IMPACT OF INNOVATION IN BANKING SECTOR

VENKATESH S1 (M.com), DR. SNS Rajalakshmi college of arts and science – Coimbatore,
PRAKASH S2 (M.com, M.Phil.). Assistant professor @ DRSNSRCAS -Coimbatore

ABSTRACT: -

This study examines the impact of innovation (technological) factors on the performance of
banks. The term innovation refers to “performing an existence process /task/ an activity in a
new way”. Banking industry is one of the fastest growing industries in India. Banks in India
have no longer restricted themselves to traditional banking activities but explored newer
avenues to increase business and capture new market. The banking sector in India has seen
number of changes. The innovation factors include internet banking, mobile banking,
automated teller machine, RTGS, NEFT, SMS banking and Cheque. The internet banking has
positive impact with public. Everywhere in the banking sector innovation is the buzzword and
technological breakthrough is witnessing new avenues of success. Competition is compelling
everyone to move ahead and faster. Due to the innovative nature of electronic banking services
will show the bank performance significantly. The banking sector plays a n important role in
the development of one country’s economy.
KEY WORDS: - Innovations, Development, Mobile Banking, Internet Banking, ATMs.
INTRODUCTION: -

Innovation is the application of new solutions that meet new and existing requirement, in
articulated or existing market needs. This can be accomplished through new effective products,
processes, services, technologies, or ideas that are readily available to markets, governments
and society. Nowadays, technological innovation is considered one of the most important tools
that can affect the economic sector as well as the banking sector. DeYoung has forecasted that
technological progress will destroy the models used in developing and delivering services in
banks and will replace them with new and original ones. Thus, banks should develop and adopt
new technological innovation to perform in a highly competitive environment. Over the years,
the banking sector in India has seen a number of changes. Most of the banks have begun to
take an innovative approach towards banking with the objective of creating more value for
customers. Information technology has given rise to new innovations in the product designing
and their delivery in the banking and finance industries. Technology offers a chance for banks
to build new systems that address a wide range of customer needs including many that may not
be imaginable today. Financial innovation associated with technological change totally
changed the banking philosophy and that is further tuned by the competition in the banking
industry. Challenging business environment within the banking system create more innovation
in the fields of product, process and market. Today, we have electronic payment system along
with currency notes.
OBJECTIVES OF THE STUDY: -

1. Brief description innovation in Indian banking sector

STATEMENT OF THE PROBLEM: -

This research is used to find out the various Innovations that are encountered impact of
innovation in banking sector. It also provides necessary method that could be used in solving
all these problems. The problems are Increasing Competition, A Culture Shift, Changing
Business Model, Rising Expectations, Customer Retention, Outdated Mobile Experiences,
Security Breaches. Adoption of new technology.

RESEARCH METHODOLOGY: -

The study is done in order to make an estimation of the current position of the Banking sector.
The entire paper is based on the secondary sources of data viz. the various websites, academic
journals, etc.

REVIEW OF LITERATURE: -

I. Hua G. (2009) research mainly investigates the online banking recognition in China by
conducting an experiment to investigate whatis user’s perception towards online
banking, do customer feel ease and secure while doing online financial transaction on
bank website.
II. Jalan, B. (2010) in his research mainly focused on all the IT evolution that has changed
the entire banking industry. Perhaps there is no other sector that has been affected by
advances in technology as much as banking & finance sector has. It has the most
important factor for dealing with the rising competition & the rapid explosion of
financial innovations.
ANALYSIS AND INTERPRETATION: -

TABLE: 1 RISK OCCURRED

Risk occurred No Of Respondents Percentage (%)

Frauds and Scams 15 60

Liquidity risk 07 28

Systematic risk 03 12

Total 25 100

INTERPRETATION:

The above table indicates risk occurred and 60% of people faces frauds and scams risk.

Chi-square

Test statistics

a. 4 cells (100.0%) have expected frequencies less than 5. The minimum expected cell
frequency is 1.0.

FINDINGS: -

In the current scenario people go with innovation and technology to get their work done much
smarter and faster. Innovation has completely changed the way of banking today. Innovation
is result of search for profits. The development of computer systems and the internet has made
electronic payments of the bills a cost-effective method over paper checks or money.
SUGGESTIONS: -

Encourage digital self-service. Create specialized offerings and Focus on building trust and
brand loyalty towards the customers. Make customers to practice value-based decision making
when defining digital journeys.

CONCLUSION: -

After number of technological innovation the entire Indian banking sector it emerged as a very
firm banking industry in entire world not only in terms of capital but also in term of making
and retaining customers. The Indian banking sector came to a position where it gives global
competition to other banks of worldin terms of higher productivity and efficiency in services.
The focus has now been shifted from product to customer. Innovation covert Indian banking
into the leaders of Internet banking, mobile banking, phone banking, ATMs. Information
Technology only the tool which re-defined and reengineered banking system and gave it face
that today banking sector is having, the use of these IT reform make it very clear that the future
of banking will be more sophisticated and standard of services to the customers will be at
continuous be improved with new innovations in product and process.

REFERENCES: -

I. Technology Impact on Banking sector performance with reference to select

II. Banking sector performance during the COVID-19 crisis Journal of Banking
FinanceVolume133, December2021,106305https://doi.org/10.1016/j.jbankfin.
2021.106305

III. Aggarwal, Sagarika and Chowdhury, Kuldeep and raj, tejas, Effect on
Technology in shaping Indian banking sector(January 2, 2021) SSRN :
http://dx.doi.org/10.2139/ssrn.3758776