Digital Channels in Retail Banking

Digital channels have transformed retail banking by enabling customers to access services anytime and anywhere, without visiting a branch. In exam context, digital channels refer to electronic platforms through which banks deliver services, including internet banking, mobile banking, phone banking, and newer technology-driven interfaces. These channels improve convenience, efficiency, and financial inclusion.

Internet Banking (Online Banking)

Internet banking allows customers to conduct banking activities through a secure web portal using a browser. After registration, customers log in with credentials to access a comprehensive view of their banking relationship.

• Through internet banking, customers can view account balances, transaction history, and download statements for savings, current, loan, and card accounts.
• It supports a wide range of fund transfer options, including transfers between own accounts, third-party accounts within the same bank, and interbank transfers via NEFT, RTGS, IMPS, or even UPI.
• Beneficiaries can be added and payments can be scheduled or automated through standing instructions.

Internet banking also enables bill payments and recharges, often integrated with BBPS, covering utilities, credit cards, insurance premiums, and taxes. Customers can open and manage fixed and recurring deposits, check loan details, make prepayments, download certificates, and sometimes apply for pre-approved loans. Non-financial services such as cheque book requests, stop-payment instructions, card controls, and grievance registration are also available. Many banks integrate investment services, allowing customers to invest in mutual funds, IPOs, bonds, or access demat and trading platforms.

Security in Internet Banking

Banks use multi-layer security such as encrypted (HTTPS) access, login credentials, OTP-based two-factor authentication, transaction-level authorization, session timeouts, and limits on failed attempts. Customers are educated to avoid phishing and access only official websites. Internet banking remains important for detailed and complex transactions, especially on a large screen.

Mobile Banking

Mobile banking refers to banking services accessed through a bank’s mobile application. With widespread smartphone adoption, mobile banking has become the primary digital channel for day-to-day retail banking.
Mobile apps offer account management, balance checks, transaction history, and consolidated dashboards for accounts, loans, and cards. Fund transfers can be made through NEFT, IMPS, RTGS, and integrated UPI, often with faster workflows than internet banking. A key advantage of mobile banking is QR-based payments, enabling instant merchant payments by scanning codes. Bill payments, recharges, and merchant payments are seamlessly supported.
Mobile apps provide powerful card and cheque controls, such as instantly blocking a lost card, enabling or disabling online/international usage, setting transaction limits, and requesting replacements. Many apps also include personal finance management tools, offering spending insights, reminders, and alerts. Banks increasingly position their apps as one-stop platforms, integrating investments, insurance, and partner services.

Security in Mobile Banking

Login is typically secured through MPIN or biometrics (fingerprint/Face ID), along with device binding. Transactions require MPIN/OTP, and apps are often locked to a registered device, reducing risks like SIM swap fraud. For customers without smartphones or internet, *USSD-based mobile banking (99#) and SMS banking provide basic services, supporting financial inclusion.

Telebanking / Phone Banking

Telebanking allows customers to access banking services by calling a bank’s dedicated phone or IVR number. After authentication using a T-PIN or security questions, customers can check balances, recent transactions, or product information via IVR, and speak to customer service representatives for tasks like blocking cards, raising complaints, or seeking assistance.
Phone banking remains important for urgent issues and for customers who are less comfortable with apps or the internet. Many banks now use voice recognition and voice bots to enhance speed and security.

Chatbots, Virtual Assistants, and Messaging Banking

Banks increasingly use chatbots and virtual assistants on websites, mobile apps, and messaging platforms to answer queries, guide customers, and sometimes initiate transactions after authentication. Some banks also offer WhatsApp banking, enabling customers to check balances, get mini statements, block cards, or locate ATMs using chat commands. SMS alerts for transactions are mandatory and form a critical fraud-prevention mechanism.

Digital Banking Units (DBUs)

Digital Banking Units (DBUs), introduced in 2022, are physical outlets dedicated entirely to digital self-service banking. They provide kiosks, ATMs, cash recyclers, and video-KYC facilities, supported by minimal staff. Customers can open accounts, apply for loans, print passbooks, and access digital services in a guided environment. DBUs were launched across selected districts to promote digital inclusion and self-service adoption.

Core Banking System (CBS) and Omni-Channel Banking

Behind all digital channels lies the Core Banking System (CBS), which centralizes customer data and transactions. CBS enables “anytime, anywhere banking”, allowing customers to operate accounts across branches and channels seamlessly. Modern banks focus on omni-channel banking, where services, offers, and customer experience remain consistent across branch, mobile, internet, call center, and even social media interactions.