reference to Industry and Government...

International Journal of Research in Economics and Social Sciences (IJRESS) Available online at: http://euroasiapub.org Vol. 9 Issue 7, July - 2019 ISSN(o): 2249-7382 | Impact Factor: 6.939 |

International Journal of Research in Economics & Social Sciences

Email:- [email protected], http://www.euroasiapub.org (An open access scholarly, peer-reviewed, interdisciplinary, monthly, and fully refereed journal.)

1

A Study of the Recent Trends in the Online Banking and Mobile Banking (with

reference to Industry and Government Policies)

Prof R.K. Maheshwari1 Mrs. Harshita Gupta2 (Research Scholar)

Department of Applied Economics Department of Applied Economics

Faculty of Commerce Faculty of Commerce

University of Lucknow University of Lucknow

ABSTRACT

With technological advancement, banks and their customers must tend to switch to the new ways

of banking technologies like online banking and mobile banking. The role of technology is

increasing day by day, which is acting as a catalyst for the promotion of digital methods of banking

in India. The Ministry of Electronics & Information Technology, Government of India is playing an

important role in promoting Paperless and Cashless Economy. Today, banks have introduced the

online and mobile technologies into their services to offer their customers the freedom to pay

bills, initiate transactions, balance check and request other banking services using the

Smartphone. This research paper examines and presents the recent trends in the online and

mobile banking industry it also focuses on various awareness program, policies and initial steps

taken by the government to promote the digital banking industry in India.

KEYWORDS: Online banking, Mobile Banking, Government policy, Digital Payment and Cashless

economy.

INTRODUCTION

Mobile banking and online banking have emerged as a popular mode of banking in India. Mobile

banking and online banking services help the customer to carry financial transactions and

operations with the help of Mobile devices, Laptop or Computer. It enables banking transactions

like transfer of funds, payment of loans and EMI deposit, online shopping and mobile recharge.

Government is encouraging the uses of online banking, mobile banking, E-wallet, banking cards,

micro ATM and POS by the Indian citizens. At Present most of the customer in the banking sector

are more technology-savvy and are reducing the uneasiness towards the introduction of new

technologies in the banking sector. The number of Mobile banking registered customers rose by

54 percent to 251 million at end-March 2018 from 163 million at end-March 2017.

India's demonetization pushed the nation towards online banking, mobile banking, and digital

banking. E-banking helps in facilitating faster payment services in India. People had used more

and more online banking and mobile banking to handle their daily expenses during the time of

demonetization. Many payment apps like UPI, Paytm, Mobikwik, and BHIM have played an

important role in promoting online banking, mobile banking and digital payment in India.

International Journal of Research in Economics and Social Sciences (IJRESS)

Vol. 9 Issue 7, July -2019

ISSN(o): 2249-7382 | Impact Factor: 6.939



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ONLINE BANKING

Online banking is a type of banking transaction where a user can conduct a financial transaction

over the internet with the help of the banking website and secured username and password

provided by the bank using laptop or computer. Internet Banking provides facilities like funds

transfer, online payment, opening a bank account, obtaining account balance, financial loan, order

cheque book and bank statement.

MOBILE BANKING

In Mobile Banking, a user can conduct a different type of financial transaction or can request

service using the mobile device only. The mobile software called an app is provided by the bank

or the financial institution which can be downloaded and installed by the user on his mobile

device to use the banking services. A mobile banking user can conduct transactions like Fund

transfer, cheque book request, bill payments, mobile recharge, E-Commerce transactions, etc

OBJECTIVES OF THE STUDY

To find the recent trends in online banking and mobile banking industry in India.

To find the government policy promoting the usage of online banking and mobile banking

in India.

LITERATURE REVIEW

In this topic, few studies were conducted in India. The researcher reviewed many researchers

conducted in India to find out the correct area to carry out the research paper.

Manpreet Kaur (January 2017) in their research paper "Demonetization: impact on cashless

payment system" discuses about how much the cashless transaction is growing after the

demonetization. He studies in what way our economy is moving from cash to cashless system

because cashless transactions are convenient and safe for the people as well as economical.

Abhani Dhara K, (March 2017) has studied about "A study on the impact of demonetization over

the banking sector regarding Veraval city" in his research paper. He had used the Questionnaire

and filled by the employees of the 13 selected banks of Veraval. He also used primary data in his

research. As a result of his seeing the data and explained that 55% of employees agree with the

statement i.e. Positive impact of demonetization over the banking sector. Then he had seen 51%

employee's positive opinion about the impact on online banking in our research paper. He

concluded his research paper demonetization was very successful compared to earlier. He also

found in his research that how the demonetization has prevented corruption and black money.

D. Mounika and R.Kadhirvel, (April 2017) have examined about "Impact Of Demonetization In E-

Banking" in his research paper. This study examines the effect of demonetization on internet

banking and behavioral intention of the customers about adopting E-banking on the time of

demonetization. They discussed how the people move to cash transaction into a cashless

transaction due to demonetization. In his research, he also found that illiterate people were more

difficult to accept E-banking.

RESEARCH METHODOLOGY

The research study is based on secondary data. It is fundamental and descriptive. This study finds

out the recent trends in the online banking and mobile banking industry and the government

policy promoting the usage of online banking and mobile banking in India Secondary Data have

been collected from various online sources such as websites, articles, journals, news, etc.






3

DIFFERENT MODE OF ONLINE BANKING AND MOBILE BANKING PAYMENT METHOD

Online Banking and Mobile Banking involves transactions that are carried without the use of

physical money for the purchase of various goods and services. There are various types and

modes of digital payments available as discussed below:

Figure 1

BANKING CARDS

Banking cards are a plastic card issued by banks to conduct commerce transactions and banking

transactions. Banking card contains a magnetic strip which can be read by the machine. Mainly

there are two types of banking card available namely Debit Card and Credit Card. The credit card

allows conducting the banking transactions using the fund approved up to the credit limit. Debit

Card allows conducting a transaction using the funds available in the bank account of the

cardholder.

Micro ATMs

Mobile Wallets

Point of sale

PPI (Banking PrePaid Card and Mobile Wallet)

Mobile Wallets

UPI

USSD

Banking Cards

AEPS






4

Figure 2

(Source: https://www.rbi.org.in/Publications/Monthly/RBI Bulletin/Payment and Settlement

Systems/Payment System Indicators/Year/Month)

In May 2019, the total number of transactions through credit cards was 173.2 million, while for

debit cards a total number of transactions were 407.6 million a rise of 25.8% year-on-year for

credit card and 15.8% for debit cards.

UNSTRUCTURED SUPPLEMENTARY SERVICE DATA (USSD)

USSD is a phone-based payment service which allows us to conduct a variety of banking

transactions using only the feature phone or basic phone. This service is also called as *99#

service. There is no need for internet data facility to use USSD based mobile banking. The

customer needs to register his number with the bank to use this facility.

Services offered by USSD Fund transfer, Change MPIN, Generate OTP, Balance Enquiry, Mini

Statement, Know MMID, Value Added Services (VAS).

Figure 3

352.1283.3

367.4 357.2 362.7 393.4 376.6 387.5 373.6 342.2 407.6 407.6 407.6

137.7 136145 144.2 138.2 161.1 145.8 158.3 159.6 141.3

162.4 166.9 173.2

Number of Transaction through Debit Cards and Credit Cards in India May 2018-May2019

Number of Transaction through Credit Cards (in Million)

Number of Transaction through Debit Cards(in Million)

0.14 0.14 0.13 0.13 0.12 0.11 0.12 0.12 0.11 0.11 0.1 0.1 0.1

0.24 0.24 0.23 0.23 0.230.2 0.21 0.21 0.19 0.2 0.19 0.18 0.17

Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19

UNSTRUCTURED SUPPLEMENTARY SERVICE DATA (USSD)No. of Transactions Vs Amount of Transactions

June2018-June2019

No. of Transactions (in Million) Amount of Transactions (in Billion)






5

(Source:https://www.npci.org.in/sites/default/files/RETAIL-PAYMENTS STATISTICS%20JUL-

2019.xlsx)

In June 2019, the total number of transactions was 0.1 million, while for the same month in the

previous year the number was 0.14 million. In June 2019, the total amount of transactions was

0.17 billion, while for the same month in the previous year the amount was 0.24 billion.

AADHAAR ENABLED PAYMENT SYSTEM (AEPS)

AEPS allows the customer to perform banking transactions like cash deposit, cash withdrawal,

balance inquiry and generate mini statement after seeding the bank account with the aadhaar

card. Banking correspondent of any bank is responsible for conducting the financial and non-

financial banking transactions of the customer. Aadhaar card and fingerprint only need to do

transactions.

Figure 4

(Source:https://www.npci.org.in/sites/default/files/RETAIL-PAYMENTS STATISTICS%20JUL

2019.xlsx)




UNIFIED PAYMENTS INTERFACE (UPI)

Unified Payments Interface (UPI) is a system that allows a user to use multiple bank accounts

under a single mobile application. A user can transfer funds between two bank accounts using the

UPI app. A user needs to register the details of the payee like bank account number and IFSC code

before transaction during the first transaction only.

16.5 17.77 19.67 20.34 22.5 21.79 22.52 23.45 23.98 29.92 33.25 33.53 32.9247.15 47.54 51.08 51.38 58.22 59.81 61.31 63.45 64.89

81.2492.52 91.32 87.74

AADHAAR ENABLED PAYMENT SYSTEM (AEPS)No of Transactions Vs Amount of Transactions

May2018-May2019

No. of Transactions (in Million) Amount of Transactions (in Billion)






6

Figure 5


2019.xlsx)




246.37 235.65312.02

405.87

482.36 524.94

620.17672.75 674.19

799.54 781.79 733.54754.54

408.34

518.43 542.12598.35

749.78

822.32

1025.951099.32

1067.37

1334.6

1420.34

1524.49

1465.66


Unified Payments Interface ( UPI)June2018-June2019

No of Transactions Vs Amount of Transacted

No. Of Transactions (in Million) Amount Of Transactions (in Million)






7

Figure 6


2019.xlsx)

The number of transactions through (BHIM) UPI app was 15.5 million during June 2019, a down

of 1.8% from 15.8 million last month. The total amount of the transactions decreased to 62.02

billion in June 2019 from 66.7 billion compared to the previous month.

MOBILE WALLETS

Mobile wallet is an application which can be installed on a Smartphone. The mobile wallet stores

the information of user credit card or debit card. The mobile wallet can be used at merchant listed

under the mobile wallet service provider. Most banks and private companies have mobile wallets

e.g. Paytm, Freecharge, Mobikwik, Oxigen, mRuppee, Airtel Money, Jio Money, SBI Buddy, Itz Cash,

Citrus Pay, Vodafone M-Pesa, Axis Bank Lime, ICICI Pockets, SpeedPay, etc.

16.34 16.42 16.5 16.33 18.27 17.35 17.0613.98 12.83

14.92 15.15 15.77 15.49

62.6166.93 68.73

70.65

82.06 79.8275.89

62.03

56.24

64.17 65.84 66.27

62.02


Bharat Interface for Money (BHIM) June2018-June2019

No of Transactions Vs Amount of Transacted

No. Of Transactions (in Million) Amount of Transactions (in Billion)






8

Figure 7



In May 2019, the total number of transactions was 367.4 million, while for the same month in the

previous year the number was 325.4 million. In May 2019, the total amount of transactions was


PREPAID PAYMENT INSTRUMENTS (WHICH INCLUDES BOTH MOBILE WALLETS AND BANK

PREPAID CARDS COMBINED)

PPIs are prepaid payment instrument that comes up with a preload value or with some

predefined purpose. Their service includes the purchase of good and service, fund transfer. There

is a variety of PPIs including mobile wallet, paper voucher, gift card, travel card, etc. Ppi is

regulated by RBI. There is 3 type of PPI open system, semi-closed system, closed system PPI.

Figure 8



325.41309.62 325.18

340.65324.16

368.45 347.32392.99 395.99

345.03384.89 380.62 367.45

140.47

146.32

152.02

155.73

151.02

187.86

161.08

163.68

158.58

142.79

159.9

159.75

157.27

Mobile WalletsNo. of Transactions Vs Amount of Transacted

May2018-May2019

No. of transactions (in Million) Amount of transaction (in Billion)

350.36332.95

351.8 373.39 357.86420.2

394.17441.77 444.2

384.85427.24 420.97 419

155.21 163.46

175.19

189.94

177.49

221.28

185.19

189.22

191.31164.97

185.99

185.54182.97

Prepaid Payment Instruments(PPIs)May2018-May2019

No. Of Transactions (in Million) Amount of Transactions (in Billion)






9

In May 2019, the total number of transactions was 419 million, while for the same month in the

previous year the number was 350.3 million. In May 2019, the total amount of transactions was


POINT OF SALE

POS stands for point of sale. At POS an electronic device is used to conduct the transaction

between the merchant and the customer. The customer debit or credit card is used for the

payment at the point of transaction.

Figure 9



In May 2019, the total number of transactions at POS using the debit card and credit card was

407.5 million and 173.1 million, while for the same month in the previous year the number was

352.1 million and 137.6 million. In May 2019, the total amount of transactions using the debit

card and credit card was 576.5 billion and 612.5 billion while for the same month in the previous

year the amount was 468 billion and 470.5 billion.

MICRO ATMS

Micro atm is the point of sale terminal used to provide transaction facilities in a remote area.

These are handheld devices. The micro am has a fingerprint scanner attached to it. The Micro

ATMs can perform following transactions like Cash Deposit, Cash Withdrawal, Fund Transfer and

Balance Enquiry.

137.66 135.98145 144.2 138.23 161.06 145.85 158.34 159.57 141.34 162.41 166.92 173.15

352.12 358.82 366.75 357.17 362.75 393.39 376.58 387.54 373.6 346.48 407.57 407.57 407.59

470.52 462.76 477.61 479.82 461.01 561.78

516.18

542.35 549.45 484.89 576.51576.48

612.58

468.08

479.23

482.18

489.72

458.41542.98

540.42

531.42

506.84455.09

530.11

549.58

576.52

Usage at Point of Sale (POS) from Credit Cards & Debit Cards

May2018-May2019

Usage at POS from Credit Cards No. Of transactions (in Million)Usage at POS from Debit Cards No. of Transactions (in Million)Usage at POS from Debit Cards Amount of Transactions (in Billion)Usage at POS from Credit Cards Amount of Transactions (in Billion)






10

33.5 million Transactions worth Rs 9,000 crore were conducted through micro ATMs in May. In

the first five months of the calendar, nearly 145 million transactions conducted as compared to

the overall transaction volume of 200 million in the entire 2018.

VARIOUS GOVERNMENT POLICIES TO PROMOTE USAGES OF ONLINE BANKING AND

MOBILE BANKING

Incentive/Promotional Schemes

For the promotion of digital payments Meity has taken several initiatives like monetary incentive

schemes as discussed below:

Promotional Scheme of BHIM Aadhaar

For every Aadhaar based biometric merchant transactions up to Rs 2000/- an Incentive of 0.5%

of the transaction value will be allotted to the merchant. (Minimum incentive value Rs 1/- and

maximum incentive value Rs 10/- per transaction). Maximum incentive per month per merchant

is restricted to Rs 2000/-.

BHIM-Cashback Scheme for Merchants

For 50 transaction or 20 unique transactions or more with a minimum transaction value of Rs

25, a merchant can get a cashback of up to rupees 1000/-

BHIM-Referral Bonus Scheme for Individuals

Referral Bonus for the Individuals doing the first three unique transactions using BHIM app.

Individuals get INR 25 each as Referral Bonus.

Digital Jagriti

Digital Financial Inclusion Awareness and Access (Digital Jagriti) program is conducted by

Common Service Centre to increase usage of digital payment mode among citizens and merchant

Digi Shala

Digi Shala a Free Doordarshan DTH channel is creating awareness for usage of electronic payment

in different languages

RESERVE BANK OF INDIA “PAYMENT AND SETTLEMENT SYSTEMS IN INDIA: VISION 2019 –

2021”

The Reserve Bank of India aims to empower the citizens of India with convenient, quick and

affordable e-payment options that will be safe, secure from the security perspective. The names

it vision as "Payment and Settlement Systems in India: Vision 2019 – 2021".

There are 36 specific action points assigned by the RBI and 12 specific outcomes are expected.

The main points of Payment and Settlement Systems Vision 2019 – 2021 are:

Enhance Customer experience, including robust grievance redressal

Empower payment System Operators and Service Providers

Enable the payments Eco-system and Infrastructure

Put in place Forward-looking Regulations

Undertake Risk-focused Supervision. The ‘no-compromise' approach towards safety and

security of payment systems remains a hallmark of the Vision.






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CONCLUSION

The first objective of this research is to study the recent trends in the online banking and mobile

banking industry. The result from the secondary data shows that a significant rise has been shown

in the number of usages of digital modes of payment by the customer in the banking industry. The

second objective of this research was to study the government policies in the promotion of digital

banking industry. The regulatory body RBI is taking steps to empower every Indian with access

to a bouquet of e-payment options that is safe, secure, convenient, quick and affordable. Apart

from this, the government of India has directed 35 Union Ministries and Departments to Promote

Digital Payments and around 30 Banks have shared an action plan for the promotion of Digital

Payments

REFERENCE

1. Abhani Dhara K.(March 2017).A study on the impact of demonetization over the banking

sector concerning Veraval city. International Journal of Marketing & Financial

Management, Volume 5, Issue 3, pp 21-26, ISSN: 2348 –3954 (Online) ISSN: 2349 –2546

(Print).

2. D.Mounika, and R.Kadhirvel.,(April 2017). Impact Of Demonetization In E-Banking.

International Journal of Scientific & Engineering Research, Volume 8, Issue 4, ISSN 2229-

5518.

3. http://cashlessindia.gov.in/digital_payment_methods.html

4. https://economictimes.indiatimes.com/industry/banking/finance/banking/debit-card-

pos-swipes-rise-27-as-per-rbi-data/articleshow/69382225.cms

5. https://economictimes.indiatimes.com/industry/banking/finance/banking/micro-atms-a-

big-hit-in-rural-india-transactions-in-may-touch-33-5-

million/articleshow/69983878.cms?from=mdr

6. https://meity.gov.in/banks-promoting-digital-payments

7. https://meity.gov.in/digidhan

8. https://meity.gov.in/incentivepromotional-schemes

9. https://meity.gov.in/ministries-promoting-digital-payments

10. https://www.medianama.com/2019/06/223-mobile-wallet-transactions-declined-by-6m-

month-on-month-to-378-9m-in-april-2019/

11. https://www.medianama.com/

12. https://www.medianama.com/2019/07/223-upi-transactions-in-june-2019-increases-3-

times-yoy/

13. https://www.rbi.org.in/Scripts/AnnualReportPublications.aspx?Id=1236

14. https://www.rbi.org.in/Scripts/BS_PressReleaseDisplay.aspx?prid=47045

15. https://www.rbi.org.in/Scripts/PublicationVisionDocuments.aspx?Id=921

16. https://www.npci.org.in/sites/default/files/RETAIL-PAYMENTS STATISTICS%20JUL-

2019.xlsx)

17. Manpreet Kaur. (January 2017). Demonetization: impact on the cashless payment system,

6th International Conference on recent trends in Engineering, Science &Management, ISBN:

978-93-86171-21-4, (ICRTESM-17).

18. www.ibef.org

19. www.srmuniv.ac.in

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