Role of digitization in banking

digitization

What is meant by digitization :-

  • Digitization is the process of converting data into digital format. Digitalization means the adoption of technology. But these two words are being used interchangeably.

Role of digitization in banking :-

  • Banks are not just a part of our lives, but have a significant role in our daily lives. For many, day will not end without at least a single financial transaction. Thus banks always try to adopt latest technologies to enhance customer experience.
  • Digitization is not an option for banking industry, rather it is inevitable because every industry is being digitized and banking sector is no exception.
  • Mobile banking is increasing at a fast pace more than online banking.
  • Advantages of digitization in banking :-

    • Improved customer experience.
    • Reduction of costs for banks and customers as well by using ATMs, cashless transactions etc.
    • With more digital data available with banks, they can take data-driven dynamic decisions by using digital analytics. This benefits both customers and banks.
    • Technology is non-discriminatory. Everyone will be treated same at banks.
    • Number of customers will be increased for banks because of the increased convenience of banking.
    • Digitalization reduces human error.
    • Need of handling large amounts of cash will be reduced.
    • Opening and maintaining bank accounts are never been this easier.
    • Repetitive tasks will be eliminated by automation.
    • Rural and urban gap will be eliminated.
    • With the increasing cashless transactions, fake currency threat will be reduced.
    • Productivity will be increased.
  • Disadvantages of digitization in banking :-

    • Digitalization reduces the effort of employees and hence results in loss of jobs.
    • Some bank branches may cease to exist with the increasing use of online banking.
    • Banks will be more vulnerable to cyber attacks.
    • Privacy may have to be compromised. No one can hide crores of rupees in banks and just act middle class. 😛
  • These disadvantages are just temporary. Loss of jobs will be compensated through creation of new jobs such as cyber security, research team for innovation in technology etc.
  • It’s not that banks are going to have less work, but it’s just that the role of retail banking sector changes.
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Conclusion :- 

With the increasing usage of smartphones, digitization of banking sector is inevitable to catch up the increasing expectations of the world. It indeed reduced human errors and increased convenience. But the fact that cyber threats are on the rise, banks must be very careful and should be prepared to handle cyber attacks.

Afterwords :- What is your stance on this topic? Express your thoughts in the comment section below.


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10 comments ✍

  1. Digitisation also brings transparency so all the scams that happened in the past would be avoided.People would fear while taking bribe which leads to reducton in black money and ultimately it would lead India towards corruption free society.

  2. but one whose age is 45 and more do you really think he/she will go for change and how much difficult it will be for him/her. the one who is skilled specialized in their zone, for them how they will be compensated…

    1. yes i agree, it is realy a big challenge but we are the part of the youngest country in the world and it is well known that changes always take some time to adopt them.

  3. Yes agree that many will lose their jobs but still digitalisation of banking sector by converting banking sector from paper to paperless is quite good for economy and it is a sign of development of banking sector as the economy will grow with the growth of banking sector it will indirectly generate more employment in the economy

  4. like you have mentioned that the loss of jobs will be compensated by the creation of new jobs, but how is it possible for a person who sits at a counter in bank to facilitate the transaction to help those who got jobs in cyber security department. Both the sectors are entirely different and require completely different skill set. So it might be possible that those who have lost jobs may not be able to find new jobs.

    1. Before facing such problem banks should traine their stafs by providing them with cyber security courses..

      1. it is not that the bankers will lose there jobs in banking rather there will be less job creation in the banking sector and the future job shift will be towards cyber security. banking is not possible without professional banker so yes there may be some lean period in banking but everything will be fine soon and no current employee have to learn anything new. It will be just job shift from one sector to another in future. Hope this helps ☺

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