what is Digital Banking its key components and features
- 2. TOPIC. Digital Banking Presented To: Mam Aaqiba Saqib Pressented By: Saqlain Abbas M. Usman M Soban Khalid Kashif Ali
- 4. content Introduction Incorporation Features Channels Advantages Disadvantages
- 5. Introduction Digital banking, also known as internet banking, e-banking or virtual banking, is an electronic payment system that enables customers of a bank or other financial institution to conduct a range of financial transactions through the financial institution's website.
- 6. Digital banking refers to the digitization of all the traditional banking activities and programs that historically were only available to customers when physically inside of a bank branch. This includes activities like money deposits, withdrawals, and transfers, checking/savings account management, applying for financial products, loan management, bill payment, and more. The introduction of digital banking has significantly transformed the financial sector, enhancing convenience, accessibility, and efficiency for customers and financial institutions alike.
- 8. Key Components of Digital Banking Online Banking: Website Platforms: Banks provide secure websites where customers can log in to manage their accounts, pay bills, transfer money, and more. Mobile Banking: Smartphone apps allow customers to perform banking activities on the go, providing a more convenient and accessible way to manage finances. Online Account Management: Account Opening and Closure: Customers can open or close accounts online without visiting a branch. Account Monitoring: Real-time tracking of account activity, transaction history, and balance inquiries are available online.
- 10. Electronic Payments: EFT (Electronic Funds Transfer): Includes mechanisms like ACH (Automated Clearing House) transfers and wire transfers that allow for the electronic movement of money between accounts. Digital Wallets: Apps like Apple Pay, Google Wallet, and PayPal facilitate cashless payments using smartphones or other digital devices. Contactless Payments: Methods like NFC (Near Field Communication) technology enable quick payments by tapping a card or device near a payment terminal.
- 11. •Loan and Credit Services: •Online Applications: Customers can apply for loans, credit cards, and mortgages online. •Automated Underwriting: Use of algorithms and digital tools to assess loan applications quickly and accurately. Customer Support: Chatbots and AI: Many banks use artificial intelligence to provide 24/7 customer support, addressing common queries and issues without human intervention. Secure Messaging: Customers can communicate with bank representatives through secure online messaging systems.
- 13. Incorporation It was first incorporated in United States. Online and Mobile Banking: Offering customers the ability to manage their accounts, transfer funds, pay bills, and access other banking services through web portals and mobile apps.
- 14. Digital Payments: Facilitating electronic transactions through various methods such as mobile wallets, online payment gateways, and contactless payments. Automated Services: Implementing chatbots, virtual assistants, and AI-driven customer service to handle routine inquiries and provide support.
- 15. Data Analytics: Using big data and analytics to gain insights into customer behavior, personalize services, and improve risk management. Cyber security: Ensuring robust security measures to protect customer data and prevent fraud, including encryption, multi-factor authentication, and biometric verification.
- 16. Open Banking: Allowing third-party financial service providers to access banking data with customer consent to foster innovation and offer new services. Block chain and Crypto currencies: Exploring the use of block chain technology for secure transactions and the incorporation of crypto currencies as part of the banking ecosystem.
- 17. Regulations: Online banking has been federally governed by the Electronic Funds Transfer Act of 1978. Licensing and Supervision: Digital banks must obtain the necessary licenses from regulatory authorities to operate legally. They are also subject to ongoing supervision to ensure compliance with relevant laws and regulations.
- 18. Consumer Protection: Regulations ensure that consumers are treated fairly and are protected from fraud, unauthorized transactions, and data breaches. This includes transparency in terms of fees, interest rates, and terms of service. Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF): Digital banks must implement robust AML and CTF measures to detect and prevent illegal activities, such as money laundering and terrorism financing. This includes customer due diligence (KYC) and transaction monitoring.
- 20. Data Privacy and Security: Regulations like the General Data Protection Regulation (GDPR) in the EU require digital banks to protect customer data and ensure privacy. This includes securing data against unauthorized access and breaches. Capital Adequacy and Risk Management: Digital banks must maintain sufficient capital reserves and implement effective risk management practices to ensure financial stability and resilience against potential losses.
- 22. Open Banking and API Standards: Regulations like the Payment Services Directive 2 (PSD2) in the EU promote open banking by requiring banks to provide secure access to customer data to third-party providers, fostering competition and innovation. Transparency and Reporting: Digital banks are required to provide regular reports to regulatory authorities on their financial health, compliance status, and any significant incidents. This ensures ongoing oversight and accountability.
- 23. Features A bank customer can perform non- transactional tasks through online banking, including –Viewing account balances Recent transactions Downloading bank statements Download periodic account statements
- 24. Funds transfers between the customer's linked accounts Viewing images of paid cheques Ordering cheque books
- 25. Paying third parties, including bill payments and third party fund transfers Investment purchase or sale Loan applications and transactions, such as repayments of enrollments Credit card applications Register utility billers and make bill payments
- 26. Channels of Digital Banking ATM CHEQUE DEPOSIT MACHINE CASH DEPOSIT MACHINE INFORMATION CENTRE
- 27. MOBILE BANKINGMobile App DEBIT CARD/CREDIT CARD E-COMMERCE POS (POINT OF SALE)
- 28. Advantages • 24*7 access to your account • Transaction made easy • Settlement of transaction in no time • Complete access to your own account • Eco-friendly • Saving time
- 29. Disadvantages Personal relationship with the Bank is not established Issues with transactions Security issues Site Disruption Site Navigation Cross Selling