Chaitali Avadhani, Author at Global Trade Magazine

Digital banking reduces a person’s bank visits and manual work, along with saving time. The COVID-19 pandemic has accelerated the process of digital banking due to its numerous benefits. Smartphone usage has resulted in an additional surge in digital banking during the COVID-19 pandemic. Moreover, swift transactions, 24/7 banking facilities, and smooth mobile banking have flourished the digital banking industry.

If you ask your grandparents or any person old enough to have witnessed changes in technology, they will tell you about the endless hours spent in a bank just to get one task done. The story doesn’t end here though; efforts to keep track of all transaction receipts, cheques, passbook records, and pending payments seemed to be tiring in those days. Don’t you feel lucky now to be born in an era that has tremendous technological facilities and scope?

According to a report published by Research Dive, the global digital banking market is projected to cross the $1,702.4 billion mark by 2026, from a significant market share of $803.8 billion in 2018, and exhibit CAGR of 10.0% in the 2018-2026 forecast timeframe. The exponential rise of technological development is suggested to be the driving force of the digital banking market growth.

What is Digital Banking?

Ideally, banks are boring yet important part of our lives. Boring because one has to wait for long hours in queue just to get cash or transfer money. If you hit your rewind button, then, about 30 years ago, banking systems dealt with a lot of paperwork. Computers and the internet were not advanced enough to run quickly. A lot has changed to date but a huge push to go digital came from the COVID-19 pandemic. This outbreak changed the shape of the entire banking industry by making it go digital.

In simple terms, digital banking means converting all traditional banking services to online or digital mode. These services could be deposits, transfers, withdrawals, applying for various financial services, account handling, loan management, and bill payments. Digital banking eliminates the need for paperwork such as demand drafts, cashing cheques, or pay-in slips. One has the complete liberty to perform all banking activities 24/7 without literally going to the bank. Digital banking facilities are accessible with a stable internet connection and any electronic gadget like mobiles, laptops, or tabs.

Customers’ preference for banks with digital banking options forced several small and large banks to go digital. Banks didn’t expect that consumers would opt for online banking services at a faster pace, and hence creating digital banking provisions at an accelerated rate in all financial institutions for clients became a necessity. Deloitte’s 2019 banking and capital market outlook suggests that banks are trying to match consumers’ expectations regarding banking by turning towards digital banking services. Moreover, ‘create digital capability’ was cited by 28% of banks as their foremost initiative. Almost 50% of the banks are making digital banking their top priority.

What are the Benefits of Digital Banking during the COVID-19 Pandemic?

There is a significant advantage of fund or money transfer as digital banking skips the hassle of issuing demand drafts or cheques. One can simply transfer money from one account to the other without visiting a bank from the safety of their homes. This ensures a low risk of COVID-19 infection and the liberty of transactions anytime and anywhere. A few notable options for online money transfers are IMPS (Immediate Payment Service), RTGS (Real-Time Gross Settlement), and NEFT (National Electronic Fund Transfer).

Apart from this, one has the luxury of downloading e-bank statements at any point in time. These bank statements can be saved on mobile phones or laptops and can be accessed easily. This prevents the need to visit banks and take printed copies of statements, thus preventing unwanted contact during the COVID-19 pandemic. Moreover, the installation of ATM machines in every nook and corner is aiding people in withdrawing cash, be it day or night.

Bill payments can be smoothly managed with digital banking by simply logging in to your bank account. All kinds of bills such as electricity, phone, gas, and television can be completed via digital banking. Mostly, several banks have auto-debit facility to pay bills automatically whenever issued. For instance, HDFC bank has started a pre-paid mobile recharge facility as part of the digital banking initiative. In addition to this, one can open a fixed deposit account in seconds, invest in mutual funds, and apply for loans and various insurance policies as well.

The rise in smartphone usage and the availability of strong network connectivity has paved way for mobile banking systems. Since everyone nowadays possesses a smartphone, one can download apps for transaction purposes. Google Pay, Apple Pay, BHIM, SBI’s Yono, Payzapp and many more are gaining popularity amidst the COVID-19 outbreak. For transactions, one just has to scan a QR code or know the phone number of the beneficiary. Mobile banking apps are like mini-digital banks that include all banking services on the go.

If at all you have to stop a cheque process, then simply log in to your account and click on update cheque process. Furthermore, one can track credits and debits of the account as banks send SMS or e-mails of transactions. These notifications aid in preventing frauds and one must report them as quickly as possible to the bank authorities. Beyond this, digital banking displays transaction history and any pending payments as well.

The Future of Digital Banking

This title wouldn’t have existed 50 years ago due to a lack of technical knowledge, but today this heading seems relevant. The digital banking sector will continue to grow in the upcoming years with a few changes in technology. Several banks are already utilizing artificial intelligence for meeting the financial demands and expectations of customers. Today it is artificial intelligence; tomorrow, it will be something else that’ll augment digital banking to a greater height.

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Chaitali Avadhani is currently working in the content writing industry and has a Master’s degree in journalism and mass communications from Savitribai Phule Pune University. She is naturally attracted towards writing and is harboring experiences in the same field. Apart from this, she is a certified mountaineer and has passed out from Himalayan Mountaineering Institute, Darjeeling. Outside the office she is actively engaged in fitness activities such as running, cycling, and trekking.

The contactless payment market is estimated to surge during the global crises of the coronavirus disease owing to the need to maintain social distancing. Apart from this, the rise in technology, fast and easier payment methods, and network coverage have also impacted the contactless payment market during the pandemic.

‘Where did we come from and where are we going?’ is a famous line from Dan Brown’s book called ‘Origin’. This book signifies the importance of technology and its role in answering the question of ‘where are we going’. Digitization and technology will soon one day become the next element of planet earth. The roots of which have been planted in today’s time, especially in the Covid-19 pandemic. One important aspect of digitization is the economy and money transactions associated with it, paving way for the contactless payment market amidst the coronavirus pandemic.

What is Contactless Payment?

This is a secure method of payment that utilizes technologies like radio frequency identification (RFID) and near-field communication (NFC) for transactions. The name itself suggests that all forms of money exchanges will be carried out in a non-contact way. The only way to do that is by using digital methods of payments.

Some of the popular contactless payment methods are smartcards, credit/debit cards, Google pay, Apple Pay, and many more. Credit/debit cards are used with RFIDs, also called chip cards, that eliminates the necessity to swipe or enter a pin code. Contactless payment is not a new concept but its prominence has augmented due to the Covid-19 pandemic. For instance, in November 2018, RBI replaced all magnetic stripe-only cards to EMV chips and also started a second-factor authentication (PIN) for transactions up to INR 2,000/-.

How has Covid-19 Outbreak Impacted the Global Contactless Payment Market?

According to a report published by Research Dive, the global contactless payment market is anticipated to garner revenue of $20,340.3 million by 2026. The fear of getting infected has pushed people to opt for contactless payment, for instance, almost 79% of the MasterCard users preferred contactless payments during the pandemic period. This is a sign that the contactless payment market has enhanced during the Covid-19 crisis. The idea to turn India into a cashless economy post demonetization has been augmented in 2020.

The traditional methods of payment are fading away in today’s time; however, the geriatric population and the marginalized section of the society are still lagging in digital payment methods. In the current situation, it is essential to maintain distance and avoid infection from spreading. According to WHO, viruses can stay on cash for several days after exposure; thus contactless payment seems a better choice for now.

Apart from this, there was a 40% ‘year-to-year’ rise in contactless payment globally from January to March 2020. In fact, countries like Germany and China also experienced growth in digital payments during the pandemic. The major driving factors responsible for the contactless payment market growth are the usage of mobile phones and strong internet connectivity.

Online transactions can be risky due to cyber thefts, frauds, and scams but contactless payment has minimized these dangers by using magnetic strips at the back of the cards and all the information is automatically encrypted during transactions. Apart from this, biometrics usages such as iris recognition and transaction limits prevent fraud as well.

The contactless payment market is in demand due to advance technological changes such as artificial intelligence-based voice payments and wireless technology. These technologies directly connect debit/credit cards to fitness trackers, phones, and smartwatches for payments via Google pay or Apple pay.

Several countries are applying innovative strategies for boosting contactless payment, for example, AIB bank of Ireland suspended all charges on contactless payments for encouraging people to take up this mode of payment. Furthermore, retailers have reported a 69% rise in contactless payment since January 2020 due to an increase in online orders as per a study conducted by Forrester Research.

Social distancing norms are the only reason behind the growth of the contactless payment market that ascertains fast and simple transactions.

Future Scope of the Contactless Payment Market:

The contactless payment market will continue to grow in the post-pandemic world as well due to strategies, product launches, and collaborations applied by the market players. For instance, the partnership of SBI and Titan has devised contactless payment services via watches called Titan pay. This mode of payment rules out the option of card swiping or inserting pins and is available for all the people using MasterCard.

Another example of fruitful collaboration is that of Samsung and Curve that have launched Samsung pay in the market. This mode of transaction provides features like peer-to-peer payments, notifications on money spent, and switch payment sources retroactivity.

It’s pretty clear from the above deductions that the Covid-19 pandemic will leave a long-lasting impact on the contactless payment market, economy, and banking sectors.

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