Para Banking: Expanding the Banking Universe
by Yuvi K - December 16, 2023
What is Parabanking?
ParaBanking is the name given to the financial activities facilitated outside of the traditional banking interfaces like physical branches. It allows banks to operate without the need for a large physical presence and thus drastically reduces operation costs as well as providing convenience for customers.
ParaBanking includes features like mobile banking, ATMs, Point-Of-Sales (PoS), prepaid cards, etc. It provides customers with easy access to their financial needs when a bank branch is not in their proximity. It is widely used in India, where there is a huge population of underbanked and unbanked customers.
There are many benefits associated with ParaBanking such as cost savings, improved customer service, better security, and faster transaction processing. It is an important part of the banking industry and has contributed to the growth of many banks and other financial institutions such as PayTM, Flipkart, Amazon, etc.
Advantages of Parabanking
Cost Savings
ParaBanking helps banks cut down costs associated with operating branches. It eliminates costs of rent, electricity, and personnel for branches. As the costs associated with managing a physical presence are drastically reduced, banks can make more profits. This allows them to offer better services to customers at lower rates.
Improved Customer Service
ParaBanking helps banks provide better and faster services to their customers. Customers can access their banking services anytime and anywhere. They don’t have to wait in queues at the bank branch for their banking needs. This is especially beneficial for customers in rural and remote areas, who don’t have access to a physical bank branch.
Security
ParaBanking enhances safety and security of banking transactions. Banks can store data and personal information on secure servers, away from the physical premises. With the help of encryption technologies, they can ensure that all transactions are secure and non-traceable.
Faster Transaction Processing
PareBanking technology enables banks to process transactions quickly. Transactions can be completed instantly with the help of internet banking, PoS terminals and ATMs. This reduces wait times for customers and helps them access their funds in a timely manner.
Features of Parabanking
Internet Banking
Internet banking allows users to access their banking services online without having to go to a branch. It offers a variety of services like checking account balance, transferring funds, payments, and other financial services.
Mobile Banking
Mobile banking uses the mobile phone as a banking interface. Customers can use their mobile phones to check their account balance and make payments. They can also transfer funds to other accounts and set up standing instructions using their mobile phones.
ATM
ATM (Automated Teller Machine) allows customers to withdraw and deposit funds as well as make payments. It is an easy and convenient way to access one’s banking needs without the need to visit a bank branch.
Point-Of-Sales (PoS)
PoS (Point-Of-Sales) are terminals where customers can pay for goods and services with their debit or credit cards. It is an electronic alternative to cash and cheques. It is widely used in the retail industry and helps reduce payment processing time.
Prepaid Cards
Prepaid cards are cards which can be loaded with money and used for making payments. They allow customers to manage their expenses better as they can limit the amount of money they spend. Prepaid cards are also a good option for customers who don’t have access to a bank account.
Conclusion
ParaBanking has revolutionized the banking industry and allowed banks to offer better services to their customers. It has enabled banks to offer their services in areas where they don’t have physical presence, thus providing financial inclusion to the unbanked and underbanked customers.
It has ushered in an era where banking is not limited to visiting a physical branch, but is available anytime and anywhere. ParaBanking is a great way to reduce costs and increase convenience for customers. With advancements in technology, it is expected to bring even more innovation and convenience in the banking sector.
