The digital revolution has transformed banking in profound ways. Digital savings accounts that can be opened instantly and operated remotely have made banking extremely convenient for consumers. Let’s see how these futuristic savings accounts are altering banking dynamics.
What Are Digital Savings Accounts?
Digital savings accounts are held with banks but allow complete remote access through mobile/internet banking. Customers can instantly open accounts online and perform all transactions digitally without needing to visit branches. Advanced features like paperless documentation, anytime money transfers, auto savings and personalised pricing are offered. Leading this shift are specialised digital banks.
Key Benefits of Digital Savings Accounts
1. Convenience
Digital savings accounts can be accessed anytime, anywhere, through mobile or internet banking. This allows conducting transactions remotely rather than visiting a branch. You can check account balance, request statements, transfer money to anyone instantly, pay utility bills, recharge phones, etc., from your phone or laptop at your convenience.
2. Lower Charges
Digital channels help banks reduce operating costs. These cost savings are passed on to customers in the form of lower fees and charges. Many transactions which otherwise involve charges can be done free of cost through net banking or mobile apps.
3. Zero Balance
Most digital savings accounts do not have any minimum balance requirements. Unlike regular accounts, you don’t need to maintain a certain average monthly balance. Moreover, there are no penalties or charges if your balance falls below a threshold at any point.
4. Enhanced Control
You get instant notifications for all transactions and activities in your digital savings account by email or SMS. If unauthorised activity is detected, you can instantly block online payments or freeze your ATM/debit card with a few clicks.
5. Easy Tracking
Digital statements and transaction histories can be easily retrieved through net banking or the bank’s mobile app. Personal finance management dashboards provide a graphical analysis of income, expenditure, and net worth to better understand spending patterns.
Factors Driving Adoption in India
1. Increasing Smartphone Usage
Smartphone ownership in India has risen exponentially with affordable devices and data plans. This has rapidly expanded the country’s digital footprint and online user base. As mobiles become the primary device for Internet access for most Indians, digital banking and digital payments have boomed.
2. Tech-savvy Millennials
The majority of India’s population now comprises youth below 35 years who are tech-native and digital-first. This new generation prefers the ease and personalisation offered by mobile apps across spheres. They readily opt for digital banking channels over traditional ways of visiting branches physically.
3. Regulatory Backing
Governments and regulators have introduced many reforms to boost digital banking access, and video KYC guidelines now enable remote on-boarding of customers in savings accounts.
4. Competition
India has seen an upsurge in niche digital banks and fintechs in recent years. To acquire and retain customers, they offer feature-rich and differentiated digital savings products. Competing private banks are compelled to accelerate their own digital offerings.
Key Elements of Digital Savings Accounts
Video KYC facility enables online verification and instant account opening within minutes. Customers no longer need to submit physical documents or visit branches for initial account setup
1. Zero Balance and Zero Fines
Most digital savings accounts do not enforce any minimum balance requirements. Account holders are not penalised through fines or fees for non-maintenance of monthly average balances. This provides flexibility to users and exempts them from unnecessary charges
2. Round-the-Clock Availability of Banking
Mobile and Internet banking platforms allow remote access to the savings account 24×7. Customers can undertake a wide range of financial transactions digitally without visiting the branch. This includes money transfers, bill payments, mobile top-ups, online product purchases, etc.
Conclusion
Digital savings accounts have made banking extremely convenient through remote access and paperless processes. India has witnessed rapid adoption of such accounts aided by supportive regulations, evolving consumer behaviour and fierce industry competition. Though cyber risks need effective controls, the 24×7 availability of banking on the phone is likely to drive further innovation.