender
expect the data to be seen and /or saved by another person. The more e-mail is sent, the more
a digital footprint grows. Since most people save their e-mail online, the messages sent can
easily remain online for several years or more.
Blog publishing and social media updates are another popular way to expand Digital
footprints. The answer updates on Quora, posts Facebook, tweets on Twitter, and everything
else which is shared on social media all adds to the Digital Footprints. The more time a user
spends on social media, the larger becomes their Digital Footprint. Digital Footprint is not a
thing to be worried about, everyone who uses the internet has a Digital Footprint. However, it
is wise to consider what trail of Data a user is leaving behind. For example, remembering the
Digital Footprint may prevent a user from sending a scathing e-mail, since the message might
remain online forever. It also makes the user more aware about the content they publish on
social media. It is possible to delete data which has been shared online, but there is no
guarantee that it will be removed permanently from the internet.
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BANKING AND DIGITAL FOOTPRINTS

Earlier, the Loan officers from the bank used to meet customers personally to decide on their
credit worthiness. With the digital space gaining prominence, more and more people are
becoming active on social media, and banks are using this as an opportunity to trace their
digital footprints and measure their credit worthiness.
Most non-banking finance companies that are aggressively pushing into the retail lending
space, use their customers digital footprints to judge their credit worthiness. Financial
institutions have started using digital footprints to improve turnaround time for disbursal of
loan and mitigate fraudulent application.
India is a country with the largest number of youth population in the world, and banks and
financial companies see this as a huge opportunity in lending to these people. The issue with
them is that, since they are new to the workforce, they have no credit history. In order to lend
to this section of population, banks are using digital footprint of these people to get an idea of
their credit worthiness.
Lending institutions in India are yet to adopt risk-based pricing. Customers with strong
footprint still do not have any access to better rates. At this point, lenders are getting
tremendous amount of help to acquire new customers which wouldn’t have been possible by
solely relying on traditional data.
DIGITAL BANKING
Innovation has always been among the most powerful forces that have continued to shape
human society. The advancement in the material standard of living enjoyed by most (though
not all) human beings are largely due to innovation. One of the principal arguments for free-
market capitalism is that it is the economic system that encourages innovation most, because
it allows innovators to capture a significant part of the remunerations of their work. Financial
services industry is no different. The accelerating rate of technological change, combined
with shifting customer preferences and an evolving regulatory landscape, have dramatic
implications for the ways in which financial services are designed, delivered and disbursed
today.
Technology is overturning workflows and processes in the financial services industry. Tasks
once handled with paper money, bulky computers, and human interaction are now being
completed seamlessly entirely on digital interfaces. Almost every type of financial activity -
from banking to payments to wealth management and more - is being re-imagined by some
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tech savvy banking incumbents as well as by startups. Meanwhile, the old guard is trying to
solve a puzzle presented by the digital revolution: How can they benefit from the rise of
digital, and how can they stay relevant?
Gone are the days when banking was a chore, baffling activity which in many cases needed
the banker to take a day-off to accomplish their task. Technology (Internet and Mobile
phone) has virtually enabled banks to be where the customer is; enabling her to connect to the
bank at a time and place according to her convenience. By the year 2030 most of today's
technology will be redundant and will be replaced by other more evolved modes.
Mobile phones especially smart phones have created more opportunities to the common man
than any other technology in the recent past. Today, mobile banking and mobile wallets are
the two fastest growing segments in the payments industry. Evolution of mobile banking in
India has helped clients make faster and secure banking transaction on the move. For banks
mobile banking is the most cost-efficient mode of offering banking services.
FUTURE IS INCREASINGLY DIGITAL

Digital business is an all-embracing trend covering how the blurring of the physical and
virtual worlds is transforming business designs, industries, markets and organizations. Major
business and technology advancements, such as the Internet of Things, 3D printing, and
machine learning combine to disrupt existing business models and create an opportunity for
entirely new ones. Digital technologies build on each other with wave after wave of
innovation. Customer expectations for banking services (both offline and online) are being
reset by the experiences being provided by retailers and online providers, elsewhere. Thanks
to companies like Google, Amazon, Apple, Uber and our very own e-commerce firms;
customers now expect every organization to deliver products and services swiftly, with a
seamless user experience. New digital attackers are definitely changing the rules and
disrupting traditional value chains in many industries. The same could happen to financial
services industry as well. Fintech start-ups are already accelerating innovation in financial
markets by leveraging technology. But it will also be naive to believe that technological
advancement in banking will only be done by Fintech firms. Over the next couple of years
you will notice that a lot of financial innovation will be spear headed by incumbent banks -
either independently or in partnership with new fintech firms. You will increasingly see a
trend where incumbents will be as good as fintech firms at innovation. Today a lot of banks
are partnering with fintech firms for mutual benefits. Some of the traditional players in
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banking have been very agile in experimenting with new age technologies such as Artificial
Intelligence and Block-chain. Banks and non-banks are innovating and Indian ecosystem as a
whole is gearing up for digital.
TECHONOLOGIES OF FUTURE
Two very important developments have the potential to herald a new age of digital payments
- the rapidly growing smartphone penetration and the proliferation of bank accounts. India
has over a billion mobile connections with around 240 million smartphone users and is
expected to grow to 520 million by 2020 as per a report on Digital Payments by BCG and
Google. The National Optical Fiber Network initiative under Digital India will connect
250,000-gram panchayats across rural India and increase adoption of data services. The
Pradhan Mantri Jan Dhan Yojana (PMJDY), through 282 million accounts and 220 million
cards (as on 29 Mar'17), has provided the infrastructure for universal access to banking. The
issuing infrastructure is largely in place and with the launch of Unified Payment Interface
(UPI) will provide a significant fillip in the proliferation of low cost acquisition infrastructure
by allowing smartphones to substitute costlier PoS devices. UPI will be a game changer in
way that it is a unique interface which works 24x7 across the banking system and is instant,
safe, secure, cost effective and convenient to use. UPI allows payments to different merchants
without the hassle of typing one's card details, or net-banking password. UPI is built on top of
the IMPS, which we have used to instantly transfer money between accounts with different
banks. All money transfers with UPI are secured with the two factor authentications as
mandated by RBI - the first factor being your phone and the Mobile PIN as the second. UPI is
likely to benefit overall payments ecosystem as the payments service can be provided by
banks to the merchant with an entry level smartphone and there is no need to install POS
machine at the place of business.
Blockchain is another such new technology that combines a number of mathematical,
cryptographic and economic principles in order to maintain a database between multiple
participants (lenders & borrowers) without the need for any third party intermediary or
reconciliation. In simple terms, it is a secure and distributed ledger/database, hardened
against tampering, against which anyone can verify the validity of transactions. A block is the
'current' part of a blockchain which records some or all of the recent transactions, and once
completed goes into the blockchain as permanent database. Blockchain represents the next
evolutionary jump in business process optimisation technology.
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With the advance of Smartwatch, banking is already slated to experience shift from your
pockets to your wrists. Wearable banking will help banks roll out contextual notifications to
its clients, which means that actionable promotional content can be delivered at just the right
time. The future lies in ultimate personalized, contextual engagement. However, smart
watches are not the ultimate frontier of wearable technology. As the technology extends
beyond Smart Watches to include Smart eyewear, gesture-controlled devices and other
connected products in the larger IoT (Internet of Things); we envisage an exciting world of
'Predictive Banking' to emerge. All the data you generate across your daily life can be
captured (with your due permission of course), connected and analysed - from sensors
embedded in everything from your wearable to your cooking utensils to your car. The area is
unbound for exploration and as we explore further a billion possibilities can emerge. You can
expect your bank to create products that shall connect with you on a deeper level but in a
non-intrusive manner. Banks and financial institutions will be a part of an invisible layer
around your daily activities. For example, by linking to your fitness band, we would like to
encourage your fitness goals by rewarding you on your achievements. We can track your
health data (pulse rate, sleeping habits, daily physical exercise, calorie intake, etc.) and create
customized insurance plans for you at lowest possible annual premiums by partnering with
various health providers. Artificial Intelligence (AI) & Machine Learning is another
important technology that combines natural language queries, predictive analytics, and self-
evolving cyber security systems. Artificial Intelligence is the future & has already started to
be part of our everyday lives. Machine learning is an approach to achieve artificial
intelligence & machine is "trained" using large number of data & algorithms that give it
ability to learn how to perform the task. Another emerging technological advancement is
cloud computing the practice of using a network of remote servers hosted on the internet to
store, manage, and process data, rather than a local server or a personal computer. The big
benefits of the cloud are cut costs, improve flexibility & scalability, increase efficiency, serve
client faster.
The combination of higher spending power and a freer adaption of technological adoption
mean that banks and other financial institutions have an entire market of willing and able
customers to offer better financial products/services at lower costs. The fact that unbanked
population in India halved from 577 million to 233 million speaks volume about the
advancement of financial inclusion efforts. Technology is the biggest enabler and equalizer
today. As we connect one-on-one in real time, it has created massive new flows of trade for
markets that were underserved or overlooked. Cell phone subscription in India has crossed
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one billion. So, the first massive change in the network effect of financial inclusion is that
millions of people who previously had zero access to digital services are now on the network
and are connected for good.
It is also very encouraging that we have a central bank that is equally enthusiastic about
promoting innovations and technology. The Reserve Bank in its continued efforts towards
building robust and secure payment and settlement systems for achieving a less-cash society
published Vision 2018 which highlights the need for making regulations more responsive to
technological developments and innovations in the payments space. India now has the best
digital infrastructure for financial universalization and the fact that we have the Jan-Dhan,
Aadhaar and Mobile (JAM) layer, we have an indigenous Indian stack that is propelling us
from being data poor nation to a data rich nation. Add to this the data available through GST
Network, under which companies will upload nearly three billion invoices every month and
government will effectively have real-time economic data 24X7. Digital adoption and
moving away from cash would not be without complications. Some objections can be easily
addressed, such as a claim expressed by a fifth of a sample of respondents, who said in a
recent survey that they like the feel of carrying cash. But other problems will be harder to
ignore. The most intractable is the risk that parts of society will be left out of the financial
system, in a world where smartphones and plastic become the only ways to pay. In a near
cashless world vulnerable groups, such as the poor, the elderly and migrants, could become
further marginalised, and those who are especially cash dependent for income, such as street
vendors, small traders, charities and the homeless, would fear to see a drop in their incomes.
Today banking is a complex business delivered through multiple channels. The challenge is
to offer consistent omni-channel experience. Each channel should promote other channels
and should be seamlessly integrated. For example, when interacting with a branch employee,
the customer may be assisted in how to use mobile banking. When calling the call-centre, the
customer may get help with online banking. Today, far too many banks create silos for each
channel - including separate reporting lines and separate sales goals. This has to quickly
change because in the customer's mind, all channels merge together to form the aggregate
customer experience. When customers are given choices on how to do business, and those
choices are relevant and the experience is consistent, they are much more satisfied. Finally, it
is customer preference which will drive business models. Customers with new expectations
and the need to build trusted relationships are forcing incumbents seek value propositions
where experience, transaction efficiency and transparency are key elements. As self-directed
solutions emerge among competitors, the ability to differentiate will be a challenge. In
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addition to social changes, the driving force behind innovation in financial services can
largely be attributed to technological advances outside the financial services sector that will
bring new opportunities to understand and manage the risk (e.g. telematics, wearables,
connected homes, industrial sensors, medical advances, etc.). While it will be fairly easy to
replicate technology, the critical aspect will be building a culture of innovation and the ability
to leverage insights to build solutions that will determine who will be able to maximize the
opportunities and emerge as a winner.
DIGITAL BANKING IN INDIA

We understand significance of digital and how clearly it is game changing for banking and its
customers. A new India like never before can be experienced under Digital India Programme.
The new innovative and futuristic thought processes have given birth to whole new business
and social dimension. Ambitious projects such as Digital India, Payment Bank, Make in
India, and RBI initiatives along with NPCI such as UPI, AEPS, India QR, are now the
keywords to bright and sustainable financial progress of our nation.
The Reserve Bank of India’s “Payment and Settlement system in India: VISION 2018” aims
at building best of class payment and settlement system for a less cash India. In order for the
banks to migrate to electronic payment and ensure that the payment systems in India are safe
and secure, RBI has periodically put forth its vision for payment and settlement system.
The three driving factors in order to meet the short term and long term business and
technological requirements of the bankers:
1-ADOPTION
The success of e-commerce and m-commerce Post demonetisation is largely attributed to the
phenomenal growth of various digital payment technologies such as card payment, electronic
fund transfers, payment gateways, smartcard, etc. Crucial to embracing such new age systems
are the people, technologies and processes that have together created vast, robust and
dependable network that guarantee herculean transactional volumes at breakneck speed.
2-AGILITY
Today aspects such as enhanced customer satisfaction and value through unified customer
experiences, infinite banking volumes, financial inclusions, scale of economies, etc. are being
sought after by leveraging digital banking and mobile technologies.
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3-ARRIVAL OF PLAYERS
Traditional banking should be worried about the new age players e.g. Payment Bank, Fintech
culture around. And the end customer is the single largest beneficiary- with a bouquet of
services and service providers to choose from and along with hugely competitive pricing
models.
FEATURES OF DIGITAL BANKING

Digital banking facilities have many features and capabilities in common, but also have some
that are application specific.
1. A bank customer can perform non-transactional tasks through online banking, including:
 Viewing account balances
 Viewing recent transactions
 Downloading bank statements
 Viewing images of paid cheques
 Ordering cheque books
 Download periodic account statement
 Downloading application for e-banking, m-banking.
2. Bank customers can conduct banking operations through online banking including:
 Fund transfer between customer linked account
 Paying third parties, including bill payment and third-party transfer
 Investment purchase or sale
 Loan applications, such as repayment of enrolments
 Credit card application.
 Register utility billers or bill payment
3. Financial institutions administration
4. Management of multiple users having varying level of authority.
5. Transaction approval process.
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ADVANTAGES IN DIGITALIZATION OF BANKS

Digitalization involves exploring business models and platforms using digital technologies, devices or
techniques to yield several benefits in various aspects of life. Digital solutions can simplify a
country’s security and intelligence systems, and its economy and infrastructure, to name a few. For
citizens, digitalization promises much needed improvement both in the delivery of public services,
such as Government/Bank issued certificates, and other services, financial or otherwise. Digital
solutions and services can facilitate trades and settlement between different countries, as well as
defend against malpractices such as embezzlement and money laundering.
Following are the important benefits of digitalization in bank:
 PAPER WORK REDUCED

The traditional procedure of banking is manual and paper based. Electronic banking is
gradually reducing the paper transactions in the banks which have reduced the paper work.
 EASY TRANACTION
Electronic banking has reduced the problem of the customers like writing cheques, filing
taxes and transforming of cash. Under the ATM facilities provided by the banks there is no
need of cheque books.
 TIME SAVING
Electronic banking has saved the time and money of the customers and also the banks. The
burden of work on bank employees has also been reduced. Earlier, the employees were hired
at very high wages, so operating cost was also very high. Now by using electronic banking
the number of employees has also been reduced.
 NO QUEUES
Earlier the people have to stand in long queues to pay various bill payments, however with
the help of net banking the customer can easily make a hassle-free payment. The best part is
that the payment gets transferred in a couple of minutes.
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NET BANKING
Net banking, online banking, also known as interest banking, e-banking or virtual banking, is
an electronic payment system that enables a customer of a bank or other financial institution
to conduct a range of financial transactions through financial institution’s website.
HDFC bank offers its customers a comprehensive range of transactions across multiple
products through its Net Banking channel. The customer can just log in to Net Banking and
conduct 200 plus transactions from the comfort of their home or office. They can check their
account balance, book fixed and recurring deposits, download account statement up to five
years, pay their bills, recharge mobile/DTH connection, and much more in a secure
environment.
The customer can log in to net banking using their customer ID/User ID and IPIN (Net
Banking password). They are free to choose their own User ID and personalise their Net
Banking login. This makes Net Banking access easy.
WHY USE NET BANKING?

The customer can manage their account conveniently through the internet.
 200 plus transactions available on Net Banking
 Up-to-the-second details of their account
 Access anytime, from anywhere
 No queues to stand in, or turns to wait for
HOW SAFE IS NET BANKING?

 The net banking facility of HDFC is secured with industry standard technology and
infrastructure
 HDFC bank has implemented an extra security solution for its customers Secure Access
 Secure Access is a simple three-step process that greatly enhances online security and
allows the customer to transfer funds online.
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WHAT’S NET BANKING ALL ABOUT

Net Banking is an incredibly convenient and powerful tool, letting the customer do
everything they want with their accounts at the click of a mouse.
It is Real Time, giving up-to-the-second details on account. All a customer needs to do is Log
in using their Customer ID and IPIN (Net Banking password).
The customer ID is mentioned on the account statement/ account welcome letter/
chequebook. (Current account / HUF customers can obtain this from the branch). The
customer can re-generate IPIN online in 3 easy steps.
Some of the transactions one can do through Net Banking are:
1. Check the account balances and download 5-year account statement in 5 formats,
instantly
2. Book Fixed Deposit / Recurring Deposit
3. Pay Utility Bills
4. View Credit Card details and pay Credit Card Bills
5. Recharge Prepaid Mobile & DTH Connections
6. Invest in Mutual Funds Online
7. Book IRCTC Tickets online
8. Purchase a Gift Card
9. Pay Taxes online
10. Update PAN Details online
11. View Tax Credit Statement (Form 26 AS)
12. Request for a Demand Draft/ Chequebook
13. Request Stop Payment of a Cheque/ Hotlist you Debit Card/ Credit Card
14. View Loan details
15. Apply for IPO
16. Request for Debit Card PIN Regeneration
17. Register for Third Party Transfer
18. Transfer funds between accounts within HDFC Bank and other Bank Accounts
These are just some of the 200 plus transactions one can do through Net Banking. HDFC
Bank's Net Banking service is secure. Using industry-standard technologies and
infrastructures, the services offered by HDFC bank gives its customers peace of mind.
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HOW TO REGISTER FOR NET BANKING?

Net Banking registration is given by default to all Bank Customers. In case a customer is not
registered for Net Banking, it is quick and easy. The many ways a customer can register are:
 Online
 ATM
 Phone Banking
 Branch
THIRD PARTY TRANSFER

Third-Party Transfer (TPT) is a feature a customer can use to transfer funds from your HDFC
Bank account to another account (called the beneficiary), within HDFC Bank or any other
bank, anywhere in India. A customer needs to be separately registered for this service. Third
Party transfer includes all transactions where funds are transferred from one account to
another, within or outside the Bank. A customer can conduct a third-party transfer from
his/her account to other bank account using:
 Transferring funds from HDFC Bank account to other HDFC Bank accounts with different
Customer IDs. TPT is a real time transaction, which means that the transfer will show up
immediately in your accounts.
 National Electronic Funds Transfer (NEFT) - This is a Funds Transfer service, to
transfer funds to Accounts outside HDFC Bank. Any amount in the range of Rs. 1 to Rs. 10
Lacs can be transferred through this facility. The customer needs to add a Beneficiary to
transfer funds to his Account. Only the Account Number and IFSC details are used to carry
out the transaction.
 Real Time Gross Settlement (RTGS) - This is a Funds Transfer facility where the amount
reaches the Beneficiary's Bank within time stipulated by RBI. The transaction amount can
vary from Rs. 2 lacs to Rs. 10 lacs. You need to add a Beneficiary to transfer funds to his
Account. Only the Account Number and IFSC details are used to carry out the transaction.
 Immediate Payment Service (IMPS) (formerly called as InterBank Mobile Payment
service) - through which the customer can transfer funds instantly to any IMPS Beneficiary.
It is an instant interbank electronic fund transfer service, which customer can use with their
mobile phone. As an HDFC Bank customer they can send money instantly to anyone in any
participating bank (including another HDFC Bank customer) who is registered for IMPS via
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the MobileBanking service. They can also receive money through this mechanism from
anyone else in a participating bank (including another HDFC Bank customer).
 Online Shopping.
 Visa CardPay From the account to any Visa Credit Card within India. The account will be
debited online, and the funds will be sent to the beneficiary Bank within 2 working days
using the Visa system. The Beneficiary Bank will then transfer the funds to the beneficiary's
card account.
 Third Party Demand Drafts up to Rs. 10 Lac can be requested from the account, through
Net Banking. DDs will be couriered to the mailing address / beneficiary address provided
within 4 working days. A maximum of 3 Demand Drafts can be requested through Net
Banking, each day.
 eCMS service is available for large corporates and institutions.
MOBILE BANKING
Mobile banking is the act of making financial transactions on a mobile device (cell phone,
tablet, etc.). This activity can be as simple as a bank sending fraud or usage activity to a
client’s cell phone or as complex as a client paying bills or sending money abroad.
Advantages to mobile banking include the ability to bank anywhere and at any time.
Disadvantages include security concerns and a limited range of capabilities when compared
to banking in person or on a computer.
Mobile banking includes all the applications provided by the bank. Mobile banking refers to
the use of smart phone or other cellular device to perform online banking tasks while away
from home computer, such as monitoring account balances, transferring funds between
accounts, bill payment and locating an ATM.
Applications provided by the bank are:
PAYZAPP
HDFC Bank PAYZAPP, a complete payment solution, giving its customer the power to pay
in just one click.
With Payzapp, the customer can shop on mobile at partner apps, buy movie tickets, groceries,
compare and book flight tickets and hotels, shop online and get great discount at SmartBuy,
send money to anyone in contact list or to the bank account, pay bills and recharge mobile,
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DTH and data card and many more. The customer can link the Debit and Credit card, of any
bank, to Payzapp and enjoy the most convenient and secure way of payment.
WHY PAYZAPP?
1. It is convenient- “Cards link kro ek baar, pay karo baar baar”, no need to preload money
every time. Pay directly from credit and debit card.
2. It’s fast- Make payment in an instant with just one click.
3. It’s secure- The details of the card are safe with the bank and not stored on the mobile
phone or other partner apps.
WHAT PAY WITH PAYZAPP?

1. Recharge utility/bills- No more standing for hours in a queue for bill payment every
month.
2. Travel Payments- Get the best of offers for air, bus, hotel services amongst several other
options.
3. Shopping Payment- opt for a convenient shopping experience like no other.
4. Movie ticket purchases- Catch the latest movie at the best prices.
5. Dining and home services- Seamless payment options for all the food and home services.
6. Taxi service- Get a hassle-free transport service with easy payment opportunities.
7. Grocery shopping- The customer can opt for one stop shop for all their grocery needs and
have them delivered to their doorstep.
8. Add/send funds- Make a money transfer to a mobile number or an e-mail id when
required.
9. Special offers- Get great offers, discounts and schemes from top brands available.
CHILLR
Chillr is India’s first multi-bank mobile payment app that links directly to the customer’s
bank account. It allows the customer to send money instantly from their HDFC bank account
to anyone in their phonebook or to a beneficiary using his ‘Account number and IFSC code’
or ‘UPI ID’. The customer can also recharge pay bills, split bills, or request money on chillr.
Sending money on chillr is as easy as sending a text. The customer can add all their bank
account on chillr, so that they can use just one app to manage all their account.
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THINGS THAT CAN BE DONE WITH CHILLR

1. Send money to chillr contacts instantly.
2. Add people who are not on chillr using their ‘Account number and IFSC code’ or ‘UPI
ID’.
3. Recharge mobile, DTH, Data card, Ola Money wallet and BookMyShow wallet.
4. Pay landline, electricity and Gas bill.
5. Pay life insurance premium.
6. Request money from friends or customers.
7. Split bills between friends.
8. Scan QR code and pay to any chillr user in vicinity without sharing mobile number.
HOW TO GET STARTED

1. Generate 2. Generate MPIN 3. Download
MMID chillr and
register
1. Login to HDFC bank 1.Login to HDFC bank Net 1.Download Chillr
Net Banking/Mobile Ban Banking/Mobile Banking
king
2. Under accounts open 2.Under Accounts, go to 2.Enter the mobile
requests tab and press requests tab and select number registered with
Generate MMID. Generate MPIN. the bank account.
3. Select the account for 3.Select the account for 3.Select HDFC bank.
which MMID needs to be which MPIN needs to be
generated. generated.
4. Press confirm 4.Press confirm 4.Now go to HDFC bank
card on top of the home
screen
Note: MPIN will be sent on 5.Click change MPIN
the customer’s registered
mobile number and email.
6.Enter current MPIN, a
new MPIN of the
customer’s choice and re-
enter it to confirm.
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THROUGH UPI
 Download Chillr
 Enter the mobile number registered with the bank account
 Enter the details and select the bank that you want to link to the chillr
 Press VERIFY MY DEVICE
 In case of dual SIM phone, select the mobile number which is linked to the bank account
 Set a security question and answer
 Enter the debit card details and press SET MPIN
 Enter the OTP sent to the mobile number and set an MPIN
 Enter the complete account number and press CONFIRM.
PROBLEM STATEMENT
HDFC bank is giving shape to its digital vision in a number of ways. “Our digital vision is
the same as the philosophy with which we run our business. We have a full relationship
context in the way we conduct our business,” says Nitin Chugh, country head of Digital
banking at HDFC bank.
Aiming to be “a completely customer centric organization”, the bank has been gearing itself
up digitally for the past few years. The objective according to Chugh, is to provide services,
interfaces and products in a manner that the customer can “interchangeably consume them on
any of the digital channels”- such as online banking, smartphones and social media.
Consider the bank’s humanoid IRA (Intelligent Robotic Assistant) and the chat bot EVA
(Electronic Virtual Assistant). While IRA can “guide” people at a branch to find the relevant
counter for them, EVA can answer common queries for users who log on to the bank’s
website.
The bank has also launched a Facebook Messenger bot that allows users to do transactions
such as bill payments, mobile recharges and even booking Ola or Uber Cabs. Chugh and his
digital innovation team at the bank are now working on building more features- hotel booking
for instance.
So the managerial decision problem of HDFC bank is that they are trying to build the digital
capabilities of offering the same banking experience, ease, level of engagement and product
as they offer face to face across different online channels and to make customers aware about
the same. Since most of the customers are using android phones which plays important role in
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availing various online services of mobile and net banking. After installing various apps
customer can access bank without visiting the branch.
RATIONALE OF PROBLEM
 The main aim of undertaking this study is to identify and analyse the factors influencing the
customer’s adoption of technology in banking services.
 To find out the level of satisfaction of customers from the online services being offered by
HDFC bank.
 To identify which online services (Internet banking, Mobile banking) is often used by the
customers.
 To identify which application should be improved to enhance the service quality of HDFC
bank.
CHAPTER 3
REVIEW OF LITERATURE
A number of researches have been conducted on digital banking and its adoption,
development and its perils. A snapshot of some of the research reviews are:
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Nath et.al (2001) found in their study that in every industry, E- Commerce is revolutionizing
the way business is conducted. New business models are replacing outdated ones and
organizations are rethinking business process designs and customer relationship management
strategies. Banks are no exception to this transformation. This study examines banker’s views
on providing banking services to customers using the web. Specifically, it addresses issues
such as the strategic need for internet banking, its effect on customer bank relationship, and
customer’s experiences in Internet banking.
Corrocher (2002) in his study examined the drivers of the adoption of the internet banking,
in order to understand its role with respect to the traditional banking activity and to offer a
comprehensive picture of the diffusion of such a technology within the sector. The main
purpose of this paper is to investigate the relationship between the internet banking and the
traditional banking activity, in order to understand if these two systems of financial services
delivery are perceived as substitute or complements by the banks.
Leary (2002) in his study examined how internet or digital banking is slowly but surely
reviving itself after numerous attempts by various financial institutions and financial
intermediaries in the 1970s and 1980s. The standardization in technologies and the public’s
familiarity with the use of personal computers and the internet have made the internet bank or
digital banking easier, cheaper and more cost effective than ever before. This paper discusses
the coming of age of internet banking, the opportunity for internet banking and some of the
obstacle and procedures that must be followed in order to develop a sound internet banking
presence.
Bradley and Stewart (2003) conducted a research in which they studied the factors driving
the adoption of internet banking. The financial services environment has been subject to
changes on many fronts. Technological change and the advent of the internet are among the
most dramatic and challenging areas of change for the sector. This paper looks at retail
banking and its adoption of online banking, in particular the factors driving and inhibiting
adoption by the bank. By 2011, it is expected that bank adoption of the Internet will be near
universal. The key factors that are driving banks to adopt online banking are the adoption by
other banks, competitive forces, consumer demand and the availability of technology.
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Singh and Malhotra (2004) in their study found that the tremendous advances in technology
and the aggressive infusion of information technology had brought in a paradigm shift in
banking operations. The purpose of this paper is to help fill significant gaps in knowledge
about the internet banking landscape in India. The paper presents data, drawn from a survey
of commercial banks websites, on the number of commercial banks that offer Internet
banking and, on the products, and services they offer. It investigates the profile of
commercial banks with respect to profitability, cost efficiency, and other characteristics.
Laukkanen and Tommi (2007) in their research aimed to compare customer perceived value
and value creation between internet and mobile bill paying service. A qualitative in-depth
interviewing design was applied in order to ascertain the factors that create value perceptions
in fund transfer service via personal computer and mobile phone. The findings suggest that
efficiency, convenience and safety are salient in determining the differences in customer
value perceptions between internet and mobile banking. The paper provides enhanced
information for business managers about both positive and negative customer value
perceptions in internet and mobile banking. The contribution of the paper lies in achieving a
more profound understanding on consumer value perceptions to internet and mobile banking.
It expands the literature on electronic or mobile commerce and on electronic banking
especially.
Nandan et.al (2008) in his paper discusses the concept of Internet banking, perception of
internet bank customers, non-customers and issues of major concern in Internet banking. The
state of internet banking in India has been explored using various concepts like E-banking
continuum, and gap analysis related to the various services and the security features offered.
In order to have a clear and focused insight about the perceptions of users about internet
banking, a survey was conducted. The finding of the survey provides valuable insights into
concern for security, reasons for lower penetration, and likeliness of adoption, which have
been used to make useful recommendations.
Mishra and Kiranmai (2009) in their study found that information technology is considered
as the key driver for the changes taking place around the world. According to Heikki, the
transformation from the traditional banking to e-banking has been a ‘leap’ change. The
evolution of e-banking started from the use of Automated Teller Machine (ATMs) and
telephone banking, direct bill payment, electronic fund transfer and the revolutionary online
49
banking. It has been forecasted that among all categories, online banking is the future of
electronic financial transactions.
Unyathanakorn & Rompho (2014) “Factors Affecting Customer Satisfaction in Online

Banking Service” is a research conducted to find out the factors that affect customer
satisfaction in the use of online banking provided by banks in Thailand. The study is aimed to
assist banks in competitiveness in the online banking service of commercial banks in
Thailand to be able to compete with commercial banks from foreign countries and thus lead
to loyalty to the bank.
Kumar et al. (2016) Internet Banking- Benefits and Challenges indicates the rapid evolution
in information and communication technology has resulted in numerous changes in almost
every area of life. It has taken the form of online banking in the banking industry, which is
now replacing conventional banking practises. Online banking has a range of advantages that
improve customer loyalty in terms of convenience and security, at the same time enabling the
banks to gain more competitive advantage over other competitors.
Vally & Divya (2018) A Study on Digital Payment in India with perspective of consumer
adoption mentions Digital India as the Indian Government's flagship programme with a
vision to convert India into a digitally empowered country. Faceless, Paperless, Cashless is
one of the supposed functions of Digital India. The study focuses on analysing the impact of
customer education on usage of digital payments. The paper has produced the results as the
deployment of technology for digital payments have improved the performance of the
banking sector and able to achieve the motive of a cashless country.
Sornaganesh et al. (2020) “Impact of Covid - 19 Outbreak in Digital Payment” highlights

the effect of digital payment before lockdown and during the lockdown as well as the
problems faced during online payment. The paper concluded that it is early to state what the
changes might look like in each cultural, demographic, and institutional context, but we can
be sure that Covid-19 is already reinforcing existing trends towards increased digitisation of
payments.
Ganesan & Meena (2020) “Customers Perception on Effectiveness of Digital Banking

Services during Covid- 19 Lockdown Period” an exploration on the relationship that exists
50
between bank’s digital services and overall customer’s experience during COVID-19
lockdown period. The article observed through correlation analysis that there is a significant
relationship between digital banking services and overall customer satisfaction. Customers
were highly satisfied with mobile banking services during Covid lock down in terms of
transferring their cash to another account from their place itself.
Jindal & Sharma (2020) “Usability of Online Banking in India during Covid-19 Pandemic”
focuses on the importance of online banking, as it can be done without physically visiting the
bank branch and it can make the transaction through an electronic basis without the exchange
of any tangible commodity with maintaining social distance. This paper highlights the
favourable role online banking played during Covid-19 period to protect the people. All type
of people using online banking have felt he safety in the online payment from Covid-19 virus.
Haq & Awan (2020) “Impact of e-banking service quality on e-loyalty in pandemic times
through interplay of e-satisfaction” concludes that reliability and website design proved to
increase e-banking loyalty, particularly during COVID-19. The link between e-banking
privacy and security and e-banking loyalty was proved as fully mediated by e-banking
satisfaction; however, the indirect effect of the reliability and website design with e-banking
loyalty was partially mediated
Kwan et al. (2020) “Stress Testing Banks’ Digital Capabilities: Evidence From the COVID-
19 Pandemic” Their main focus was on the relationship between banks’ IT capabilities and
their ability to serve customers during the demand shock for digital banking services
generated by the COVID-19 pandemic. It was established during the course of the research
that a banks’ IT capabilities affect their ability to serve customers during the COVID-19
pandemic.
CHAPTER 4
RESEARCH METHODOLGY
According to Oxford University:
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“Research is a systematic investigation into and study of materials and sources in order to
establish facts and reach new conclusions.”
It is a procedure of logical and systematic application of the fundamentals of science to the
general and overall questions of a study and scientific technique, which provides precise
tools, specific procedures, and technical rather than philosophical means for getting and
ordering the data prior to their logical analysis and manipulating different type of research
designs is available depending upon the nature of the research project, availability of
manpower and circumstances.
According to D. Slesinger and M. Stephenson research may be defined as, “The manipulation
of things, concepts or symbols for the purpose of generalizing to extend, correct or verify
knowledge, whether that knowledge aids in the construction of theory or in the practice of an
art.” Thus, it is original contribution to the existing stock of knowledge of making for its
advancement. In short, the search of knowledge through objective and systematic method of
finding solution to a problem is research.
Research Design
A research design is an arrangement of conditions for collection and analysis of data in a
manner that aims to combine relevance to the research purpose with economy in procedure.
In fact, the research design is the conceptual structure within which research is conducted.
This research was descriptive in nature.
Descriptive Research
The research undertaken was descriptive in nature as it was concerned with specific
predictions, with narration of facts and characteristics concerning digital banking service
provided by HDFC bank.
DATA COLLECTION AND ANALYSIS

Primary Data
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Primary data is the data collected for the first time from the source and never have been used
earlier. The data can be collected through interviews, observations and questionnaires.
Secondary Data
Secondary data are those which has already been used or published earlier like the journals,
magazines, newspaper, etc.
In this research project, secondary source used were various journals, articles, newspapers,
and websites of various online journals.
OBJECTIVES
The current study was undertaken to achieve the following stated objectives:
1. To know about the digital banking services provided by HDFC bank.
2. To study the stretch of digital footprints the bank has marked.
3. To know how secure the Netbanking services provided by HDFC Bank.
NEED
With the evolution of banking and mingling of technology with it, the understanding of
banking for the customers has also gone to another level. The purpose of this study was to
know, what perception does the customers of today hold regarding e-banking and various
security, services being provided by the bank.
Another purpose was to know, whether the customers are satisfied with the provided services
that are being served online, what are the changes in services customer wants and the things
that should be added to make the service better.
This study mainly focuses upon the impact of digital banking on the customer as well as
productivity and profitability of the organization due to electronic services.
It also focuses upon the change in banking sector due to implementation of technology and
impact upon the customer who are availing online services of the bank.
SCOPE
The scope of this research is identifying the quality of digital banking in HDFC Bank. This
research is based on Secondary Data. This study only focuses on the dimension of Digital
Banking. It aims to understand the skill of the company in the area of Digital Banking that are
performing well and shows those areas which require improvements.
53
54
CHAPTER 5
DATA ANALYSIS AND INTERPRETATION
BUSINESS STRATEGY
HDFC bank objective is to build sound customer franchises across distinct business so as to
be a preferred provider of banking services for target retail and wholesale customer segment,
to achieve a healthy growth in profitability, consistent with the bank risk appetite. Bank is
committed to do with this while ensuring the highest-level ethical standards, professional
integrity, corporate governance and regulatory compliance, continue to develop new product
and technology is the main business strategy of HDFC bank and maintaining a good relation
with the customer is the primary objective of the bank.
HDFC bank business strategy emphasises the following:
1. Increase market share in India’s expanding banking and financial services industry by
following a disciplined growth strategy focusing on quality and not on quantity and
delivering high quality customer services.
2. Leverage technology platform and open scalable systems to deliver more products to
more customers and to control operation cost.
3. Maintain current high standards for asset quality through disciplined credit risk
management.
4. Develop innovative products and services that attract the target customers and address
inefficiencies in the Indian financial sector.
5. Continue to develop bank’s products and services that reduces bank’s cost of funds.
55
ANALYSIS OF SWOT
SWOT analysis is a framework used to evaluate a company's competitive position by
identifying its strengths, weaknesses, opportunities and threats. Specifically, SWOT analysis
is a foundational assessment model that measures what an organization can and cannot do,
and its potential opportunities and threats.
Strength
1. HDFC bank is one of the leading new age private sector banks.
2. The bank has a nation wise distribution network of more than 4500 branches and more
than 12500 ATMs in more than 2500 cities and towns.
3. It offers several services like online banking, app, mobile banking, NRI services, etc.
4. HDFC bank offers its customers a comprehensive range of transactions across multiple
products through its Net Banking channel
5. Customers can check their account balance, book fixed and recurring deposits, download
account statement up to five years, pay their bills, recharge mobile/DTH connection, and
much more in a secure environment.
6. They are free to choose their own User ID and personalise their Net Banking login. This
makes Net Banking access easy.
7. The net banking facility of HDFC is secured with industry standard technology and
infrastructure.
Weakness
1. HDFC is having limited free transactions monthly after that they will charge fee for every
transaction.
2. HDFC bank takes high charges on demand draft, fund transfer in regular current account
than other nationalized banks.
3. Share prices of the bank are often fluctuating causing uncertainty for the customers.
4. Rural penetration of the bank is low as compared to the other nationalized bank.
5. Competition for public sector and private sector bank means limited market share growth.
Opportunities
1. Mobile banking, internet banking, etc. can be a huge boon for HDFC’s business.
2. Rapid expansion of distribution networks and retail offerings.
56
3. Company also has the opportunity for the dissatisfaction of the customers of public sector
bank and foreign banks.
4. Company gets benefit by minimizing the remedy of both private and foreign bank.
5. HDFC has very good opportunities abroad and a great scope for acquisition and strategic
alliances due to its present financial position.
6. Venturing more into rural areas can be done by HDFC.
7. Providing more complex products to the ever-increasing demands of the industry.
Threats
1. ICICI bank is the potential threat to the HDFC bank online portal.
2. Competitors increasing their business can adversely affect HDFC's business.
3. New banking licenses and regulations can impact operations.
4. Foreign banks that offer complex products.
5. NBFCs (non- banking financial companies) and new age banks are increasing in India.
6. RBI has opened up to 74% for foreign banks to Invest in Indian market.
7. The government banks are trying to modernize to compete with private banks.
57
Pestel Analysis of the company

PESTEL analysis includes factors that are not in the control of organization but it provides
opportunities or poses threats.
Political Factors
Government and RBI policies affect the banking sector to a great extent. With the coming of
new party in power new policies and financial frameworks are formulated which leads to
changes in work process of the financial and banking institutions.
Economic Factors
Every year RBI declares its 6months policy and various measures and rates are implemented
which has an impact on the banking sector. The economic measures affect the banking
sectors to boost the economy by giving certain concessions or facilities. If the savings are
encouraged, then more deposits will be attracted towards the bank and in return they can
contribute more money to the agricultural sector and industrial sector, therefore booming the
economy. If the FDI limits are relaxed, the more FDI are brought in India through banking
channels. In past months RBI has changed its key monetary rates 13 times to curve inflation
and other economic crisis.
Socio-cultural Factors
It includes cultural aspects and health consciousness, population growth rates, age
distribution, career attitude, and emphasis on safety. Life style of India is changing
frequently, the needs and wants of the people are changing day by day and this has opened
opportunities for banking sector to adapt this change. This has made things available to
everyone. Increase in population is one of the important factors, which affects the private
sector banks. Banks would open more branches after looking into the population
demographics of the area. Lifestyle rate of India is very low as compared to other countries;
illiterate people hesitate to transact with banks. But on the other hand, illiterate people trust
more on banks to deposit their money, they do not have market information and other various
opportunities like stocks and mutual funds.
Technological Factors
Technology plays an important role in banks internal control as well as services offered by
them. Through the use of technology and new products and services are introduced. It
includes technological aspects such as R&D activity, automation and technological change.
58
Automated Teller Machine: The latest development in terms of technology in computer and
telecommunication have encouraged the bankers to change the concept of branch banking,
the use of ATM and net banking has allowed the facilities of anytime and anywhere banking.
Credit card facility: Credit card facility has encouraged banking payments. The bank has
now started issuing smart cards and debit cards to be used for making payments, banks have
also started home banking through telecommunication facilities and computer technology by
using various applications through which customer can make balance enquiry, can get the
statements of the accounts, can make money transfer.
Environmental Factors
Today the service sector is contributing half of the Indian GDP. It takes India one step closer
in the list of developing countries. Earlier major contributor was the agriculture sector of the
Indian GDP. This increases the avenues of investment by the industrial sector. This would
further increase the borrowings by the industry’s leading to the banking industry. In regards
with the service sector, as the income of the people will increase, lending and savings will
increase leading to the increase in the business for the banks.
Legal Factors
The banking regulation act also provided that no new bank or branch of an existing bank
could be opened without a license from the RBI and no two banks could have common
directors. The RBI will intervene smooth sharp movements in the rupee and prevent
downward spiral in its value, but will balance this with the need to retain reserves in the event
of prolonged turbulence.
59
CHAPTER 6
FINDINGS OF THE STUDY
1. The Digital Banking services provided by HDFC Bank includes Mobile Banking, Digital
Wallet, Banking through Chats, Opening an account Digitally etc.
2. In 1999, HDFC Bank began its digital journey by launching its online, real-time
NetBanking.
3. The net banking facility of HDFC is secured with industry standard technology and
infrastructure. HDFC bank has implemented an extra security solution for its customers
Secure Access
4. The bank has left a strong digital footprint with the help of initiatives like ‘missed call
banking’, paperless loans, virtual cards etc.
5. One can stay updated about your bank’s products like loans, investment options, etc. Plus,
you can avail a lot of offers on shopping and purchases just with a mobile phone.
6. The bank makes sure that the technology used is up to date and modern banking
equipment’s are employed so as to retain and increase customer satisfaction.
7. The improved service quality and security leads to customer satisfaction and ultimately,
to customer loyalty.
8. A bank customer can perform non-transactional tasks through online banking, includes
viewing account balances, viewing recent transactions, downloading bank statements etc.
60
SUGGETIONS
1. Uncertainties still exist regarding the safety and security of availing the digital banking
services. Major concerns include data leaking and hacking.
2. HDFC bank takes high charges on demand draft, fund transfer in regular current account
than other nationalized banks. This can be reduced.
3. The bank should make effort to familiarise the customers to various services through
demonstration.
4. The bank should adopt more upgraded techniques to make their customers feel more
secure while accessing their account.
5. Awareness campaign should be undertaken by the bank in an effective manner to make
their customer more aware about the net banking service.
6. The banks should adopt the Deposit machines like the ATMs in order for their customers
to deposit the required amount from anywhere at their ease.
7. The bank should be more flexible in order to compete with other rival banks.
8. HDFC bank should also strive to increase its reach to the rural areas for increasing its
customer base.
61
CONCLUSION
The emergence of new technology has been changing the attire of the banking. Technology is
aiding globalization of financial market across the globe. Customer’s expectation of new
products and alternative delivery channels has been rising. Banks are under tremendous
pressure to offer today what the customers would be expecting tomorrow. Due to innovation
and spread of new technology, banks today offer the customer a choice to conduct their
business across the counter.
The objective of this study was to see how strongly HDFC bank has established its digital
footprint in the market and what more can be done towards it. The research was descriptive in
nature.
Majority of the people were aware of the digital banking facility of the bank and most of
them were also digitally connected to the bank. The customer held a view that digital banking
has led to ease of doing business to a great extent whereas there were also a few who were
still unsure about the use of digital banking.
It was also concluded to the end of the training that the services offered by HDFC bank is fast
and satisfying compared to other bank offering the same service. The reason behind that
being, HDFC bank offer door to door service and fast service in order to satisfy its customers.
The bank is more prone to adopt new technology in its service offering for its customer
satisfaction.
62
BIBLIOGRAPHY
1. https://www.hdfcbank.com/
2. https://www.ventureskies.com/blog/digital-banking
3. https://www.fintechfutures.com
4. https://www.hdfcbank.com/personal/resources/learning-centre
5. https://economictimes.indiatimes.com
6. https://bfsi.economictimes.indiatimes.com
7. https://www.nelito.com/blog/what-is-digital-banking-its-benefits-and-future.html
8. https://www.financedigest.com/as-banks-become-more-digital-customer-
satisfaction-calls-for-a-robust-approach.html
9. https://www.thehindubusinessline.com/topic/digital_banking/
10. https://thedailyguardian.com/impact-of-digitalisation-on-the-indian-banking-
sector/
11. https://thedigitalfifth.com/digital-banking-in-india-and-its-components/
12. https://enterslice.com/learning/evolution-and-growth-of-digital-banking-in-india/
13. Kelman, James (2016). The History of Banking: A Comprehensive Reference
Source & Guide
14. Kumar, A. A., Hariharan, S., & Immanuel, D. A. (2016). Internet Banking-
Benefits and Challenges.
15. Ankrit. (2011). Factors Influencing Online Banking Customer Satisfaction and
Their Importance in Improving Overall Retention Levels: An Indian Banking
Perspective. Information and Knowledge Management.
63

A Strategic Analysis On Digital Banking With Reference To HDFC Bank

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A STRATEGIC ANALYSIS ON DIGITAL BANKING WITH REFERENCE TO HDFC BANK

Benefits Of Digital Banking

History of Digital Banking

1993 - Temenos AG is founded, a provider of banking software systems to retail, corporate,

1997 - Tangerine launches, becoming the first digital-only bank in Canada.

2009 - Online banking hits 54 million users in the United States.

2016 - Millennials succeed in fundamentally shifting digital banking preferences, signaling to

(3) According to Temenos’ 2019 state of digital banking report, 65% of digitally

What Digital Banking means for Banks?

Back-end Banking Architecture

3. IT teams do not always grasp business priorities

Direction towards Digital Cash

Emerging Digital Solutions

Future of digital Banking

Risk and Challenges

Digital Banking Solutions

1. Delivery of digital services through different channels

Digital Banking for Traditional Banks

What are digital banking platforms?

Many digital banking platforms encourage cross-institutional services by connecting their

1. Checking and savings accounts

2. Competitive interest rates compared with traditional banking

4. Financial management tools

5. Real-time transaction alerts

7. Virtual cards and cardless payments

10. Deposit insurance

11. Free ATM transactions with participating branches

12. Competitive FX rates or even zero rates

13. Fully compliance with regulators and deposit insurance

Digital banking platforms focus on modular infrastructure

Adding digital assets to digital banking platforms

ORIGINS OF MODERN BANKING

Eighteenth-century British banking practices and structures were transported to North

BANKING AND MACROECONOMIC ACTIVITY

to upholding the finest ethical principles, professional transparency, corporate governance,

HDFC Bank's business concept is built on five basic values:

The Brand Promise

Products of the Bank

Accounts and Deposits

13. Easyshop RuPay NRO Debit Card

BUSINESS PROFILE OF THE ORGANIZATION

BANKING AND DIGITAL FOOTPRINTS

FUTURE IS INCREASINGLY DIGITAL

DIGITAL BANKING IN INDIA

FEATURES OF DIGITAL BANKING

ADVANTAGES IN DIGITALIZATION OF BANKS

 PAPER WORK REDUCED

WHY USE NET BANKING?

HOW SAFE IS NET BANKING?

WHAT’S NET BANKING ALL ABOUT

HOW TO REGISTER FOR NET BANKING?

THIRD PARTY TRANSFER

WHAT PAY WITH PAYZAPP?

THINGS THAT CAN BE DONE WITH CHILLR

HOW TO GET STARTED

Unyathanakorn & Rompho (2014) “Factors Affecting Customer Satisfaction in Online

Sornaganesh et al. (2020) “Impact of Covid - 19 Outbreak in Digital Payment” highlights

Ganesan & Meena (2020) “Customers Perception on Effectiveness of Digital Banking

DATA COLLECTION AND ANALYSIS