The document discusses various aspects of e-banking, outlining its advantages such as convenience, accessibility, and cost savings, while also addressing challenges including security risks, technological dependencies, and privacy concerns. It reviews different types of e-banking including internet and mobile banking, along with features like fund transfers and bill payments, and compares digital banking with traditional banking. Furthermore, it highlights the evolution of payment systems in India and the role of the National Payments Corporation of India in facilitating electronic payment services.

1. UNIT –V
E- BANKING

2. UNIT IV
Corporate Governance in Banks
Governance in Indian Banks - Public sector Bank, Private sector Bank - Issues,
Challenges, Global scenario - NPAs - Governance in Regulations - Basel II, III, IV, SEBI
LODR - other global scenario - Governance structure - Public, Private - Small Banks -
Payment Banks - Corporate Social Responsibility in Banks
(15 Hrs )
UNIT V
Trends in Modern Banking
E – banking – Digital Banking (Virtual banks) - Augmented reality – Block Chain
technology – Robotic Process Automation – Artificial Intelligence- API platforms
(Application programming Interface) – Prescriptive Security – Meaning -Features and
Benefits

3. • E-banking, short for electronic banking, is like having your bank right at your
fingertips, but on your computer or phone! Instead of going to a bank branch,
you can do all your banking stuff online or on your mobile device. That means
checking your account balance, paying bills, transferring money between
accounts, and even depositing checks, all without leaving your home. It's super
convenient because you can do it anytime, anywhere, as long as you have
internet access. Plus, it's usually pretty safe and secure, with special measures
to protect your money and personal information.

4. Advantages and Disadvantages of E-Banking
• E-banking offers numerous advantages in terms of
convenience, accessibility, and efficiency, it also poses
challenges related to security, technology, inclusivity,
customer support, and privacy that must be addressed to
ensure a safe, reliable, and inclusive banking experience for
all customers.

5. Advantages of E-Banking
E-banking offers several significant advantages for both customers
and financial institutions. Firstly, it provides unparalleled convenience
by allowing customers to access banking services and conduct
transactions from the comfort of their homes or while on the go.
• Convenience
E-banking offers customers the convenience of accessing banking
services and conducting transactions anytime, anywhere, without the
constraints of traditional banking hours or the need to visit a physical
bank branch.

6. • Accessibility
E-banking allows customers to access their bank accounts and perform transactions
remotely through electronic channels such as the Internet, mobile devices, and ATMs,
providing greater accessibility to banking services for individuals in remote areas or
with mobility limitations.
• Cost Savings
E-banking can lead to cost savings for both banks and customers by reducing
overhead costs associated with maintaining physical bank branches, such as rent,
utilities, and staffing. This can result in lower fees, higher interest rates on savings
accounts, and better value-added services for customers.

7. • Efficiency
E-banking enables faster and more efficient processing of banking transactions
compared to traditional paper-based methods. Transactions such as fund transfers, bill
payments, and account inquiries can be completed in real time or with minimal
processing time, enhancing customer satisfaction and reducing administrative delays.
• 24/7 Access
E-banking provides customers with 24/7 access to their bank accounts and banking
services, allowing them to manage their finances, monitor account activity, and perform
transactions outside regular banking hours, including weekends and holidays.

8. Disadvantages of E-Banking
E-banking also presents several challenges and disadvantages that must be addressed to
ensure a safe and secure banking experience. One of the primary concerns is security
risks, including phishing attacks, malware, identity theft, and fraudulent transactions,
which can compromise customer data and financial assets.
• Security Risks
E-banking exposes customers to security risks such as phishing attacks, malware,
identity theft, and fraudulent transactions. Cybercriminals may exploit vulnerabilities in
online banking systems or trick users into disclosing sensitive information, leading to
financial losses and privacy breaches.

9. • Technological Dependencies
E-banking relies on digital technologies and internet connectivity, making customers
vulnerable to service disruptions, system failures, or cyberattacks that can disrupt access
to banking services or compromise the integrity of financial transactions.
• Digital Divide
Not all individuals have equal access to e-banking services due to disparities in internet
access, digital literacy, and technological infrastructure. The digital divide may exclude
marginalized populations, including the elderly, low-income individuals, and those in
rural or underserved areas, from accessing essential banking services online.

10. • Customer Support Challenges
E-banking may present challenges in providing personalized customer support and
assistance compared to face-to-face interactions at physical bank branches. Resolving
technical issues, addressing customer inquiries, and assisting with complex transactions
may be more challenging in an online or automated environment.
• Privacy Concerns
E-banking requires customers to share personal and financial information online, raising
concerns about privacy, data security, and confidentiality. Customers may be apprehensive
about collecting, storing, and using their sensitive data by banks, third-party service
providers, or malicious actors, leading to trust and confidence issues in e-banking platforms.

11. Features of E-Banking
• E-banking, or electronic banking, offers a wide range of features and functionalities designed
to provide customers with convenient, secure, and efficient banking services through digital
channels. These features of e-banking empower customers to manage their finances efficiently,
securely, and conveniently through digital channels, enhancing the overall banking experience
and driving greater customer satisfaction and loyalty. Here are some key features of e-banking:
• Account Management
E-banking allows customers to view account balances, transaction history, and account
statements in real time. Customers can monitor their finances, track expenditures, and manage
multiple accounts, including checking, savings, and credit card accounts, from a single online
banking platform or mobile app.

12. • Fund Transfers
Customers can transfer funds between their own accounts or to other accounts within the
same bank or to accounts at different financial institutions using e-banking channels. Fund
transfer options include one-time transfers, recurring transfers, scheduled transfers, and wire
transfers, offering flexibility and convenience in managing financial transactions.
• Bill Payments
E-banking platforms enable customers to pay bills electronically, including utility bills,
credit card bills, loan payments, and other recurring expenses. Customers can set up one-
time or recurring bill payments, schedule payments in advance, and receive electronic
confirmation of payment transactions.

13. • Mobile Banking
Mobile banking apps provide customers with on-the-go access to banking services through
smartphones and tablets. Mobile banking features typically include account management, fund
transfers, bill payments, mobile check deposits, account alerts and notifications, and ATM
locator services, allowing customers to manage their finances anytime, anywhere.
• Remote Deposits
Some e-banking platforms offer remote deposit capture (RDC) functionality, allowing
customers to deposit checks electronically using their smartphones or scanners. Customers can
capture images of checks, submit them for processing through the bank's mobile app or online
banking platform, and receive confirmation of deposit without visiting a physical bank branch.

14. • Online Statements and Documents
E-banking platforms provide customers with electronic statements and documents, including
account statements, transaction confirmations, and tax documents. Customers can access, view,
download, and print electronic documents securely through online banking portals, reducing
paper waste and administrative hassles associated with paper-based statements.
• Security Features
E-banking platforms implement robust security measures to protect customer data and financial
transactions from unauthorized access, fraud, and cyber threats. Security features may include
encryption, multi-factor authentication, biometric authentication, transaction monitoring, and
fraud detection systems, ensuring the integrity and confidentiality of customer information.

15. • Customer Support
E-banking platforms offer customer support services to assist customers with
account inquiries, technical issues, and transaction disputes. Customer support
options may include online chat support, email support, phone support, and self-
service help resources such as FAQs, tutorials, and troubleshooting guides.

16. Types of E-Banking
These types of e-banking offer customers a variety of options to access banking
services and conduct transactions conveniently, securely, and efficiently through
digital channels, catering to diverse preferences and needs in the modern banking
landscape. Electronic banking (e-banking) encompasses various types of banking
services and transactions conducted through electronic channels such as the
Internet, mobile devices, and ATMs. Here are some common types of e-banking:

17. • Internet Banking
Internet banking, also known as online banking or web banking, allows
customers to access banking services and perform transactions through secure
websites or online banking portals provided by their banks. Customers can log in
to their accounts using a username and password to check balances, transfer
funds, pay bills, view transaction history, and perform other banking activities
online.

18. • Mobile Banking
Mobile banking enables customers to access banking services and conduct
transactions using smartphones or tablets through dedicated mobile banking apps
provided by their banks. Mobile banking apps offer similar functionalities to
Internet banking, including account management, fund transfers, bill payments,
mobile check deposits, account alerts, and ATM locator services, providing
customers with on-the-go access to their finances.

19. • ATM Banking
Automated teller machines (ATMs) allow customers to perform basic banking
transactions such as cash withdrawals, deposits, balance inquiries, and fund
transfers using ATM cards or debit cards. ATMs provide convenient access to
banking services outside bank branch hours and locations, offering self-service
options for customers to conduct transactions independently.

20. • Telephone Banking
Telephone banking, also known as phone banking or telebanking, enables
customers to access banking services and conduct transactions over the phone
through automated voice response systems or interactive voice response
(IVR) systems. Customers can check account balances, transfer funds, and pay
bills by following voice prompts or speaking with customer service
representatives.

21. • SMS Banking
SMS banking allows customers to access banking services and receive account-
related notifications and alerts through text messages sent to their mobile phones.
Customers can request account balances, view transaction alerts, receive
payment reminders, and perform other banking activities via SMS commands,
providing a convenient and efficient communication channel for banking
transactions.

22. • Cardless Banking
Cardless banking enables customers to perform banking transactions at ATMs or
retail locations without using physical cards. Customers can initiate transactions
using mobile banking apps or SMS commands to generate one-time PINs
(OTPs) or QR codes, which are used to authenticate transactions and access
banking services securely without the need for physical cards.

23. Digital Banking
• Digital Banking is the evolution of banking with the help of digital resources. It means that any user with a personal
computer and a browser, a smartphone, or a tablet, can get access to their bank’s website to perform any kind of virtual
functions. Digital banking is an important concept not only for practical purposes but also for banking awareness
preparation.
• Digital banking can also be cited as the delivery of banking products and/ or services to customers through electronic
channels.
• In digital banking, there is no need for any physical exchange of money as all the transactions are done through
electronic mode from one account to another through the Internet.
• Digital Banking is also known as cyberbanking, internet banking, virtual banking, home banking, and electronic
banking as it includes various banking activities that can be conducted online and not offline.
• The concept involves new-age online banking instruments such as RTGS, NEFT, ECS, credit cards, debit cards, cheque
truncation, telebanking, mobile/ internet banking, and ATM.

24. History of Digital Banking
• In India, the traditional method of banking had been taking place through
branch banking only. In the late 1980s, the need for digitization was felt in the
Indian banking sector in order to improve customer service, MIS reporting, and
accounts maintenance.
• Hence, banks began using Information Technology initially with the
introduction of standalone PCs and migrated to Local Area Network (LAN)
connectivity. With further developments, banks began adapting to the core
banking platform. Thus, branch banking changed to online banking.

25. • In 1988, the Reserve Bank of India (RBI) set up a committee on computerization across
all banks of India. The committee was headed by Dr. C. Rangarajan. The important
technological developments witnessed in the new age payment systems including:
• Arrival of card-based payments with debit card and credit card (1980s)
• Introduction of Electronic Clearing Service (ECS) (1990s)
• Introduction of Electronic Funds Transfer/ Special EFT (2000s)
• Real Time Gross Settlement (RTGS) (2004)
• Introduction of NEFT (National Electronic Funds Transfer) (2005-06)
• Introduction of CTS (Cheque Truncation System) (2008)

26. Features of Digital Banking
• 24×7 banking services
• No geographical limitations
• Easy online fund transfer facility
• Enhanced efficiency in customer relationship management
• Online bill payment for electricity, telephone, mobile recharge, etc.
• View the balance of accounts and statements online
• Mini statement orders
• Mobile banking anywhere, anytime
• SMS banking services

27. Digital Banking Vs Traditional Banking
Digital Banking Basis of
Difference
Traditional Banking
No physical presence as services are
provided online
Physical
Presence
They exist physically for offering
services to the customers
Customers need not have to visit the
branch of the bank personally, thus
saving them time.
Time It consumes a lot of time as customers
not only need to visit the branch but
also wait in queues.
It is accessible round the clock. 24*7 Access Customers have to visit the branch
during the working hours only
Greater chances of security threats as
data is accessible online
Security Threat Limited or no security threats
It is relatively cost effective as
customers need not spend money for
bank visits
Expensive Customers need to shell out money to
make bank visits whenever required
No costs involved as the banks do not
have physical presence
Cost Physical presence implies operating
and fixed costs

28. National Payments Corporation of India
• The National Payments Corporation of India (NPCI) is an umbrella organization for
all kinds of retail payment systems in India. It aims to enable the citizens of the
country to have direct access to e-payment services at any place and at any time.
• The NPCI was incorporated in December 2008 and its Certificate of Commencement
of Business was issued in April 2009. The NPCI includes the following:
• National Automated Clearing House (NACH)
• Aadhaar Enabled Payment System (AePS)
• RuPay Card
• Bharat Interface for Money (BHIM)
• BHIM Aadhaar
• National Electronic Toll Collection (NETC)
• Bharat Bill Pay

29. Payment Systems in India
Due to the advent of technology in the banking sector, there has been an evolution in the way businesses and
individuals bank. Accordingly, the payment systems in India have been transformed from exchanging money in
currency notes and coins forms to making online transactions. The payment systems in India are categorized into:
• NEFT (National Electronic Funds Transfer) BHIM (Bharat Interface for Money) App
• ECS (Electronic Clearing Services) NFS (National Financial Switch)
• RTGS (Real Time Gross Settlement) AePS (Aadhaar Enabled Payment Systems)
• IMPS (Immediate Payment Service) Bharat Bill Pay System
• UPI (Unified Payments Service) RuPay Card
• SWIFT (Society for Worldwide Interbank Financial Transactions)

30. Inter Bank Transfer
• Inter Bank Transfer enables electronic transfer of funds from the account of the remitter in one Bank to the
account of the beneficiary maintained with any other Bank branch. There are two systems of Interbank Transfer
– RTGS and NEFT. Both these systems are maintained by the Reserve Bank of India.
RTGS- Real Time Gross Settlement - This is a system where the processing of funds transfer instructions takes
place at the time they are received (real-time). Also, the settlement of funds transfer instructions occurs
individually on an instruction by instruction basis (gross settlement). RTGS is the fastest possible interbank
money transfer facility available through secure banking channels in India.
NEFT- National Electronic Fund Transfer - This system of fund transfer operates on a Deferred Net Settlement
basis. Fund transfer transactions are settled in batches as opposed to the continuous, individual settlement in
RTGS. Presently, NEFT operates in half-hourly batches. There will be 48 half-hourly batches every day. The
settlement of first batch will commence after 00:30 hours and the last batch will end at 00:00 hours. The system
will be available on all days of the year, on a 24 x 7 basis, including holidays.

31. Minimum / Maximum amount for RTGS / NEFT
transactions under Retail Internet Banking
Type Minimum Maximum
RTGS Rs. 2 Lakhs Rs. 10 Lakhs
NEFT No Minimum Rs. 10 Lakhs
What is the minimum/maximum amount for RTGS/NEFT transactions
under Retail Internet Banking?

32. ECS
• The ECS is an electronic mode of payment and receipts for transactions that are repetitive
and periodic in nature.
• It is an electronic mode of funds transfer from one bank to another.
• ECS can be used by the institutions for making payments such as distribution of dividend,
salary, pensions, etc.
• It can also be used to pay bills and other charges such as electricity, water, telephone, etc.
The facility can be used for both credit and debit purposes.
• The ECS includes transactions processed under the National Automated Clearing House
(NACH) operated by the NPCI.

33. IMPS
• The facility was initiated by Smt. Shyamala Gopalan (former deputy governor of RBI) in addition to NEFT
and RTGS.
• Immediate Payment Service is a new facility added to the Mobile Banking Service. It facilitates funds
transfer to an account of the beneficiary with a participating bank, based on the beneficiary's Mobile
Number & MMID or Account No & IFSC.
• IMPS provides real-time and robust fund transfer throughout 24x7x365 as an interbank electronic service.
• IMPS is an emphatic service which allows transferring of funds within the banks across India, making it not
only safe but also economical for the customers.
• For carrying out IMPS, banks are required to fulfill the eligibility criteria of having a valid banking or
prepaid payment instrument license from the RBI.
• IMPS can be done 24x7x365 – even on bank holidays, RBI holidays, and Sundays.

34. UPI
• Unified Payments Interface (UPI) is a system that powers multiple bank accounts
into a single mobile application (of any participating bank), merging several
banking features, seamless fund routing & merchant payments into one hood. It also
caters to the “Peer to Peer” collect request which can be scheduled and paid as per
requirement and convenience.
• With the above context in mind, NPCI conducted a pilot launch with 21 member
banks. The pilot launch was on 11th April 2016 by Dr. Raghuram G Rajan,
Governor, RBI at Mumbai. Banks have started to upload their UPI-enabled Apps
on Google Play store from 25th August 2016 onwards.

35. How is it unique?
• Immediate money transfer through mobile device round the clock 24*7 and 365 days.
• Single mobile application for accessing different bank accounts.
• Single Click 2 Factor Authentication – Aligned with the Regulatory guidelines, yet
provides for a very strong feature of seamless single click payment.
• Virtual address of the customer for Pull & Push provides incremental security with the
customer not required to enter the details such as Card no, Account number; IFSC etc.
• QR Code
• Best answer to Cash on Delivery hassle, running to an ATM or rendering exact
amount.
• Merchant Payment with Single Application or In-App Payments.
• Utility Bill Payments, over-the-counter payments, QR Code (Scan and Pay) based
payments.
• Raising Complaints from the Mobile App directly.

36. AePS
• Payments that can be done with the help of identification and authentication
through the Aadhaar database is known as Aadhaar Enabled Payment Systems
(AePS)
• It is the new form of payment promoted by the government to motivate
digital payments instead of cash transactions
• The first type of payment is Aadhaar Bridge Payment System which is meant
for direct benefit transfer and subsidy payments to the beneficiaries from
the government
• The second AePS is used at the business level where bank customers can use
the Aadhaar to access various services like for withdrawing cash, account
opening, and fund transfer without visiting the branch.
• The third is Aadhaar Pay in which the merchants can accept payments through
Aadhaar identification of their customers.

37. RuPay Card
• It is a new card payment scheme launched by the NPCI offering a dometic open-loop,
multilateral system to allow all the Indian banks and financial institutions to
participate in the electronic payments.
• RuPay Cards address the needs of Indian consumers, merchants, and banks providing the
flexibility of the product platform. Its features include:
• Complimentary lounge access program – domestic & international
• 24×7 concierge services
• Earn cashback time after time
• Comprehensive insurance cover
• Exclusive merchant offers

38. SWIFT (Society for Worldwide Interbank Financial Telecommunications)
• It is a messaging network that financial institutions use to securely transmit
information and instructions through a standardized system of codes.
• With SWIFT, each financial organization has a unique code which is used to send
and receive payments.
• It does not facilitate funds transfer, instead, SWIFT sends payment orders, which
must be settled in correspondent accounts that the institutions have with each other.
• The SWIFT India messaging platform is the foundation on which the Indian
financial community comes together.

39. Augmented Reality
AR is an experience where parts of users’ physical world are
enhanced with computer-generated input. It can provide an
interactive experience of a virtual environment in the real world.
• AR can make illusions look real, and users can do things as he
or she would do in the real world. AR has the capability of
altering the current perception of the real world.

40. What are the opportunities for augmented reality in banking?
• Here in this segment, we bring to you ways of using augmented realities in
banking:
• Locating ATMs
AR phone applications have been made, which helps customers to locate ATMs
nearby and bank branches. In India, the Axis bank launched an AR app called
“Near me” for this purpose. These apps convey real-time data about location,
distance, and services provided at these ATMs.
• Self-service
Today customers prefer banking from the comfort of their homes rather than
visiting brick and mortar bank branches. Banking apps are also gaining
popularity as they make transactions more easy and straightforward. Now, if we
take into consideration the role of augmented reality in banking applications, it
will help customers with information about their bank accounts, loans,
mortgages, etc. This will provide a great user experience to customers.

41. • Payment experience
The AR finance apps can encourage payments by recognizing the specifications and
price of an item and overlaying the data on customers’ experience with the real world.
Accounts payment and management may also get simpler with this.
• Customer Acquisition
Millennials are a generation that has relied on technology and need systems that
evolve with them. The technologies are expected to grow because many institutions in
different fields have started adopting augmented realities. Customer acquisition will
depend on whether banks have the ability to adopt new trends and innovation in
banking.

42. • Security
The introduction of AR into banking can improve security with
biometric security, like voice recognition and retinal scans. It will be
helping in blocking unauthorized access by hackers.
• Bank branches
Virtual banking is becoming more usual than before, and it has
reduced the number of people visiting bank branches. These
virtual banks combine self-service with competent AR assistants like
chatbots etc. that provide essential information to customers. With AR,
visualization of account information is possible, which in turn will
help banks to offer personalized bank assistance. Data can also be
presented in a unique manner, which will help customers to
understand various investment strategies.

43. • Minimal Documentation
Imagine filing those bulk of physical documents one after the other. This can be
brought down as AR develops. Bank statements, advice, letters, and even
cheques can be presented virtually. It will save a lot of time. It will also simplify
the process of obtaining loans, which involves a lot of paperwork.

44. • Challenges with the implementation of Augmented Reality in banking
There are certain challenges facing banks in the implementation of augmented
realities. Some of these challenges are discussed below:
• Technical challenges
When it comes to banks that are looking to implement a functional augmented reality
solution, they may require a lot of components. It may pose a challenge to banks, and
unless these technical debilitations are tackled, AR cannot be properly visualized.
• Lack of regulations
As of now, there are no such regulations that help businesses and consumers
understand what kind of AR applications may be used and how data can be
processed. Therefore the data may be used with malicious intent.
• Lack of public awareness
Although AR is a hot topic of discussion for tech geeks, consumers or the public are
unaware of the technology. Lack of awareness among the public may lead to privacy
and security concerns while using AR technology.

45. Blockchain
It is digital information that is stored in a public database. It usually
consists of cryptocurrencies and provides added security for a variety
of financial transactions - actually becoming one of the most widely
used technologies in fintech. With blockchain, banks can store
information about transactions such as the date, time, and dollar
amount of a recent purchase.

46. • How do blockchains work? An overview
• As mentioned, blockchains work as databases. They're made up of blocks of transactions
cryptographically linked to each other.
• The blocks store information about the parties that are involved in a transaction as well. For example,
blockchain will record a transaction without any identifying information and will use a digital
signature instead.
• The information stored through blockchain will also store information that distinguishes it from other
data. It will store a unique code called a hash which enables it to classify each unit of information.
• For example, if you purchase the same product twice on a website, there will be different codes to
classify each transaction. Blockchain can store up to 1 MB of data per block. A single block can store
up to a few thousand transactions.

47. Benefits of blockchain
• There are several benefits of blockchain for banks. The advantages of blockchain
in banking have helped financial institutions find ways to complete more secure
transactions and reduce errors.
• As a result, banks will want to consider using blockchain more often to better
meet the needs of its customers.
Costs Reduced
• One of the benefits of blockchain for banks is reduced costs. Banks have recently
learned that blockchain can allow them to reduce infrastructure costs by up to
$20 billion by the year 2022.
• Implementing things such as smart contacts within a platform, banks can reduce
the interactions with counterparties and intermediaries. They can also lower the
cost of maintaining and executing contracts as well.
• Banks can also reduce the transaction costs between bank-to-bank transactions.

48. Faster Transactions
• Another one of the advantages of blockchain in banking is
offering faster transactions. Any transaction can be done
within a matter of seconds and slightly faster than other
traditional methods.
• Banks are now able to avoid middlemen which can allow
them to ensure that customers complete transactions at a
quicker pace. This will result in customers and banks able to
complete and process more transactions.

49. Improved Security
• Shared ledgers can help banks better secure transaction
information.
• First, they will be able to quickly complete a transaction and
reduce the risk of someone either capturing transaction
information or diverting payments.
• Two security keys exist for each transaction. A public key is
available for every user while a private key is shared between
the parties of a given transaction. Data of a transaction is also
unchangeable once it has been verified.

50. Digital Currencies
• Banks can benefit from blockchain with the use of digital currencies.
They are now able to accept digital currency to complete a variety of
transactions. With cryptocurrency, banks will be able to more easily
clear and settle financial trades faster and more securely.
• Banks will also look to make digital currency as standard currency in
the future.

51. Accountability
• With accountability, banks will be able to benefit from blockchain by
reducing fraud and misuse of company assets. With digitally generated
transactions, banks will no longer have to worry about significant errors
being made. They won’t have to worry about important information being
fabricated as well.
• Blockchain makes all transactions easy to check and verify which will,
therefore, ensure that banks accurately process transactions more
consistently.

52. Compliance
• Banks will also benefit from blockchain with better
compliance. They can allow auditors and government
officials access to the blockchain. With this access, auditors
and the government can see business unfold with complete
transparency.
• Banks can also intercept suspicious transaction activity and
streamline the auditing process. Financial institutions - and
fintech firms in general - are now able to provide digital
information that is easy to find and save time with the
auditing process.

53. Reduced Error Handling & Reconciliation
• Blockchain has also benefited banks by allowing them to more easily
reconcile transactions. They can trace transactions more quickly and
find errors in a timelier manner.
• This enables them to find errors before a transaction is completed. As
a result, they will have the means to fix errors before they can cause
a problem for the institution and their customers.

54. Artificial intelligence
• It helps banks manage high-speed data to receive useful insights, and features like digital
payments, AI bots, and biometric fraud detection systems lead to high-quality services.
• Artificial intelligence provides numerous advantages for the banking industry. In India's
banking sector, artificial intelligence is transforming corporate operations and customer-
facing services. It's also utilized to comply with regulations, prevent fraud, and assess
individual creditworthiness. Artificial intelligence (AI) has the potential to improve
company operations, provide tailored services, and aid with wider aims like financial
inclusion. Without a question, the recent push toward digitalization is having a dramatic
impact on traditional banking structures.

55. Application of Artificial Intelligence in the Banking Sector
• The banking sector relies on the crucial role played by AI, harnessing advanced
technologies like machine learning, natural language processing, and predictive
analytics. These cutting-edge technologies empower AI systems to learn from
data, identify patterns, and generate informed predictions. Within the banking
industry, AI solutions find application in numerous critical domains, including

56. CustomerService
Virtual assistants and chatbots powered by AI are gaining
popularity in the banking industry because they provide
prompt and efficient client service. These systems are excellent
at answering common questions, making tailored
recommendations, and helping users with difficult tasks like
loan applications.

57. • Fraud Detection
AI algorithms are used to identify and stop fraudulent behaviors like credit card
fraud, identity theft, and money laundering. These algorithms precisely identify
suspicious transactions and activities by evaluating enormous volumes of data
from numerous sources.
• Risk Management
AI systems use market trends and client data to identify potential dangers and
recommend risk-reduction measures. They enable banks to take preventive action
by monitoring credit portfolios, evaluating creditworthiness, and forecasting the
possibility of credit defaults.

58. InvestmentManagement
Artificial intelligence (AI) algorithms examine market patterns to find
profitable investment possibilities. Additionally, taking into
consideration the customers’ risk tolerance and investment goals, these
systems offer individualized investment suggestions, supporting
clients in making well-informed investment choices.

59. Need for Artificial Intelligence in Banking
•Enhanced Customer Service:
• AI-driven chatbots and virtual assistants offer 24/7 customer
support.
• They understand human language and provide tailored guidance,
improving overall customer satisfaction.
•Fraud Detection and Prevention:
• AI algorithms analyze vast transaction data to spot fraudulent
patterns.
• Real-time monitoring identifies suspicious transactions, reducing
financial losses and protecting customer accounts.

60. • Risk Assessment and Credit Scoring:
• AI assesses financial records, credit ratings, and market trends.
• This enhances lending decisions’ accuracy and speeds up loan approvals.
• Personalized Financial Planning:
• AI examines customer data to provide custom financial advice.
• Customers make informed choices about savings, investments, and retirement plans.
• Automation of Manual Processes:
• AI streamlines repetitive tasks like data input and document handling.
• This reduces errors, improves efficiency, and allows personnel to focus on higher-level work.

61. • Improved Security and Compliance:
• AI monitors data to identify anomalies and security breaches.
• Banks enhance data protection, prevent cyber threats, and meet regulatory requirements.
• Advanced Data Analytics:
• AI extracts insights from customer behavior, market trends, and risk patterns.
• Banks make data-driven decisions, create precise marketing campaigns, and discover new
business opportunities.
• Seamless Digital Banking Experience:
• AI enables effortless banking through digital channels, enhancing user experience.
• From mobile apps to voice-enabled services, AI provides convenience and personalized banking.

62. What are API Banking Services?
• API or Application Programming Interface enables a 3rd party application to use a
particular interface through which it can access a common set of tools or services.
In banking, this means a bank can offer 3rd party access to its custom services
through dedicated APIs. Multiple 3rd parties can then use banking services or also
offer the same to its customers.
• Some of the top banks in India now also allow developer organisations to use their
API platform and build custom APIs. From building an API from scratch, testing it,
to going live, banks offer all the tools and features to the developers to build
powerful and efficient APIs.

63. API Banking in India
• Now that you know what Application Programming Interface is and how bank APIs work, let us
have a look at the state of API banking in India. It was in Aug 2016 that the Competition and
Markets Authority (CMA) in the UK asked several top banks such as Barclays, Santander, Lloyds,
and more, to provide access to their core banking data to licensed 3rd
parties.
• In the same year, the RBI Governor launched the Unified Payments Interface (UPI) in India.
Developed by the National Payments Corporation of India (NPCI), the payment system has played
an integral role in the rise of banking APIs in the country. A few banks then started launching API
services which considerably disrupted the traditional retail banking scene in the country.
• Fast forward to 2019, and there are now many banks that offer such services, and several start-ups
are now solely focused on banking APIs to further boost Open Banking.

64. What are the different types of bank APIs?
• A few top banks in India now offer a host of banking API banking services spread
across categories such as Accounts and Deposits, Payment Gateways, Loans and
Cards, Trade Service and Business Banking. There are innumerable ways in
which these APIs can be used by 3rd parties.
• For instance, a FinTech platform that offers retail loans can make use of the API
to check the CIBIL score of a customer or verify their PAN details. Similarly, a
business can integrate its Enterprise Resource Planning (ERP) with API banking
to manage its cash receivables and payables directly through its ERP.

65. Banking APIs: Fast, Secure and Efficient
• The API services and the access they offer to the core banking data, in a way,
helps in eliminating barriers between businesses as all of them have access to
the same data. Ultimately, this helps in the overall growth of the financial
industry, along with improving the quality of services available.
• With many different Application Program Interface types being launched by
banks, API banking services are only expected to get more popular in the
future. If you run a business, get in touch with a reputed bank offering such
services to know more about how the APIs can benefit you.