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Tag: net banking

  • Evolution of Indian Banking System: A Comprehensive Study

    Archaeological evidence from the era of 2000 BCE shows the beginning of the banking system with the first prototype that engaged in giving grain loans to farmers and traders. It also proves that money-lending was also an activity carried out in India and China as well. The historical roots of modern banking can be traced to medieval and renaissance Italy.

    Function of Banks
    A Short History
    The Impact of Nationalization
    Liberalization – 1991 Till Date
    Evolution of the Banking Model – A comparison
    The Risks Attached
    What Does The Future Hold

    Function of Banks

    “Banking is defined as the business activity of accepting and safeguarding money owned by other individuals and entities, and then lending out this money in order to conduct economic activities such as making a profit or simply covering operating expenses.”

    The primary role of a bank is to take in money, called deposits, pool them, and lend them to those who need funds. In essence, banks are intermediaries between depositors and borrowers.

    A Short History

    At the time, India won independence, and the major banks of the country were privately run. This created a potential problem as people from rural areas were dependent on money lenders for financial assistance.

    With an aim to resolve this issue, the government decided to nationalize these banks. Between 1969 and 1991, twenty banks, whose national deposits were more than Rs. 50 crores, were nationalized. The banks that were nationalized include the Bank of Baroda, Bank of India, Central Bank of India, Punjab National Bank, Oriental Bank of Commerce, UCO Bank, Union Bank of India, and many others. Also, the State Bank of India was formed in 1955.

    The Impact of Nationalization

    There were many other reasons and considerations behind the government’s decision to nationalize banks.

    • It led to an increase in funds and helped raise the economy of the country.
    • It increased the efficiency of the banks.
    • It helped boost the rural and agricultural sectors of the country.
    • It helped boost employment.
    • The profit of the banks was used by the government for the betterment of the citizens.
    • Competition decreased leading to increased efficiency.

    Liberalization – 1991 Till Date

    This was one of the biggest developments in the Banking sector. RBI gave licenses to 10 private sector banks to establish themselves in the country. These include ICICI Bank, HDFC Bank, Axis Bank, and IDBI Bank.

    This introduced a new era of the Banking model. As technology advanced so did the banking model evolve.

    Evolution of the Banking Model – A comparison

    Indian Banking Growth

    Until the 1990s, the banking sector in India had adopted the traditional means of banking and maintaining records manually. However, with the financial reforms since 1993, the Indian banking sector had to accept computerization in order to cope with the increasing overload and incompatibility of the manual system to sustain further growth.

    In 1993, the employees’ association of the Indian banks (IBA) contracted an agreement with the bank manager about the introduction of computerized applications in banks. This agreement was the major breakthrough in the introduction of computerized applications and the development of communication networks in banks.

    Once the technology was introduced into the banking sector, it saw unprecedented growth and advancement. Traditional means of banking were rapidly replaced by e-banking options –

    ATMs (Automated Teller Machines)

    Automated Teller Machines (ATMs) or 24-hour Tellers are electronic terminals that allow banking activities almost anytime. To withdraw cash, make deposits, or transfer funds between accounts, an ATM card / Debit card is utilized. It offers a host of functions –

    • Cash Withdrawals
    • Balance inquiry
    • Mini Statements for accounts
    • Cheque or Cash Deposit facility
    • Funds Transfer
    • Payments

    Telephone Banking

    Telephone banking is a service provided by a bank or a financial institution, enabling customers to perform various financial transactions without the need to visit a bank branch or ATM. These transactions do not involve cash or financial instruments such as cheques. Banks have upgraded their phone banking services enabling customers to avail of a whole host of services with the help of a Voice Response System (VRS)

    • Check account balance and statement information.
    • Transfer funds between accounts.
    • Payment of bills like utility, credit cards, mobile, etc.
    • Request cheque book or account statements.
    • Demand Draft request.

    Mobile Banking

    Mobile Banking refers to the provision and availability of banking and financial services with the help of mobile telecommunication devices. Mobile banking facility is offered by most major banks in India. This has made banking transactions easy and hassle-free. Customers can use mobile banking to view their account balance, make instant fund transfers and pay bills, etc. There are various types of mobile banking services i.e., SMS, USSD, and mobile apps. Some of the banks have incorporated services like loan approval and linking of insurance policy in their mobile banking apps.

    • Access to Account Information.
    • e-statement of account.
    • Loan statements.
    • Card statements.
    • Third-Party Money Transfers.
    • Payments via NEFT/IMPS/RETG/UPI/MMID.
    • Investments in various financial tools.
    • Opening fixed deposit/recurring deposits.
    • Portfolio management services.

    Online Banking

    Also known as Internet banking or web banking allows a user to conduct financial transactions via the Internet. It offers customers almost every service traditionally available through a local branch including deposits, transfers, and online bill payments. The most prominent advantages of online banking are:

    • 24/7 access and account service.
    • Speed and efficiency.
    • Online bill payments.
    • Cost-effective for banks.

    Other services

    The nature of banking services has evolved in the last 5 decades. Banks have also expanded their services to include various other peripheral services apart from traditional banking services.

    – Investment Options:

    Banks offer their own investment plans with a SIP option or one-time investment options which are, typically, stock market-related options.

    – Insurance Options:

    Banks have added a whole host of insurance options that they offer. Some options they offer are car insurance, house insurance, travel insurance, unit-linked life insurance policies, etc.

    The Risks Attached

    With advancements also come risks. The digitization of banks carries the same risks associated with the online internet world. There are security threats, privacy invasions, virus attacks, phishing scams, technological issues, money laundering risks, and many others.

    Of course, there are actions that can be taken by both the customer and the bank itself to minimize the threats but they can never be completely eliminated. Banks, in particular, must adopt a robust security plan and keep it upgraded at all times to protect the confidentiality of data.

    What Does The Future Hold

    The mobile and the wireless market has been one of the fastest-growing markets in the world.  The arrival of technology and the escalating use of mobile and smartphone devices have given the banking industry a new platform.  Connecting a customer anytime and anywhere to their money and needs is a must-have service that has become an unstoppable necessity. This worldwide communication is leading a new generation of solid banking relationships.

    At the pace at which technology is evolving, there is no way to know how the banking system will further evolve. The only certainty is that it will become more accessible and friendlier. It will grow to encompass other options and services for the benefit of its customers.

    FAQs

    What are the recent changes in the banking system?

    A recent change in the banking sector is the emergence of e-banking, which is crucial in offering better services to clients.

    What is the difference between traditional and modern banking?

    Traditional banking requires you to go to a physical bank branch in order to access your account. However modern banking, allows you to conduct transactions from anywhere with an internet connection.

    What was the aim behind the nationalization of banks?

    The aim was to encourage businesses in order to serve better the needs of the country’s economy.

    Which was the first nationalized bank?

    The first bank in India to be nationalized was the Reserve Bank of India.

  • Top 6 Online Business Banking Solutions for Small and Medium Businesses

    ‌‌Each business requires several services for its easy working. Some of the services are achieved by the traditional method, whereas some services get fulfilled by outsourcing facilities.

    Apart from these, there can be few leniencies provided by modern technology to accomplish a work. The best example of this is to achieve business banking solutions by the medium of the internet.

    Online business banking solutions are a great way of using banking solutions with additional advantages such as convenience, ease to use, better-maintained record, etc. Multiple platforms are providing different services in the online business banking industry. Some of the most famous and well-known platforms are:

    1. BlueVine
    2. Axos Bank
    3. Novo
    4. Lending Club Bank
    5. Mercury
    6. NorthOne

    1. BlueVine

    BlueVine is a California-based Fintech company popularly known to provide online banking solutions to small and medium-sized businesses. BlueVine works with the mission of empowering small businesses with innovative banking specially designed for them.

    They work towards easing the pain point of every small business owner by providing them with solutions that can help them with acknowledging their cash flow, capital access, etc. There are several services provided by them,

    • Account basics.
    • Vender services and transactions.
    • Paycheck protection loan programs.
    • A business line of credit, etc.

    Why should you consider BlueVine:

    • Best for small business owners or newly opened businesses.
    • Allows unlimited transactions.
    • Provides a better competitive interest rate.

    2. Axos Bank

    Axos Bank Website
    Axos Bank Website

    Axos Bank is an American-based chartered Bank with the mission of building a secure financial future for those who look out for convenient online banking solutions. Axos Bank is a well-known bank for providing complete online-based business solutions to its customers.

    • Small business banking solutions.
    • Commercial business banking solutions.
    • Commercial lending solutions.
    • Personal banking solutions, etc.

    Why should you consider Axon Bank:

    • Axos Bank does only limit its services to online business banking solutions, it also provides complete services to personal banking services.
    • Axos Bank provides both mobile applications as well as desktop versions for the easy use of customers.
    • It is also given the tag of one of the best banks in America by Forbes.

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    3. Novo

    Novo Website
    Novo Website

    Novo bank is a United States-based online banking solution provider. Novo bank works with the ethics of empowering their customers with financial data along with the most compelling banking experience. Novo bank works with the simple aim of keeping no hidden fees for small businesses.

    • Helps in creating and managing an unlimited number of invoices.
    • Refunds at all ATMs.
    • Allows domestic and foreign wire exchange.

    Why should you consider Novo Bank:

    • Novo bank works with a negligible amount of fees as compared to other places.
    • Novo bank is the simplest online banking solution provider platform. It’s easy to use and maintain.
    • Novo bank is perfect for new users as well as new startups to manage their business activities.

    How Credit Scores Plays an Important Role in the Fintech Industry?
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    4. Lending Club Bank

    LendingClub Website
    LendingClub Website

    Lending Club is a California-based-to-peer platform enabling its users to keep a track of their financial expenses. Lending Club works on different facilities with the mission of transforming the banking industry to make credit more affordable and investing more rewarding.

    • Easy lending loans for business.
    • Easy lending loans for personnel.
    • Facility to check and keep a check on a business account.

    Why should you consider Lending Club:

    • A business account can be opened within a few minutes.
    • Provides excellent customer service.
    • Provides the service of mobile applications as well as web platforms.

    5. Mercury

    Mercury Website
    Mercury Website

    Mercury is a United States-based banking solution provider platform especially popular for its support to newly born startups. Mercury can be considered as the first platform for providing easy access to early building startups and fintech companies. The aim of mercury is to power the next generation of companies that can build the shape of American industry.

    • Allows the creation of virtual debit cards.
    • Keep a track of cash flow.
    • Allows the customers to sign in from anywhere in the world.

    Why should you consider Mercury:

    • The whole process right from the start of creating the account till managing it with different facilities is available through the online method. Mercury completely eliminates the possibility of stepping into the bank.
    • Avails the customers with the facility of issuing virtual as well as physical banking cards by reposting each transaction to the head.
    • It is the perfect stop for startups to indulge in online business banking solutions.

    6. NorthOne

    NorthOne Website
    NorthOne Website

    NorthOne is a United States-based online banking solution. It combines online banking solutions with in-built tools for easy and safe business banking solutions. NorthOne works with the mission of eliminating the financial administration for business owners so that they can eventually focus on developing their business.

    Some of the popular services of NorthOne are:

    • Allows smart and digital banking tools.
    • Allows the facility of depositing checks at a simple pace.
    • Provides business banking cards.

    Why should you consider NorthOne:

    • NorthOne is the perfect platform for new users.
    • It is a mobile-based application, hence more accepted and favoured by typical mobile users.
    • Provides one in all solutions with a single step.

    The Boom of FinTech Industries in India – A Statistical Data Analysis
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    Conclusion

    Technology is grasping the world in its hand with each passing day. The businesses earlier needed visiting banks for taking up their needed services. However, now one can easily select needed online business banking solutions for their firm and can work with them without the need of actually stepping into the bank. There are several online platforms providing business banking solutions to customers.

    FAQs

    What is the best business banking app?

    Some of the best banking apps one can consider using are Revolut, Monzo, Barclays, etc.

    Which bank has the most secure online banking?

    Citibank and Bank of America are the most secure banks for online banking

    Which is the best online bank for business?

    Santander is considered the best bank for online businesses.

    What are the advantages of using an online business banking platform?

    There are several advantages associated with the use of online business banking platforms. Online business banking platforms are low-cost to maintain, allow instant money transfer, is convenient to use, etc.

  • Are Neobanks Really The Future of Banking?

    In this fast-pacing era where really nobody has the time or the interest to walk over to a bank branch to do banking or business, “Neobanks” are a change and, in a good way, but are they really a promising future? Let’s find out.

    What is Neobank?
    Difference Between Neobanks and Traditional Banks
    What Do The Neobanks Offer That Traditional Banks Don’t?
    How Does Neobanks Work?
    Are Neobanks The Future of Banking?
    Pros and Cons of Neobanks
    FAQs

    What is Neobank?

    Neobank
    Neobank

    Neobanks are financial institutions or digital banks that exclusively operate online and do not have any physical branches. Neobanks provide services and products that are not found in traditional banking systems and are also, very efficient. They work either directly with service providers or with already established banks as they don’t have regulatory licenses, in the Indian context. Neobanks are a wide umbrella of financial services such as faster deposits, transfer of payments, credit cards, etc.

    Neobanks had a customer base of around 7.7 million in 2018 and nearly tripled it to 20 million in 2020. In 2019, in India alone, Neobanks raised a big amount of 90 million dollars. And are expected to raise an amount of 394 billion dollars globally by 2026, according to reports of lead squared. Globally there are more than 200 Neobanks and more than 10 in India and the numbers are rapidly increasing.

    In India, the growth of Neobanks are not that fast compared to the growth around the globe, but looking at how vast the Indian Market it can take over by a storm.

    Difference Between Neobanks and Traditional Banks

    • Neobanks mostly press on solving banking issues faced by customers but lack in better overall customer experience.
    • The onboarding process of Neobanks is very simple, paperless, and less time consuming compared to traditional banks.
    • Neobanks are beneficial for small businesses whereas traditional banks prove to be very useful to millennials.

    What Do The Neobanks Offer That Traditional Banks Don’t?

    In the past few years, there’s a lot of change in the finance industry and with the introduction of UPI in India, which recorded over 4 billion transactions in October 2021, and the mobile wallets in the US and Europe we have seen tremendous amounts of transactions digitally.

    Neobanks use innovative new technologies such as AI, Cloud analytics and for their audiences, they are merely an app, unlike the traditional banks which rely on financial products and expand their large network of branches for the customer base.

    Neobanks mostly come in handy to the people who do not have much time to handle the hassles of visiting physical branches and have a busy living. They are way different than other financial institutions in certain ways such as,

    • Reduced timeline of acquiring customers and provide seamless customer services and paperless operations
    • Removing the challenges that are faced in the traditional banking system and thus, providing a brilliant user experience.
    • They have fewer regulations and are easy for customers to set up their accounts and also ensure advanced security and privacy.
    • They provide accounts and money transfers, seamless international payments. They also provide better interest rates than traditional banks because of their fewer costs and easy processes.

    How Does Neobanks Work?

    Neobanks work on the “Banking as a service” module and fix the gap between traditional banks and customer expectations. Banking as a service is an end-to-end process of operation of financial services on the internet and allows digital banks or third parties to connect with banks for better financial and banking services.

    They are completely digital and online as there are no physical branches. Neobanks have modernized platforms that help them collect data of their target audience and based on the data collected they customize their marketing strategies accordingly as a result successfully creating a cohort of customers.

    Are Neobanks The Future of Banking?

    They are changing the face of the Fintech community and one day maybe replace traditional banks but it’s not easy and one can never be sure. Neobanks are mostly like digital banks but remember “mostly”. They are much recognized as companies than banks.

    In India, the RBI still doesn’t allow banks to be 100% digital and have some physical presence. The defining and most important reason for this is and the difference between Neobanks and traditional banks is funding and not forgetting customers’ trust. Traditional banks may find it hard to compete in this tech-savvy world still the legacy can’t be weighed down so easily.

    Pros and Cons of Neobanks

    Pros of Neobanks

    • Adapting technology and no presence of credit base makes them low cost and convenient for the low-salaried customer base.
    • Neobanks are convenient as allow operations through an app from basic banking to investing and other finances.
    • Better services and benefits. Quick processing for loans and speeding other requests by ditching paperwork.

    Cons of Neobanks

    • Limited services compared to traditional banks and less regulated. No physical presence may hinder customers’ trust.
    • Keeping up with technology and advancements in trends.
    • No physical bank branches and In-person assistance access.

    What changes we might see in Banking after the pandemic?
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    Conclusion

    Neobanks have emerged as a buzz wave in the fintech community and have been doing great in maintaining their spotlight on a global level and every day more and more businesses and banks are signing up with them. We see a new player everybody whose intention is to simplify financial services and provide additional benefits with them.

    Though it’s going to be hard to revolutionize the whole industry of banking and finance it’s gonna take time and real hard work for tech geeks. As the saying goes, “it’s the little changes that make the most important changes”.

    FAQs

    Are Neobanks banks?

    Neobanks are not banks and do not have a bank charter. Instead, these institutions generally partner with a bank to ensure their products. Before signing up with a neobank, make sure it’s FDIC insured by a partner bank.

    What is Neobank?

    Neobanks are digital banks that do not have any physical branches and provide all financial services to their consumers through apps that can be accessed through a smartphone.

    Is Neobanks secure?

    Money deposited in a neo-banking account is as secure as it would be in a regular bank account in India.

    When did Neobanks start?

    The term neobank has been in use since at least 2016 to describe fintech-based financial providers that were challenging traditional banks.

    Talking about the neobanks in the Indian context, neobanks are not directly regulated by the banking regulator. This is mainly due to the fact that RBI does not grant licenses for operating virtual banks in India.

  • The Successful Business Model of HDFC Bank

    The corporate sector often requires major backing from banks. Private banks have always been front in targeting the blue-chip manufacturing companies in the entire Indian corporate sector. These also target small or mid-sized corporate companies and agricultural businesses.

    Private banks offer tons of transactional and banking services such as trade services, cash management, working capital finance, and transactions services. Banks facilitate the structural organization management for cash services where it gets combined with the merchant and the distributor for the smooth working supply chain management, wholly for the corporate customers.

    ‌‌Private Banks such as HDFC bank have been very upfront in providing the services of cash management and transactional banking system for the corporate customers, stock exchange members, mutual funds and banks. HDFC Bank is India’s largest private sector bank and has always been very promising. In this article, we have discussed the remarkable business model of HDFC bank and how the bank operates. Let’s get started!

    About HDFC Bank
    ‌‌Where are the branches of HDFC Bank established?
    Product and Services offered by HDFC Bank
    Business Model of HDFC Bank
    How does HDFC Bank operate?
    FAQ

    About HDFC Bank

    ‌‌HDFC bank is a very promising and secured Indian private banking and financial services company. The company is known as the largest private sector bank by marketing capitalization and assets in India. HDFC Bank was established in 1994, headquartered in Mumbai, Maharashtra, India.

    As of 2021, HDFC bank is stated as the third-largest company based on market capitalization in the Indian Stock Exchange market. HDFC bank employs around 120,000 employees in its bank and its branches, this employees count is the thirteenth-largest in India.

    ‌‌With the chairman Atanu Chakroborty and Sashidhar Jagdishan as the chairman, HDFC bank has grown immensely. HDFC Bank was established as the subsidiary of the Housing Development Finance Corporation. The bank is very promising and satisfactory with its services and has a huge customer base across India.

    ‌‌Where are the branches of HDFC Bank established?

    ‌‌HDFC Bank is the first-ever private bank in India to obtain approval from the Reserve Bank of India (RBI). HDFC Bank has grown its network vibrantly and has gained a huge customers base throughout the country. Today, HDFC Bank has established a banking network of over 5608 branches along with 14,897 ATMs in more than 2902 cities and towns.

    Product and Services offered by HDFC Bank

    ‌‌HDFC Bank has always been very promising and satisfactory to its customers. Its top services are retail banking, auto loans, wholesale banking, two-wheeler loans, treasury, consumer durable loan, personal loans, loans against property, credit cards, and lifestyle loans. Moreover, HDFC Bank also offers various digital products including SmartBUY and Payzapp.

    Business Model of HDFC Bank

    ‌‌HDFC Bank, the leading finance company in India has always been guaranteeing and fulfilling its services. The company has a very strong foothold in the market as a finance company. Following the lead, the Industrial Credit and Investment Corporation of India (ICICI) is known to be the second-largest bank in the country.

    ‌‌HDFC Bank has been revolutionary with its terms of deposits and loan disbursements, which keeps it at the top of the Finance sector market. HDFC Bank runs on a very subtle business model plan where it generates universal banking-based synergies by cross-selling the bank’s products to its subsidiaries across India, without actually incorporating any commodity.

    HDFC Bank has gained a huge customer base and enormous finance handling. With its current business model, the bank is up for dozens of more achievements and has become the first-ever most reliable, and exclusive private bank in India, with great customer support.

    Deposits of HDFC Bank Limited
    Deposits of HDFC Bank Limited

    How does HDFC Bank operate?

    ‌‌Banks are considered the safest house for people to conserve their money and funds. With the growing technology, private banks are putting everything in their power to provide the best services to their customers and gain their loyalty.

    HDFC Bank operates through various segments such as:

    Retail Banking

    The bank offers an assorted range of finance products and services to its customers via a developing HDFC branch or its ATM or through various digital channels including Phone Banking, Netbanking, and MobileBanking.

    Treasury

    Through the Treasury services, the Bank guides businesses in generating great outcomes on their funding and financial management risk. Treasury includes the product services of the local currency market and debt securities, foreign derivatives and exchange, and capitals.

    Wholesale Banking

    The bank offers a broad gamut of transactional and commercial banking services to various businesses and organizations regardless of their size. These services are trade services, cash management, working capital finance, and transactional services.

    Conclusion‌‌

    HDFC Bank has provided tons of promising services to its customers. Being a private bank, the company has earned absolute trust from its customers and gained a huge customer base throughout the country.

    The bank engages with various financial and banking services such as Treasury operations and commercial banking. HDFC Bank facilitates the banking services of various upper and middle-income people and organizations across India. The bank has a very strong position in the market and is considered the most reliable and reasonable private bank in India, later followed by ICICI bank.

    HDFC bank follows a pretty bold as well as a subtle business model which has brought tremendous growth and development to the bank and its services.

    FAQ

    What is the revenue of HDFC Bank?

    The revenue of HDFC Bank is 1.56 lakh crores INR in 2020.

    Who is the CEO of HDFC Bank?

    Sashidhar Jagdishan is the current CEO of HDFC Bank.

    Is HDFC a foreign bank?

    No, HDFC Bank is an Indian banking company.