This document discusses digital banking in India. It provides an overview of digital banking products and services, the evolution of digital banking and payments in India from 1980 to present, and emerging technologies behind digital banking. It also analyzes the digital banking landscape and ecosystem, maturity models for digital transformation, and the future of digital payments in India with innovations like UPI and Bharat QR expected to significantly reduce cash transactions by 2022.

1. Digital Banking in
India
Operation, Payments and Clearing
Supratik Nag

2. Content
• Overview of ‘Digital’ from Banking Perspectives
• ‘SMAC’ Philosophy
• Digital Banking Journey in India
• Digital Banking Products and Services
• Digital Banking Landscape
• Digital Banking Technology
• Digital Banking SWOT
• Digital Banking Operation
• Ecosystem
• Maturity Models
• Operating Models
• Digital Payments
• Evolution of Consumer Digital Payments
• Differentiators of Payments Gateways
• Digital payment types and Clearing
• Case Study on Social Inclusion
• Roads Ahead

3. Digital World – ‘SMAC’ Philosophy
• Social Media
• Mobility
• Analytics
• Cloud

4. Digital Banking Journey in India
1980
•MICR
•Standard
Cheques
•Encoders
1990
•ATMs
•Electronic Fund
Transfer
•Branch Connectivity
•Core banking
2000-10
•IMPS
•RTGS
•NEFT
•NECS
•Online banking
•Tele banking
2011+
•Biometric
•Mobile banking
•Cheque truncation
Mechanization Automation Internet Mobile
Technology Evolution in Indian Banking

5. Digital Banking Evolution
• Ongoing technology/ digital evolution
• Entry of non-traditional players
• More demanding customer expectation
• “Enabling” regulation and ‘Digital
India’ initiatives
Four Seismic causes

6. Digital Banking Products and Services
Digital Banking
Products and
Services
Digital Banking
Products
Lending
Insurance
Mutual Fund/
Broking
Personal Finance
Digital Payments
Products
Payment Banks Mobile Wallets
Payment
Gateways
Payment
Infrastructure
ATM
mPOS

7. Digital Banking Landscape
Traditional Banks
Payments Banks
Fintech
PaymentLending
Personal
FinanceTax
Government Initiatives

8. Technology Behind Products and Services
Payments,
Clearing and
Settlement
Mobile and Web-
based Payments
Digital
Currencies
Distributed
Ledger
Deposits and
Lending
Crowdfunding
Peer to peer
lending
Distributed
Ledger
Market
Provisioning
Internet of
Things
Cloud
Computing
E-Aggregators
Investment
Management
Robo Advice
Smart Contacts
E-Trading
Data Analytics
and Risk
Management
Big data
Artificial
Intelligence
Robotics
Blockchain Technology RoboticsArtificial Intelligence

9. Digital Banking SWOT Analysis
•Increasing awareness of digital
banking benefits
•Better infrastructure by RBI and
Government initiatives
•Higher growth in smartphone user
and cheaper network
•Better customer services and
advices provided by branch
banking
•Any security related issues and
news
•‘Personal touch’ by branches
•Security concern over digital
mode
•Slowly growing acceptance
towards digital banking and
payments
•Demographics with age group
above 45 less inclined towards
digital world
•24X7 availability
•Faster and low cost transaction
•Provide better convenience and
more efficiency
Strength Weakness
OpportunityThreat

10. Digital Banking Ecosystem
Digital
Banking
Ecosystem
Financial
Institutions
E-
commerce
Fintech
Companies
CRM
Core Financial
Services and
Products
Non-core
Financial Services
and Products

11. Digital Banking Maturity Stages
Contact Centres
and Digital
Channels
Channel
Integration
Centralized
digitalization
Fully integrated
and automated
digital
experienceAdopting Digital
Basic Digital
Advanced Digital
Mature Digital

12. Digital Banking Operating Model
Federated
Model
•Starting
digital
transition
•Separate
digital
initiatives by
different
business
departments
/ lines
Shared Service
Centre Model
•Reached
minimum level
of maturity
•Capitalize on
available know-
how, harmonise
methodology
and foster
communication
Competency
Centre Model
•Central
dedicated
body to
manage
strategic
digital
initiatives
across
business
lines
•Bring in new
capabilities
to anticipate
new future
trends
Core Digital
Model
•Fully digital
companies
and/or profit
centres
organized
around
digital core
platform
•Attract new
generation
of customers
with digital
cash
operation
Adopting Digital Basic Digital Advanced Digital Mature Digital

13. Evolution of Consumer Digital Payments
Single
Channel
Closed
Multi-
channel
Open,
Fragmented
Multi-
device,
social
Online Mobile Internet of Things
2000-2014 2015-2019 2020+

14. Payment Gateways
Payment gateways cost (Setup, Annual fees, Transaction fee etc)
Time to setup
User interface of gateway
Payment options (Credit/ Debt Cards, Netbanking, UPI etc)
Aftersales support
Banks
Third
Party
Vendor
Differentiators

15. Digital Payments Types and Clearing
Card
Payments
•Credit, Debt
and Prepaid
e - Payments
•NEFT
•RTGS
•IMPS
•ECS
Mobile
Payment
•Mobile wallet
to wallet
transfer
USSD
•National
Unified USSD
Platform
•Unstructured
Supplementar
y Service
Data
AEPS
•Aadhaar
Enabled
Payment
System
UPI
•Unified
Payment
Interface
•BHIM
Cards Clearing
Scheme
National
Clearing House
Mobile Wallet NPCI NPCI NPCI

16. Why UPI?
Advantages Disadvantage

17. Case study on Social Inclusion
• https://youtu.be/9e2MDpH3KwA

18. Roads Ahead…
• Next-generation payment structures, such as mobile wallets, payments
banks, Bharat QR, and electronic authentication, have created new forms
of digital payment channels and servicing capabilities.
• Further, the government is further nudging the country toward cashless
payments by restricting values of cash transaction and provide
incentives towards digital payments.
• By 2022 digital payments will be more than cash transactions and two-
third of this will be through UPI, Mobile Wallet and Rupay Cards which
shows a tectonic shift in payments from traditional types.
• Regulatory framework to mitigate risk concern in digital banking and
digital payments and strengthen customer confidence.