A Study on the Impact of COVID- 19 on E- Banking

Introduction

In today’s world, E- banking has occupied abundant role and importance mainly during the period of COVID- 19. E- banking also known as electronic banking has numerous names like online banking, virtual banking, internet banking. The coronavirus pandemic has extremely reformed and reshaped the methodology of how banks and credit unions function at present time. Covid-19 is a viral disease that first appeared in Wuhan, China in 2019 and is rapidly spreading over the world.  As a result, most of the nations, notably India, have announced a pandemic, but fundamental needs such as medicine and food are essential for people to live, and financial transactions play a key role in this. Individuals can safeguard themselves from this pandemic by keeping social distance through online banking, which allows them to conduct transactions on an online basis without transferring any actual commodities.

In 1991, in India advancement in the banking industry began with the arrival of globalization and liberalization processes which resulted in the development of e-banking. The number of electronic transactions is expanding every day as a result of the revolution in information technology, and the global has evolved into a digital world in which everyone is connected at a global level via the internet.

Electronic banking is defined as the delivery of services concerning banks to a customer at his house or office via a variety of devices connected such as a phone, desktop application, a pc, a digital tv, or a cell phone with browser. The world’s first country to deploy electronic banking was Finland and ICICI Bank was the first Indian bank to do so in 1997 under the Infinity label.

Customers can conduct banking transactions on a secure website operated by the institution, which can be a retail bank, virtual bank, credit union, or building society through E-banking that also contains mobile banking, cheque truncation, ATM, RTGS, and debit cards, ECS, Tele banking, credit, Internet banking, and NEFT. Banks are, in theory, a dull but necessary part of our lives. and they are tedious since one has to stand in line for hours to get transfer of funds and cash and   deals with a lot of paperwork.  The impact of COVID-19 on e- banking is important to be researched upon because the outbreak provided a major impetus to become digital and transformed the financial industry by driving it to go digital and moreover, the conception of E- banking is very much appropriate to the present time.

Impact of E-Banking During Covid’19

The most effective techniques to avoid COVID’19 transmission are to establish a social distance by preventing intimate contact and the majority of people who stay at home use digital channels, both on their phones and online to meet their requirements of bank. face-to-face communications and traditional branch visits with workers of bank have declined as a result.

The Covid-19 could have a significant impact on e- banking, among other things.

COVID-19 ‘s impact on digital banking affect consumer behaviour

Because of the repercussions of Covid-19, significant acceleration in digitalization where Customers might well be compelled to accept digital banking, which they previously would have been hesitant to use. The more people utilise this type of banking, the more they will acknowledge the comfort it provides and be less willing to visit the banks.

Banks’ response to the impact on digital banking due to COVID-19

Banks in several nations have lowered their operating hours and urged more and more customers to utilise the online banking facility as a result of COVID-19 and its impact on e – banking. Banks have indeed put out alerts advising their consumers and have offered tutorials on how to use e- banking so that customers can conduct transactions remotely.

Change in digital customer experience

 Due to the COVID -19, there has been increase in competition for financial institutions. , therefore financial institutions would be looking to provide customer-based and straightforward banking experiences. As a result, customers who are pleased with their virtual experience are more likely to establish new accounts with their present financial institutions. In banks, there are also positive impact on online journeys like customer onboarding, product launching and, digital banking apps might begin to offer a user-friendly and efficient overall experience in the future, helping to eliminate obstacles to financial and digital literacy.

Shift from servicing to engagement

A clear trend far from servicing but towards engagement could also have an impact on online banking and when the country’s present crisis scenario improves, customers will be seen spending less time in banking institutions. Banks will forego merely transactional digital apps like making payments and checking balances and transfers in favor of apps which allow stronger interaction with costumers, because there will be a digital business strategy of marketing and selling across the globe.

Use of next-generation technologies

Customers’ needs may change largely as a result of the pandemic, and banks will need to adapt by shifting away from existing technologies and incorporating next-generation digital tools like cloud platforms and AI which can handle large no. of questions from customers. Banks are more likely to come up with some new improvements and services for their electronic banking application as the speed of digital competition picks up, which they will be successful in achieving safely and in a faster manner.

Positive Impact of COVID-19 On E- Banking

• Money or fund transfer has a substantial advantage since digital banking eliminates the inconvenience of issuing cheques or demand draft. People could easily transfer money from one account to another anytime and anywhere without ever having to leave their houses, ensuring a low risk of COVID-19 infection. RTGS (Real-Time Gross Settlement), IMPS (Immediate Payment Service), and NEFT (National Electronic Fund Transfer) are three popular online money transfer options
• In addition, during the COVID-19 pandemic, one can download statements of e-bank at any time, which can be kept on laptops or mobile and retrieved promptly, obviating the need to go to banks and collect hard copies of statements, and thereby avoiding unwanted contact.
• In addition, ATM machines are being installed in every nook and cranny, allowing customers to withdraw cash at any time, and payments of bill, apply for loans, start a FD, utilize numerous policies concerning insurance etc can be handled conveniently with e – banking by just logging into the account
• amidst the pandemic, anybody with a phone can install apps like Google Pay, BHIM, and Payzapp for everyday transactions.
• Also, one could view pending payments or history of transactions, as well as track debits and credits regarding account as banks deliver e-mails or transaction notifications that help in the avoidance of frauds, which must be notified as soon as possible to the banks.
• The pandemic given an impetus for RBI Bank to advance its E- banking activities in order to assist people amid the crisis thereby prepare for the post-Covid-19 period and according to a survey, customers are 89.12% confident and feel safe in utilising e-banking.

Prior to the pandemic, shopkeepers used to purchase their supply using real-time cash transactions after which only the wholesaler delivered their goods but now shopkeepers can get their goods by paying their wholesalers virtually but people in villages and towns also have been motivated by the pandemic to include them into their everyday routines.

Negative Impact/Challenges of COVID-19 On E- Banking

• As we all know, a substantial section of ‘s populace is unbanked, or without accessibility to an account in the bank.  Therefore, the banking industry’s key obstacle would be to adopt new technical advancements first and then convey them to the public, particularly in rural areas, which would be a difficult task.
• Customers also prioritize safety in any situation, and banking industry of India has seen many cyberattacks which have led to huge damages. Thus, financial institutions must formulate and implement strict measures to limit these risks and ensure a safe framework as more people switch to digital banking as a result of COVID 19.
• The COVID-19 pandemic’s negative impacts are affecting various sectors of the economy in India, viz hospitality, manufacturing, auto, aviation, and commerce suffering the consequences of the lockdown. Travel restrictions, lower expenditure by people (e.g., films, dining out, entertainment, etc.) and closed stores have been hampering digital payments.
• Furthermore, due to the temporary closing of borders, cross-border payments have dropped dramatically, limiting commodities movement. Remittances from abroad have also been impacted and declined.
• According to the government and   FY2019-20, after the spread of the COVID19, banks recorded frauds of Rs244 crore using credit card, and e- banking, ATM-debit card using techniques such as phishing and vishing.

Initiatives Taken By The Government Of India Concerning E- Baking

• Online Dispute Resolution (ODR) Improves Customer Convenience and it is intended to adopt steps to create an ODR system for multiple payment services concerning transactions that have failed across all authorised financial transactions.
• The RBI released Rs. 1.2 lakh crore to cash vaults throughout the nation from April 1 to April 14 to guarantee such a seamless cashflow in the middle of the pandemic.
• The HDFC Bank has launched “Secure Banking during COVID’19,” a secure programme in which the bank will inform its customers and the public about developing frauds.
• RBI has enforced two-factor identification, that adds an extra layer of protection for digital payment transactions. Furthermore, all major bank websites feature customer awareness messages and advertisements emphasising the need of customers exercising caution when conducting e- banking.”
• The RBI and banks are working together with the Indian Computer Emergency Response Team (CERT-In) to detect and prohibit sites of phising.

Recommendations

The following are the recommendations for promoting e-banking products and services:

• Raise public awareness on e-banking: Banks should educate the public about e-banking products or services and on how to use them.
• Special arrangements by banks: To avoid data loss, technical faults must be eliminated by engaging well-trained and experienced computer specialists. To keep customers’ money safe from hackers, banks should deploy new and latest technology that is updated on a regular basis.
• Specialised training: Bank employees must obtain specialised technical training about how to use e-banking so they can convince consumers to do so
• Organizing workshops and seminars: Awareness programmes on the effective use of e-banking should be held, particularly for people who are unfamiliar with ATMs or pcs.
• Security arrangements by customers: Customers should never divulge personal information such as passwords, pin codes, or other sensitive data with anybody, even bank employees.  password mailers or PIN should not be saved instead, they should be changed and noted down before the mail is destroyed.

Analysis And Conclusion

Due to a lack of technological understanding half a century ago, this label might not have developed, but it seems to be important today. With some technological advancements, the e- banking sector would keep growing in the coming years and artificial intelligence has already been used by a few of banks to meet customer financial requirements and preferences. It’s artificial intelligence right now, but it’ll be something different tomorrow that would proper digital banking forward.  Our generations are increasingly acclimating to more technological advancements, and this pandemic is a perfect chance for the banking industry to encourage and promote and the Indians to modernization and digitalization. In the aftermath of the outbreak, India’s banking sector is expected to undergo digitalization, which would involve customer trust, security, digitalization channels, privacy, policy and compliance, and new technologies. When the economy is in rapid decline in these terrible times, these banks continue to provide their usual services and thus will undoubtedly contribute to the recovery of our economy.

In a nut shell, while there are various obstacles in the way of a successful development of E- banking in India, the study concludes that E-banking in India has a great future. E-banking is a great opportunity for India’s banking sector to increase income and base for customer, and it should never be underestimated. Furthermore, the research’s recommendations are beneficial to both customers and banks in terms of improving service and quality. As a result, only those banks that can adapt to technological improvements and customer needs will survive in the future, because the banks’ destiny is eventually in the customers’ hands. E-banking is growing popularity among the youth of today due to its benefits and ease, and banks are striving hard to expand the availability of e-banking products and services. E-banking will not only be an accepted means of banking in the future; however, it will be the favoured method of banking.

Author: Pooja Patel [CMR School of Legal Studies, Bangalore]

Related Posts

• How Commercial Courts Are Reshaping Litigation?
• Good Lawyers Don’t Just Solve Problems. They Prevent Them. Why Don’t We Train Them That Way?
• The Duty to Step Aside: India’s Recusal Jurisprudence Under the Microscope
• How Patent Strategy Shapes Competitive Advantage in Modern Businesses?
• The Fine Print of Property Ownership: Decoding Leasehold and Freehold in India