Digital Banking - Meaning, Benefits, Services Offered by Digital Banking

Digital banking uses the Internet and mobile technology to provide banking services. These include managing your account, fund transfers, recharges, and bill payments. Due to its convenience, digital banking is becoming popular every day. In this blog, you will get detailed information such as benefits, types, and services you can get. Let’s get started.

What Is Digital Banking?

In simple terms, digital banking uses different banking services electronically through the Internet. With digital banking, customers do not need to visit their branch physically. You can access digital banking 24/7 without any limitation to banking hours. You can use banking services anytime, anywhere, from your mobile phone, tablet or smartphone; you can access these services instantly. 

Digital Bank Account​

A digital or savings account is a modern banking solution that allows you to open a new bank account online. Everything you can do is like a regular bank account; you do not need to visit your branch. 

Complete KYC and video verification with your preferred bank to open this account. Depending on the bank, you must deposit a minimum balance as initial funding. However, you can get different variants of digital bank accounts in every single bank. These are the benefits of a digital bank account:

• Open an account without the need to visit a bank branch.
• Access all banking services directly from your phone or laptop.
• Experience completely paperless banking at your convenience.
• Benefit from low maintenance fees.
• Enjoy competitive interest rates, depending on your chosen bank.
• Apply for a virtual debit card for easy transactions.

The benefits, minimum balance, account maintenance cost, debit card charges, etc., depending on your selected bank and the variant of your savings account. You should always check the charges involved before opening a bank account.

Types of Digital Banking

These are the different types of digital banking services you can avail:

Unified Payment Interface (UPI)

UPI is a widely used digital payment system that allows you to transfer money directly from your bank account to receivers through different mobile applications. It offers seamless transactions using a virtual address, and you can link multiple bank accounts to a single UPI app.

Internet Banking

Also known as net banking, this digital banking allows you to manage your bank accounts online via your bank’s website. You can securely do different transactions, including fund transfers, bill payments, account management, etc., with your login credentials.

Mobile Banking

In Mobile banking, you get a dedicated application on your smartphone to access banking services. You can check your bank balance, make payments, and do other banking activities conveniently anytime, anywhere.

Banking Cards

There are different types of banking cards in the digital banking system:

• Debit Cards: These cards are directly linked to bank accounts that allow you to withdraw cash and purchase.
• Credit Cards: Credit cards allow you to make purchases on credit, and you can pay them later than the due date.
• Prepaid Cards: Prepaid cards have no link to your bank accounts. You can load money into these cards and use them.
• Virtual Debit Cards: These are electronic versions of debit cards for online transactions.

Mobile Wallets

These digital wallets store money and allow you to transact through an app linked to your bank account. It provides a convenient way to make payments for goods and services online or in stores.

Bharat Interface for Money (BHIM)

This app facilitates simple payment transactions using UPI. You can make direct bank-to-bank payments or request money using UPI IDs or QR codes.

Point of Sale (PoS)

PoS systems are electronic devices merchants use to process card payments at retail locations. These systems allow you to pay via debit or credit card, which is convenient for in-person transactions.

Services by Digital Banking

Some of the popular digital banking services are:

Account Management

You can easily access and manage your bank accounts online or through mobile apps. You can check balances, view transaction history, and update your personal information without visiting your home branch. 

Fund Transfers

Digital banking allows for quick and easy fund transfers between accounts, whether within the same bank or to different banks. You can make real-time payments with services like NEFT, RTGS, and UPI.

Bill Payments

You can pay utility bills, credit card bills, and other payments directly through digital banking platforms. You can also schedule recurring payments using autopay options.

Loan Applications

You can apply for various types of loans, such as personal, home, and vehicle loans, entirely online. Digital banking platforms streamline the application process with easy-to-follow steps and instant approvals.

Investment Services

Some digital banking platforms offer investment products like mutual funds, fixed deposits, NPS, bonds, etc. You can manage your investments using the same interface for regular banking services.

Benefits of Digital Banking

Following is a list of advantages of using digital banking services:

• Convenience: You can access your accounts and complete transactions anytime and anywhere. This eliminates the need to visit a bank branch.
• 24/7 Availability: Digital banking ensures that financial services are available round the clock, catering to your needs even outside traditional banking hours.
• Instant Transactions: You can transfer funds and make payments instantly with just a few clicks.
• Enhanced Security: Banks implement advanced security measures such as encryption and multi-factor authentication to protect your account from fraud and unauthorized access.
• Multiple Payment Options: You can choose from various payment methods, including mobile banking apps, debit cards, and digital wallets.
• Cost Efficiency: Digital banking reduces operational costs for banks, allowing you to benefit from lower fees and better interest rates.
• Personalized Services: Banks analyze your financial data to offer customized products and services. This enhances your overall banking experience.
• Environmentally Friendly: Digital banking minimizes the need for paper-based transactions. It is a step towards reducing waste and promoting environmental sustainability.
• Easy Access to Financial Products: You can apply for loans, manage investments, and track expenses conveniently through digital platforms without needing in-person visits.

Digital Banking vs Online Banking Differences

Is there any difference between digital banking and online banking? Read this table to find out:

Digital banking has transformed the way we manage our finances. It offers convenience, security, and efficiency at our fingertips. With 24/7 access to banking services, instant transactions, and multiple payment options, it simplifies financial management for individuals and businesses alike. 

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