Digitisation of Retail Banking Products

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The digitisation of retail banking involves the integration of modern technologies in banking services aimed at enhancing customer experience, operational efficiency, and cost optimization.

Key Topics Covered

• Technology in Retail Banking
• Technology Processes in Retail Banking
• User-Friendly Digital Features
• Customer Analytics
• IDRBT
• INFINET
• SFMS
• NFS
• IBCC
• Wealth Management Solutions
• Digital Lending

Mathematical Examples

1. Digital Lending Interest Calculation:
   Loan Amount = ₹2,00,000
   Interest Rate = 12% p.a.
   Tenure = 2 years
   Interest = ₹2,00,000 × 12% × 2 = ₹48,000
2. EMI Calculation using Formula:
   EMI = [P × R × (1+R)^N] / [(1+R)^N – 1]
   P = ₹1,00,000, R = 10%/12 = 0.00833, N = 12
   EMI ≈ ₹8791
3. Cost Savings with Digital Banking:
   Cost per branch transaction = ₹50
   Cost per digital transaction = ₹5
   Savings per transaction = ₹45
   For 10,000 transactions, total savings = ₹4,50,000
4. Customer Segmentation for Analytics:
   Total customers = 10,000
   High Net Worth Individuals (HNIs) = 12%
   HNIs = 10,000 × 0.12 = 1,200 customers
5. Wealth Management Returns:
   Initial Investment = ₹5,00,000
   Annual Return = 8% compounded annually
   Value after 3 years = ₹5,00,000 × (1+0.08)³ = ₹6,29,856

10 Multiple Choice Questions (MCQs)

1. What is the primary benefit of digital lending?
   a) Manual processing
   b) Paperwork increase
   c) Faster disbursal
   d) Higher interest rates
2. Which institute is known as the research and development hub for Indian banking technology?
   a) RBI
   b) SEBI
   c) IDRBT
   d) NABARD
3. What does INFINET stand for?
   a) International Financial Network
   b) Indian Financial Network
   c) Integrated Finance Network
   d) None of the above
4. Which system is used for secure messaging in Indian banks?
   a) IMPS
   b) NEFT
   c) SFMS
   d) UPI
5. What is the purpose of National Financial Switch (NFS)?
   a) Loan approval
   b) ATM interconnectivity
   c) KYC compliance
   d) Credit scoring
6. Which cloud infrastructure supports Indian banks in a secure environment?
   a) IBCC
   b) AWS
   c) Azure
   d) DigiVault
7. Which of the following is a user-friendly feature in digital banking?
   a) Passbook updates
   b) Mobile app alerts
   c) Manual ledger
   d) Paper cheques
8. What does customer analytics help banks to do?
   a) Predict behavior and personalize services
   b) Increase paperwork
   c) Reduce digital use
   d) Train tellers
9. Digital wealth management typically offers:
   a) Paper-based planning
   b) Algorithm-based investment suggestions
   c) Manual accounting
   d) Traditional brokerage only
10. A major benefit of digital technology in banking is:
    a) Increased operating costs
    b) Slower transactions
    c) Improved efficiency
    d) More branch visits

Author: Bank Theory | Date: May 2025

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