Recent Trends and Development of Banking System

RECENT TRENDS AND DEVELOPMENT OF BANKING SYSTEM IN INDIA
In recent years, the Indian economic environment has seen a lot of changes because
of reforms and measures taken by the banks. The largest change is seen in the
financial sector where the banking sector is the largest player to notice this change.
So, the banking sector is strong enough to withstand any sort of pressure and
competition. these trends in banking have been very visible in the last few
years. There is a fairly well-developed banking system with different classes of
banks – public sector banks, foreign banks, private sector banks – both old and
new generation, regional rural banks and co-operative banks with the Reserve
Bank of India as the fountain Head of the system.
Indian banking sector can be majorly divided into three sections.
Phase I – This is from 1786 to 1969 and it was the initial phase of the banking. So, in
this phase, many small banks were set up.
Phase II – This phase can be considered from 1969 to 1991 where regularization,
nationalization, and growth of banks comes into the picture.
Phase III – This phase is from 1991 onwards and it consists of liberalization and it’s
after effects.
Mobile Banking
the vast penetration of smartphones created a need among customers
to avail banking services on their mobile phones. Cheap data charges
also contributed towards the increase in usage of mobile banking.
Unifi ed Payment Interface (UPI)
UPI is a trend that emerged in the last couple of years and it is
revolutionizing the way we pay and receive money. Transactions can be
done within seconds using this interface.
Digital-only Banks
Digital-only banks operate only through IT platforms which can be
accessed using mobile phones, laptops or tablets. Digital-only banks
operate in a paperless and branchless model and seem to overtake the
traditional system of banks in the future.
Trends in Banking
1. RTGS – Real Time Gross Settlement

RTGS was introduced in India in March 2004. It is a system through which a bank
receives instruction in the form of electronic for transferring the funds from one
bank account to the other bank accounts.
As the name suggests, the transfer of funds between the accounts takes place in
‘real time’. The RTGS system is kept running and maintained by the RBI.
Settlement in “real time” means the transactions happen almost immediately “gross
settlement“ means transaction is settled one to one basis unlike national electronic
fund transfer (NEFT). Where the transaction happen in bulk at a given point in time
during the day. This is mainly used for transaction which high in value and need to
be cleared immediately. In this the bank that receives money has to credit the
amount in the account with in 30 min after receiving it. Services of RTG’s window
for transaction are available to banks from 9.00 am to 4.30 p.m in a week and 9.00
am to 4.00 pm in Saturday’s for settlement at from RBI’s end.
2. E-cheques
Electronic cheques works same as paper cheques but payment transaction can be
done through digital format. XML document provide mechanism to authenticate
parties to make transactions. In e-cheques signatures are accompanied by bank –
issued certificates which tie with signer’s key to bank account. E-cheques make
easy transfer of payments to customers which are easily available to make
payment for online purchases. It reduces chance to cheque bouncing banks
always give awareness about their account details when any transaction can be
done.
3. Electronic Clearing Service

ECS is an electronic system that is used to make the payments and receipts that are
in bulk. The payments need to be similar in nature which can be smaller in amount
and repetitive in nature. Thus, this facility is specifically beneficial to government
agencies and companies that make or receive large bulk payments.
4. EFT – Electoral Funds Transfer

It is a system of transforming money from one bank account direct to another
without any paper money charging hands. So, in this system, the concerning party
that wants to make the payment instructs the bank and make a cash payment or
authorizes the bank to transfer the funds directly.
So, the sender should provide the bank with the complete details like the name of
the receiver, account type, account number of the respective bank, city name,
branch name, and other details to the bank.
Thus it will ensure that the amount reaches the beneficiaries account quickly and
correctly.
5. ATM – Automatic Teller Machine

This is the most popular method in India to withdraw the money. The customers
can enable this service to withdraw the money 24 by 7.
It allows the customers to perform all day to day bank activities without interacting
with any humans. Furthermore, these facilities are also used for the payment of
funds, utility bills, etc.
6) Point of Sale Terminal

Point of Sale Terminal is a computer terminal that is linked online to the
computerized customer information files in a bank and magnetically encoded
plastic transaction card that identifies the customer to the computer. During a
transaction, the customer's account is debited and the retailer's account is
credited by the computer for the amount of purchase.

7) Tele Banking

Tele Banking facilitates the customer to do entire non-cash related banking
on telephone. Under this devise Automatic Voice Recorder is used for simpler
queries and transactions. For complicated queries and transactions, manned
phone terminals are used.

8) Electronic Data Interchange (EDI)

Electronic Data Interchange is the electronic exchange of business
documents like purchase order, invoices, shipping notices, receiving advices etc.
in a standard, computer processed, universally accepted format between trading
partners. EDI can also be used to transmit financial information and payments in
electronic form.
9. Bio- metric authentication

For the purpose of security the bio-metric authentication plays a major
role. Now a day’s many organisations are implementing bio-metric
authentication. It works comparing two sets of data
 Owner of the device
 Visitor of device
Both are one and same gives access to person. There are different types of
scanners
 Finger print scanner
 Eye scanner
 Speaker reorganization
Conclusion
The banking today is re-defined and re-engineered with the use of Information
Technology and it is sure that the future of banking will offer more sophisticated
services to the customers with the continuous product and process innovations.
Thus, there is a paradigm shift from the seller's market to buyer's market in the
industry and finally it affected at the bankers level to change their approach from
"conventional banking to convenience banking" and "mass banking to class
banking".

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RECENT TRENDS AND DEVELOPMENT OF BANKING SYSTEM IN INDIA

Indian banking sector can be majorly divided into three sections.

1. RTGS – Real Time Gross Settlement

3. Electronic Clearing Service

4. EFT – Electoral Funds Transfer

5. ATM – Automatic Teller Machine

9. Bio- metric authentication

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