Digital Banking: Its Benefits And Latest Trends

One of our daily activities involves banking. Now, the banking industry is keeping up with the latest market trends and follow the digital banking concept.

Digital banking in India:

It is an umbrella term that includes online banking, PC banking, internet banking, mobile banking apps, and other data-driven channels. Digital banking services include making transactions, submitting requests, and handling other banking activities online. The internet banking system started in 1996 in India. Since many banks have followed suit and provide banking facilities across mediums.

Importance of digitisation:

• Numerous factors brought in mechanisation and digitisation in the banking industry in India.
  
• A system called Magnetic Ink Character Recognition (MICR) helps in sorting and processing cheques. Every bank has the MICR system in place and follows it as well.
  
• The other step was more of an innovation. Banking is a repetitive and monotonous job. Employees tend to make mistakes. Therefore, to minimise the errors and speed the process, banks use computer technology with standalone computers and local area networks.
  
• As the networks grew and banks connected, Centralised Online Real-Time Exchange (CORE) banking came into being. The services provided here are financial transactions, accessing accounts from the participating bank branches.
  
• This resulted in different modes of fund transfer, which primarily include RTGS, NEFT, and IMPS.
  
• Nowadays, people are more inclined to their smartphones and banking taps this aspect as well. You can find banking here as well.

Benefits of digital banking:

There are a couple of digital banking benefits that not many are aware of –

• Customer service: With the internet available everywhere freely, the customer only needs a device and decent internet connectivity. It saves not only time but also the expenses as you no longer need to travel to the bank to carry out the transactions. You can also get rid of the never-ending queues. Sit at the comfort of your home or work and get the desired task done. 

• Availability: You can track your records anytime and use the digital banking services round the clock. Transferring funds has only become easier, quicker, and safer. 

• Time constraint: You had to wait for longer period to avail of service earlier. Banks earlier had boards put up outside the branches specifying the time limit for each facility. 

• Online bill payments: Another benefit under digital banking is that customers need not carry cash everywhere they go. You can get all bills such as utility, credit card, and EMIs paid immediately. You can even set schedules for them. This way, you will not delay the bill payments. 

• Lower overheads: The operating costs of the banks have reduced drastically. This has made it possible to reduce service charges and offer higher interest rates for deposits. Lower operation costs mean more profits for the bank.

Latest trends:

The benefits themselves stress the importance of online banking. The socio-economic factors emphasise on why one needs to switch to digital banking today. Considering the fraudulent activities are on the rise, it is safe to conduct financial operations digitally.

Precisely why more and more are introducing new features over banking apps and internet banking. These include –

• Electronic wallets: Since you can use the smartphone for almost every daily task, the Government encourages people to adopt electronic wallets. There has been rapid increase in the use of debit or credit card and the trend continues. 

• Chatbots: Under the customer care operation section, the banks have already employed the chatbots feature. In case of any query, the customer care executive responds to them through chatbots. The banks have improved the quality of interaction and services rendered. 

• Mobile technology: Since the digital banking services are expanding technologically, and banks have their presence felt over mobile banking apps too. More and more features get added frequently. Sometimes banks use this medium to promote their campaigns also. 

• Paperless transactions: Banks are realising that there is no scope for physical, financial operations anymore. Banks focus on end to end digital marketing only now.

Everything You Need To Know About Kids Savings Account

In these times, it is very important for a child to know basics of personal finance. Teaching your child through live examples is a better way to ensure long lasting learning and retention. Recognizing this, banks have come out with a different type of saving account specially for kids. They can operate this account and learn the basics about a savings account.

There is no need to wait till your child is 18 years before opening one. You can open zero balance account and give your child the responsibility of managing this account.

Features of Kids saving account:
The account is a zero-balance account which means there is no need to maintain a set balance in it. The account is linked to the parent or guardian’s bank account. In case the balance is zero, funds can be transferred from the linked account to the kids saving account. However, a few banks may insist on a minimum balance. So, it is better to check the rules before opening this account.

The account comes with a free debit card that the child can use to make cash withdrawals from ATM to swipe at merchant outlets. The debit card comes with a shopping limit, which means that your child won’t be able to spend more than the limit.

Banks also provide free cheque books, free passbooks, free email account statements. The account holder can also use internet banking and mobile banking. It is also possible to pay bills through this account.

This account is only in operation when the child is a minor. Once the child is a major, a regular savings account must be opened. It is possible to convert this zero-balance saving account into a regular saving account by filling up a form.

Banks may also offer a sweep in facility where funds above a particular limit are put into a fixed deposit. This ensures the savings account earns higher income.

Most banks require an auto debit facility to transfer funds from the parent or guardian’s account to the kids saving account to maintain a balance.

Some banks also provide free insurance to cover the child in case of the parent’s death.

How to open a kids savings account:
It is possible to open online saving account in this case by filling up a form on the bank’s website. Considering it is the era of e-banking apps, you could open one via your smartphones as well. Else, visit the branch and complete the procedure.

The documents required for this account are:

• KYC documents of the parent or guardian, if the child is less than 10 years of age
• Date of birth proof for example, birth certificate

Not all banks may require a passport size photograph. Once the application for online saving account opening is processed, your child’s saving account gets opened in a jiffy. Your child can then start to operate this account.

5 Fixed Deposit Rules And Regulations You Must Know

An FD is one of the most versatile investment options available to the people today. This deposit is completely flexible, in the sense you can decide the deposit amount as well as the tenure. The deposit is easy to open both online and offline and provides a safe way to invest funds for a lot of people. A fixed deposit is a fairly simple and standard investment to understand. Funds are locked in for the period of investment and an interest is paid in return. However, there are a few rules related to your FD account that you must know.

Here are 5 fixed deposit rules and regulations you must know:

Deposit insurance:

One of the reasons why a bank fixed deposit account is preferred by the people is the deposit insurance. Each deposit made in a bank is insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC). The bank bears the cost of insuring these deposits. As a part of this, each depositor is insured up to Rs. 1 lakh by the DICGC. This amount will be payable in case the bank closes or ceases operations.

Tax on fixed deposit interest:

Fixed deposit interest is taxable under Income Tax. The bank is required to deduct tax at 10% if the total interest payable exceeds Rs. 10,000 in one year. This interest is clubbed for the depositor from all branches i.e if fixed deposit interest from 3 branches totals Rs. 8,500, then no tax will be deducted by the bank. If you don’t update your PAN card with the bank, then the bank will deduct tax at 20% on the interest amount.

Steps to prevent bank from deducting tax:

If your income is not exceeding the no tax limit for the year, then you can fill up form 15G/15H and submit it to the bank. These forms certify that your income is not taxable and the bank will not deduct tax. If you forget to fill up this form and submit it to the bank, tax will be deducted. However, you can claim a refund on this in your income tax return. Form 15H is for senior citizens whereas Form 15G is for other depositors.

Loan or overdraft against fixed deposit:

An FD account is also reliable because it is possible to take a loan or an overdraft against the fixed deposit account. The rate of interest on this is generally 1% more than the fixed deposit rate. This loan is generally given up to 90% of the fixed deposit amount. This keeps the fixed deposit operational and also gives a loan at a reasonable rate of interest.

Premature liquidation:

In case you need funds, it is possible to liquidate the fixed deposit prematurely. The principal amount and the interest earned on the FD account are credited to the respective savings account. However, a penalty of 1% is charged for liquidating the fixed deposit before time.

What Are The Features Of Mobile Banking?

With the world moving so fast, everybody is always on the move. But, the urgency of conducting financial transactions can come up at any point which may completely disrupt an individual’s plan for the day, as they will have to visit the bank for conducting the financial transactions. However, this is a story of the past, with the advancement and latest in technologies, an individual can conduct all of their financial transactions through mobile banking. Mobile banking is a convenient way of conducting financial transactions without any problems.

 There are some features of mobile banking apps that make the process of banking through mobile phones easy and convenient for customers. Some of the features of mobile banking are listed below:

1. One of the most significant benefits of mobile banking is that an individual can access the features of mobile banking at any time. There is no need for an individual to go to a bank or an ATM and wait for the bank to open to check their account balance, transfer money, pay the bills or even see the account statement. An individual can conduct all of their banking transactions through mobile banking. Fund transfer transactions may complete when the bank is open, but an individual can check the account balance or get account statement irrespective of time or day. 

2. A financial institution understands that all of their customers do not have access to the internet, and this is why they offer mobile banking services to their customers over SMS and USSD. An individual who owns smartphones and has access to the internet can download and use the financial institutions mobile banking app, and others can use the mobile banking SMS and USSD services. A customer should use the right SMS format for availing the SMS banking service and the right prefix for USSD services. 

3. A customer’s bank account and the set of personal information that they have provided will remain totally safe if they use mobile banking. A bank provides the individual with a set of login credentials that they can use for signing into their account and carrying out the transactions. The login credentials are provided to the individuals securely and since they are the only one who knows the login ID and password, their account is always safe. A lot of banks allow an individual to enable two-step verification, where they can only carry out the banking transactions. If an individual enters the One-time passwords sent to their registered mobile number. 

A common misconception that individuals have is that if they want to avail the mobile banking services, it will cost them a lot. However, it is the contrary, mobile banking services are provided for free by the financial institutions. An individual will not need to pay any type of extra charges for registering to mobile banking, unlike ATM transactions where they will get a limited number of free transactions, an individual can check the account statements, balance or pay their bills as many times as they want.

6 Features Of Opening A Saving Account

A saving account is an efficient way of saving funds for future expenses. A saving account will offer an interest rate which is slightly higher than the rate of inflation, for keeping the real value of money stable throughout the years. Any individual can go for an online saving account opening by just visiting the official website of the financial institution.

A lot of modern financial institutions that offer a saving account are providing these accounts which are packed with great offers and quick links for paying bills and making quick transactions. Interest rates offered on a saving account will differ at different financial institutions.
A saving account will help an individual cover any type of unexpected expenses which may arise in the future. Holding a savings account will help improve financial stability as the funds in the account have limits on the number of withdrawals made against the account. A bank will customize a saving account depending on the general usage an account witnesses in a lifetime.

A saving account is a type of account which is opened at a bank or any other financial institution which earns a moderate interest on the balance maintained. A saving account is essentially opened for putting aside some funds which are not required immediately. A bank will place restrictions on the number of withdrawals which can be made from the account every month. Interest rates which are earned on the savings account are determined based on.

Some of the features of opening a saving account are listed below:

1. As the name suggests, a saving account is a safe place for storing surplus funds obtained by the customer. These surplus funds help in building a nest egg for any type of unexpected situations which may arise any time in the future.
2. Every saving account, whether held at a nationalized financial institution or any other financial institutions, is always safe.
3. A balance in the saving account earns interest. While the interest rate may not be as high as other bank deposits, as the funds are not withdrawn on a regular basis, it continues to increase the funds in the account.
4. A saving account is provided the account holders some level of liquidity. Financial institutions usually provide account holders with debit or ATM cards which can be used for making a certain number of withdrawals from their savings account.
5. A lot of financial institutions provide a saving account with different insurance covers including personal accidents and death.

An added benefit of a lot of saving account holders is that a lot of financial institutions offer great discounts on the locker rental facilities for customers who maintain the minimum quarterly balance.

5 Advantages Of Mobile Banking Apps For Banks And Customers

Operating financial activities has become easier today, thanks to mobile banking. You can transfer funds, requests for cheque books, passbook, apply for loans, create savings account, etc. with a click of the mouse. People swear by these banking apps as they are built by the banks or mobile application’s best in-house team.

With the number of m banking users increasing by the day, they have done away with long-standing queues and unwanted rantings of the bank representatives.

How did banking apps gain prominence? 
Online banking date backs to SMS alerts and customer care. Gradually, it turned to SMS banking in 2002. In the same year, almost every bank launched their mobile banking apps. It contained all the facilities that one would have to otherwise complete by visiting the local branch. Since, banking apps have been nothing less than revolution.

Following are the reasons why more and more people are inclining towards banking apps:
1. Availability: In case of cash transfer of funds to friends or family members for emergency purpose or otherwise, you can do so immediately. Mobile banking is available 24*7. Some apps also have in-built query system in place that clears your doubts anytime, anywhere.

2. Time-saving: A mobile banking app manages your finances without interrupting your day-to-day activities. You can pay your credit, utility, and existing EMIs instantly. You also have the facility to automate your payments on predetermined dates. This avoids debts and default.

3. Infrastructure costs: Banks save on infrastructure charges as they do not have to build more branches for people to visit. With all the facilities available at the tip of your finger, customers gain satisfaction in real-time.

4. Safety: One of the reasons why people do not opt for m banking is the safety concerns. Most of these issues will not exists if the measures are taken from the users end. Customers should avoid using their app in public spaces as fraudsters can hack the password and username in open area easily. All banks use encryptions that protects users’ financial information. OTPs and password-protected apps have made the task easier for customers today.

4. Control: You are on cruise control the moment you switch to mobile banking apps. You can track your finance and gauge your financial status. You do not have to worry about fraudulent activities as layers of security protect banking activities. In case your account is on the brink of lowering, you receive notification on SMS and e-mails. You can also monitor debit and credit card activities when you have to send money to the beneficiary. 

6 Savings Account Charges To Consider Before Opening A Savings Account

A savings account not just inculcates a saving habit but is also useful for emergency purposes. However, many banks have limitations on the number of withdrawals. The volume of transactions made on the account comes with a fee. These charges vary from bank to bank. Sometimes, they vary depending on the type of account as well.

You should be aware of the mentioned charges before you open a savings account:

• Non-maintenance of balance: This is one of the most common penalties that banks levy. You receive interest depending on the minimum balance you maintain. These charges are usually minimal. For a regular savings account, the fees are anywhere between INR 100 to INR 350 per month. On the other hand, the premium account has higher charges. It can go up to INR 600 per month. So, carefully consider these charges before choosing the savings account.

• Cash transaction charges: Every bank allows only limited cash transaction. If you cross that limit, you have to pay the penalty. Most banks allow only five free cash transaction per month. Beyond that, you have to pay the necessary costs. Some banks have also placed caps on the value of the cash transaction per month. Premium accounts involve a higher limit on a cash

• Cheque book fee: Although online transactions are trending now, some places still accept only cheque as a means of finance. A standard cheque book, which banks offer for free at the beginning, contain 20-25 cheques. If you order a new one, you have to pay a minimal amount. If you have premium savings account with a high average balance, you need not worry about cheque book issuance charges.

• Debit card costs: When you open a bank account, you are given a welcome kit along that includes a debit card. So, banks levy issuance and maintenance charges as well for the same. Sometimes the costs change depending on the services the banks offer. Certain premium accounts provide free regular debit cards.

• NEFT & RTGS charges: The two most preferred mode of transactions in India are NEFT and RTGS. NEFT has no lower limit on fund transfer whereas RTGS has a limit of INR 2 lakh per transaction. However, the movement of funds is faster under RTGS and gets done real time, on an account to account basis. Banks have specific charges in place regarding NEFT and RTGS. Some banks waive off the costs for premium accounts.

• Cheque return fee: If the cheque issued bounces back, the concerned bank levies return charges. The return cheque charges will be higher than the ones released by the third party.

Before you open a savings account through app, remember these additional charges.