BANKING INNOVATIONS THROUGH TECHNOLOGY

1. Banking Innovation ISBN 978-93-93996-89-3 1
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BANKING INNOVATIONS THROUGH TECHNOLOGY
Dr. P. ANNAMUTHU
Assistant Professor
Department of Commerce Business Application
Sri Krishna Arts and Science College, Coimbatore
Abstract
Indian banking system touches the lives of millions of people and
it is growing at a fast speed. Banking industry is facing number of
challenges in India like changing needs and perceptions of
customers, new rules from time to time and great advances in
technologies. The pressure of meeting these challenges have
forced banks to change the old ways of doing business. The
research paper focuses on how the technology has changed the
face of banking in India. India's banking system has seen some
major (related to managing money) inventions of new things in
the past at least 20 years which lead to huge/extreme
improvements in banking services and operations. The different
inventions of new things in banking and (related to managing
money)part/area are ECS, RTGS, EFT, NEFT, Cash machine,
Retail banking, Debit and Credit cards, free advice-giving
services, online banking system, mobile banking and many more
value added products and services. Banks are investing heavily in
adoption of these innovations of new things. The need of hour is
to design such a system that encourages the (wasting very little
while working or producing something) of investment in
inventions of new things and widens the gap between
money/money income and costs involved with reference to
(related to computers and science) up step.

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Keywords: Banking, Digitalization, Technology, Innovations,
Challenges, Online Banking,
Introduction:
Digitalization is having a massive impact on our lives in the 21st
century. It alters industries forcing them to either accept the
innovations or stay behind competitors. A special role in this
process is assigned to the banking sector, which is at the forefront
of introducing new digital banking innovations and solutions into
its field of operation, which will further serve as catalysts for
digitalization in other sectors of the economy. The world of
banking is undergoing a historic transformation. Paramasivan C
& Ravichandiran G (2022), Technology is one of the major parts of
banking sector which decide the quality and effectiveness of banking
services. Inclusive banking services to un banked people will be
possible only with the help of innovative business practices. With this
view, this study will provide an output to understand the impact of
innovative business practices of banking with respect to socio-economic
development. New technologies are designed to meet the growing
expectations of customers who are demanding and picky
regarding financial services. Clients expect quality service, which
prompts banks to strive for improvement and enhancement of
what they can offer to meet growing demands. Many banks are
resorting to app and web development services to create and
implement advanced solutions. In this regard, the quality of
banking services, the number of new banking apps, and the speed
of their delivery to the consumer have increased recently.
APIs
The importance of APIs has grown exponentially in recent years,
playing an essential role in the banking and finance industries.
APIs provide a more powerful means to share data and deliver
personalized services. Through APIs, banks can provide their
users with secure access to their finances through third-party
platforms. It also helps companies build banking-powered
products. Flexibility, streamlined financial services, competitive

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edge allowed banks to accomplish the following: Reduce the
intimidating administrative hurdles that may typically prevent
users from receiving loans; The capacity to generate real-time
insights on cash flow, cash position, and more, across borders; A
complete view of all financial activities in a single place with the
ability to control, track, and analyze.
Real-Time Payments
With the increasing demand for immediate payments, systems
worldwide need to either meet this request or be kicked out of the
market. Customers are requiring more convenience and security
services and processing all their transactions with rapid,
instantaneous results. Real-time or instant payments are the latest
banking innovations that are becoming the new norm, the catalyst
for the most vital transformation in the global payment panorama.
 Speed: Instant access can transform a business or a
specific project when it deals with a matter of urgency.
 End-to-end communication: Real-time payments allow the
credit card data to be collected, matched, and sent together
in a single transaction.
 Efficient payment route: Instant payments are meeting
liquidity needs and providing more financial control to
clients.
 Irreversible payments: Real-time payments are irrefutable,
meaning that once the transaction is complete, there is no
way to reverse it.
Cloud Technologies
The capabilities of the latest banking innovations come in handy
in an increasingly digital age, in which customers demand
enhanced digital experiences from companies. Cloud computing
has democratized and increased data processing capacity and
security, allowing small and big banks to gradually update their
outdated systems and succeed in web development. By relegating
most services to the cloud, financial institutions can move faster
and manage the scales of their operations with greater efficiency.

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Although most fintech and digital banking services organizations
have not yet deployed their core systems to the cloud, the
majority of them are planning to make this move. Banks are
hesitant to rush into this new technology due to the complexity of
the deployment, the risk associated with it (governance, security,
and control). The IBM research states that 91% of critical banking
workloads are still housed in an on-premises data center.
Biometrics
The future of authentication technology in banking can be
summed up in one word – biometrics. Biometrics is an important
digital banking innovation used to identify individuals based on
their physical and behavioral characteristics, unique to each
individual. Although not yet ubiquitous, many market leaders are
already actively adopting the use of physical features
(fingerprints, voice, face, keystrokes) for automatic recognition.
Identity authentication will increase the reliability of banking
operations and help prevent fraudulent activities. Also, after
passing the identification, banks expect to offer customers
individual services much faster.
Some banks are considering using technologies for recognizing
visitors not only by their faces but also by their gait while
navigating the building and to identify the client’s emotions to
assess the quality of service. Biometrics is a critical step towards
digital transformation for PFIs facing today’s mobile security
realities. For instance, in addition to fingerprints, AI reads a set of
unique face characteristics that do not depend on hairstyle,
glasses, makeup, and other factors. This technology is called a
biometric face descriptor: it cannot restore the original face
image, and therefore the data is considered impersonal and
protected from fraudsters. In addition, the program recognizes a
voice by 70 parameters while correlating speech with facial
expressions. This eliminates deception using a pre-recorded voice.
Also, in some banks, AI can identify a person by the speed of
typing on the keyboard. Another way to use biometric

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technologies is to authenticate the pattern of veins in the palm:
scanning is carried out using infrared radiation passing through
the tissue of the hand. In addition to combating fraud, biometrics
helps the fintech and digital banking clients access remote
services requiring identity verification. For users located in
remote regions, it gives a choice of the best deals in any bank,
regardless of their territorial remoteness.
Chatbots
To speed up and facilitate communication between an employee
of a bank and a client, banks began to use chatbots, simulating a
dialogue with a user, thereby reducing the need to use channels
such as telephone or e-mail. Chatbots that answer standard
questions help lessen the load on call centers, keep any client on
track and expand the bank’s capabilities in additional
communication channels with customers, which, in turn,
improves the quality of service.
The chatbot market is growing by 25% annually, and the chatbots
themselves process 50% of requests. Chatbots technologies in
banking are able to connect to the clients’ financial transactions
database, analyze income, expenses and offer to accumulate, save
or replenish a savings account. You can now buy air tickets, pay
utility bills or place an order in a store after a minute of
conversation with a robot and one click in the app.
In addition, chatbots notify customers about new banking
products and ongoing promotions and provide information about
exchange rates. This method of communication operates 24/7 and
provides quick access to information for users who use instant
messengers (programs for a smartphone or personal computer
designed for online communication).
Process Automation
The development of AI technologies is skyrocketing and finding
its application in more and more industries. Banks are becoming
conglomerates of vast amounts of The development of AI
technologies is skyrocketing and finding its application in more

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and more industries. Banks are becoming conglomerates of vast
amounts of information, and now we see rather intense
competition in the banking segment. Digital banking innovations
allow for further reduction of costs and increased profits.
Therefore, AI and its correct application in terms of targeting
banking products is now the focus of financial organizations’
attention and is one of the most significant innovations in online
banking.
AI
According to PwC, most financial leaders invest in AI. 52% of
CEOs invest in AI, 72% believe it will be a commercial
advantage. AI is already creating a completely new market and
has a positive effect on the client’s interaction with the bank. The
technology is used in transaction accounting, fraud detection,
reporting, and planning because it makes decisions faster and
makes them more accurate and cheaper than a human.
AI is able to predict the desires of a person, based on the
information that it possesses and this allows banks to fine-tune the
personalization of customer interaction. The client, opening the
mobile application, will see relevant proposals for actions
(important functions, necessary reports, current spend analytics,
etc.).
AI technology is aimed at solving many problems, the main one
of which is the adaptation of banking instruments to the wishes
and needs of financial institutions’ clients and the personalization
of banking products and services. The use of this technology
makes it possible to simplify the data collection system, recognize
and analyze speech and video, use neural networks and biometric
identification.
AI is also actively used to determine credit scoring (a method for
assessing the creditworthiness of bank customers based on
numerical statistical methods). For example, these technologies
set the credit limit acceptable for the client based on the automatic

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analysis of the borrower’s data, after which the financial
institution, based on this information, adjusts the loan amount.
OCR
One of the latest banking innovations is OCR. Most banks use
optical character recognition or OCR in their activities to digitize
customer service workflow, work with counterparties, and archive
documents. OCR technology processes large amounts of text and
translates the image into an editable format. OCR software scans
documents and automatically checks the correctness of their
filling, and then sends scanned images to the bank employee for
verification. After successful completion of verification, the
scanned documents are saved to the archive and can be further
used in the bank’s information system.
The latest mobile OCR and scanners are easily integrated with
iOS, Android, and web platforms. The benefits of this technology
include automating processes and reducing human errors,
ensuring high accuracy in document scans. OCR technology
enables document comparison in an efficient manner, speeding up
loan processing by up to 70 percent.
Microservices
Instead of the traditional version of the monolithic architecture,
making it difficult for banks to grow beyond a certain point,
banks are moving to a more advanced model. The microservice
architecture enables the application to be split into many different
pieces. The applications are divided into independent parts that
operate separately from one another. And there is their unique
secret: the way that the microservices approach eliminates the
concerns that arise with conventional apps is that it is not limited
to single server software.
A change in one part of a traditional application may affect the
operation of the entire app. With microservices, everything is
different. No changes to one module or function affect other
functionalities or modules; each module and function is
independent and able to work independently. This type of

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architecture enables frequent changes and updates to be made,
minimizing both the probability of failure and the lead time of
tasks completion, making iOS or Android app development easier.
Other benefits include: Increased processing speed; High
scalability; Superior security; Enhanced performance;
Customizable functionality; Simple integration.
Internet Of Things
A network of internet-connected devices that collect and transmit
data is called the Internet of Things. As the world reaches 4.66
billion people accessing the internet in 2021, the IoT can truly
provide fantastic changes to many industries, including new
exciting developments in banking.
The potential use of embedded finance is becoming highly
prevalent, and the many innovations and advancements in
smartwatches and sensors throughout the home are beginning to
show how we can see this trend take place further. From the
wearable set on the horizon to the smartwatches and other related
devices foster a connection between your bank account, your
smart devices, and the privacy of your home.
As fintech and digital banking innovations evolve, banks are
looking to integrate new ways to improve their services. IoT
offers a range of benefits for credit cardholders, including a more
reliable and instant banking experience. Banks can also predict
credit card fraud and debit transitions, giving them an opportunity
to evaluate their security.
Big Data And Advanced Analytics
Banks invest tens of millions annually in collecting, storing, and
processing Big Data. Fintech and digital banking institutions
operate with a huge amount of data: debit card transactions, ATM
cash withdrawals, credit history, and much more. Banks use big
data to study customer habits and segment them, manage sales,
assess risks and analyze competitors.
Tools based on Big Data analysis allow you to process significant
amounts of information coming from different sources in any

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format. Big Data technologies make it possible to store, research
and receive correct information about the “digital footprint” left
by all Internet users, which, in turn, allows banks to form personal
offers for their customers, effectively allocate resources and form
a digital strategy.
BD analysis allows you to divide bank users into segments in
accordance with specific profiles, which are compiled using these
technologies based on the customer spending model, and
identification of transaction channels. BD technologies also help
to understand the structure of expenses and the previous credit
history of a client. Financial organizations use this to assess the
risk when issuing a loan.
Enhanced Consumer Experience
Over the past several years (and especially the past two), many
developments in banking were focused on the complete transition
to mobile banking. For many financial service users, this is the
path most often used to obtain the necessary information or
conduct individual transactions. The share of customers using a
mobile application or an online bank on an ongoing basis is
constantly growing. This means that the comfort and functionality
of mobile banking applications will become the basis of
competitive advantage in the coming years.
Modern users are technologically advanced, require a
personalized attitude, and are very impatient. Their priority is not
the channel of communication with the bank, but the instant
availability of services, the possibility to resolve the issue 24/7,
and the safety of operations.
This is what modern banks are working on. They strive to reduce
the cognitive load of their users, make access to finance more
convenient, and transactions even faster. That is the only way they
can stay in the market and stand against the competition.
Human Digital Banking
Today, users need something more than a mobile digital bank,
they need the personal accompaniment of a living person. That’s

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the human-focused technologies in banking that have appeared in
the finance industry recently and that is what users require now.
A new approach to banking called Human Banking focuses on
providing digital banking with an accessible, understandable, and
personalized experience. With human banking, each client can
choose a personal banker that meets their financial needs,
regardless of the account balance. One simple step for banks to
take towards embracing a more human strategy is to provide their
customers with fun SMS verification codes instead of numeric
ones. As a result, the customer will perceive a greater connection
with the process and will remember the temporary password more
quickly.
Apart from offering assistance-related facilities, human banking is
a kind of social commitment. It is great because it is all about
understanding that money is a very sensitive asset. The
difficulties of its management can hinder clients’ plans and goals.
Human Banking aims at providing all the benefits of digital
transformation in banking, ensuring safety, trust, and human
interaction at the same time.
Voice Recognition
Robots and virtual assistants perform routine and time-consuming
tasks without human intervention accurately and quickly. In
addition, the conversation with the robot can be personalized. In
the coming years, chatbots might be managing 85% of client
requests.
The voice interface is not that easy to develop and deploy though.
It requires a whole set of add-on solutions: deep links to open
screens with products, complex integration for executing
commands, self-learning engines for dialogues, voice recognition
tools, etc.
Blockchain
If you are a part of the banking industry, staying on the cutting-
edge is paramount to success. One of the most recent technologies
that banks are implementing is blockchain. In 2018, Deloitte

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conducted a survey that revealed the curiosity and excitement of
the banking industry towards Blockchain technology. One
thousand of banks took part in the research which ultimately
revealed their trust in blockchain and the security it offers. In fact,
84% of respondents consider it to be more secure than traditional
solutions, and over 95% claim they are willing to invest in the
technology.
Blockchain and distributed ledger technology have been used for
financial and business use cases and have quickly spiraled beyond
cryptocurrency use. From logistics to healthcare to solar energy,
blockchain is everywhere, and of course, it hasn’t gone past the
banks. The blockchain provides support for hosting, integrating,
and managing various financial transactions, which is why it
could provide transparency to many services that are currently
administered by third parties. By moving away from
intermediaries, blockchain can make money borrowing more
secure and provide lower interest rates.
By storing customer data on decentralized blocks, blockchain
makes sharing information between financial institutions more
accessible and safer. Several Canadian banks, for instance, use
blockchain technologies in banking to allow users to control and
manage data they provide to financial institutions.
5G
The speed of data processing and customer engagement becomes
more important as digital transformation in banking gains
momentum and full steam ahead. With the advent of 5G
technology, data transmission and connectivity will continue to be
exponentially faster and uninterrupted, enabling a whole new way
for business growth and innovation.
5G will offer faster and more user-friendly payment options that
will make mobile and digital transactions even more of a popular
choice for many consumers. Faster 5G networks will help banks
perform more complex tasks much more quickly. Thanks to this

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speed increase, banks will be able to combat any malicious
behavior or fraudulent activity in real-time.
Final Word
Digital banking innovations are changing the relationship
between customers and banks, improving financial services, and
lowering the cost involved with customer transactions.
Implementing the above-mentioned innovation in online banking
is an essential facet of the transformation of the entire industry. To
increase the positive effect of innovations, it is best to introduce
digital developments in banking gradually, mastering related
industries, increasing the speed of product improvement, while
focusing on data security.
Conclusion:
India is one of the top 10 in the world, where the banking
part/area has huge/extreme possible ability to grow. Today, ability
to move around and customer convenience are viewed as the first
factors of growth and banks are continuously exploring new
technology, with terms such as mobile solutions and being used
with greater. nevertheless, Indian banking industry faced many
challenges such as ever-increasing competition, pressure on
spreads, and changes to match up/make even with global
standards have required/resulted in a processes in order to remain
competitive in this energetic/changing. Banks have to put into use
an approach to satisfy the ever changing needs of customers and
to grab a better. Development of fancy products with low cost
technology is the key. This calls for in- depth investigation of
customer needs the market and competitor. This analysis plays a
very important role in figuring out new products and services.
Due care will have to be made while hugging/supporting
technology and changing traditional touch points to electronic
ones, so that human touch with customers is also not lost. In the
end, it can be rightly said that working well and getting a lot done
and will be the watch words in the banking industry in the years
ahead. Planning organizational effectiveness and operational will

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govern the survival and growth of besides bringing changes in the
attitude/set of opinions of the workers, which is extremely
important with the changing times.
References
1. Kanakalatha.V (2017)” Emerging Issues and Challenges
in Banking and Financial Services on Indian economy-
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Issue3,MayJune,2017.,pp.1669-
1673.www.ijariit.com,editor@ijariit.com.,
2. https://ein-des-ein.com/blog/innovations-in-banking-
technologies/
3. Paramasivan C & Ravichandiran G (2022), A Study on
Technology Driven Innovation Practices in Banking
Sector in Tiruchirappalli District, International Journal of
Early Childhood Special Education . 2022, Vol. 14 Issue 5,
p3949-3959. 11p
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https://rbidocs.rbi.org.in/
rdocs/PublicationReport/Pdfs/0FSR6F7E7
BC6C14F42E99568A80D9FF7BBA6.PD