The internet has made life easier and has remodeled the way anyone and everyone live, shop, socialize and entertainoneself. Therefore, it has also come up as a resource people save and invest.
To differentiate their services and gain advantage over the raising competition, the financial service providers are trying to provide their services in all materialistic pleasures to the customer. The internet is emerging as the greatest helping hand to these service providers. Service Sector contributes 57% in the GDP, and so plays a vital role in Indian Economy.
With a growth rate of 8.5% every year, there are many ways in which Internet has affected Financial Services sector in India:
- Internet Banking
- Bill Payment
- E-Delivery of Financial Services
Two different necks of the woods have come up in the context of Internet Banking. One is that the banks and the NBFCs are trying their hands on the entire market of financial services. On the flip side, new Internet Sites are coming up and challenging the banks and the NBFCs. Banks are trying new schemes and melding moves to stronghold their customers while the dot-coms are fragmenting the market by providing first-rate aid.
The value of banking industry in India is $ 270 Billion by the total asset value, and the total deposits account for $ 220 Billion according to the report by IBEF. So, with such a great potential, this industry is becoming a milepost of opportunities. The rural penetration of Internet in India is 29% that will become 48% in 2018. So, they are in the limelight for the banks to take hold from products like Agri-Loan.
All characters share the same objective: take possession of the customers, provide them the knowledge about the domain with services and competitive products and increasing the value proposition of their brands.
Earlier, when the banking was offline, the customers had a gap between the content and the reach. So, this discontinuity has been filled up by internet banking. Institutions can now cover the wider audience, shifting the competition from products to services. The most benefitted through E-Banking are the private sector banks that have introduced the concept of Telephone Banking and Home banking.
Also, the eBanking has worked for the customers who can now apply for products like loans and insurance without getting into long queues. Instead of making an attempt of visiting individual websites of various banks and getting the charges like the Interest rates, they can use the power of technology and access Online Financial Services Comparison platforms which will help them understand the hidden charges and make their journey of availing services like loans and insurance smooth. The time has shifted from the basic Net Banking like NEFT and RTGS to the very economical E-Wallets.
The EBP (Electronic Bill Payment) have been proved a significant tool to attract customers by making the transactions more efficient and accessing the chapter and verse of their financial health more easily. Although the CMS (Cash Management Services) and the revenue generated by processing in the physical form have been affected by EBP but still banks take it as an integral and most vital part of services to the customers. Banks have consolidated platforms to pay the bills or recharge online which gives the customers relaxation from the hassles of late payments and issuing cheques, and also add-ons like real-time SMS alerts, etc. This has facilitated the customer to check their account balance while paying the bills. The upper hand of EBP in the market has facilitated the sale of Debit and Credit cards and also has given advantage to payment gateways.
eBrokerage is one of the fields where the online financial websites are giving a tough competition to the traditional service providers. The local DSAs and the brokers are facing threats by the online DSAs because of the value and the intelligent services these E- brokers provide to the customers. Banks and the NBFCs have also played a smart move, and they are getting into a tie-up with these e-brokers to expand their customer base and gain more on client acquisition. Banks have recorded the E- trading business and have sourced the e-traders so that the customer can buy or sell the stocks online and can also pay via the net. For example, ICICI has its trading podium icicidirect.com and HDFC have its platform called hdfcsec.com with features to integrate the Trading, Banking and Demat accounts of the customers and provide them a single solution to Internet trading.
eDelivery of Financial Services
The banks have come up with the delivery of services like checking your account status on fund transfer, writing the cheques and demand drafts through the internet. They are also trying to get into the B2C and B2B E-commerce by providing the value-added services to the customer online. Banks have also approached features like having a tie-up with the corporate so as to enter their supply chain by facilitating the electronic transfer of funds. The application process for a Personal Loan, Car loan and even mortgages have shifted Online and other products like bonds, and mutual funds are offered through their service portals. Banks have also planned their online shopping portals like HDFC has a way-in called easy2buy.com and Federal bank has a similar concept with Rediff.com and Fabmart. ICICI also has its e-tailing site called magiccart.com.
The time is not far when the customer will scan and upload his documents to avail any financial service in the comfort of his home. This will reduce the turnaround time of any product significantly, making India stand in the array of countries with highest growth rate through technology and financial knowledge.
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