How the cash-to-digital shift has gathered pace, post demonetisation

The shift from cash transactions to digital mode has been gaining pace in leading banks in the last one year since demonetisation.

Data available with banks up to September 30, 2017, show the increase in various modes of digital transactions is up about 10 per cent.

This increase is not only reflected in an increase in different channels of digital transactions, such as internet banking, point of sale (PoS) terminals, mobile banking and kiosks, but also by a corresponding decline in ATM-based transactions during the period September 2016 to September 2017.

For State Bank of India, the shift is quite noticeable. During this period, the share of transactions through Internet, PoS and mobile banking put together had gone up by 10 percentage points to 36 per cent from 26 per cent. Individually, transactions through the PoS more than doubled while that of internet and mobile banking witnessed a 2 per cent and 1 per cent increase, respectively, in their share in total transactions.

At the same time, the share of ATMs in total transactions had come down to 33 per cent from 44 per cent, while the share of branch-based transactions fell by 1 per cent.

“Surely, digital mode has gained some traction post demonetisation. These numbers indicate that people did continue to use digital mode in the last 10 months during which cash availability was not an issue,” a senior SBI official told BusinessLine on Monday.

This is also true in the case of other major banks. The digital channels accounted for 81.2 per cent of the savings account transactions in the first half of FY18 against 75.3 per cent in FY17.

This includes touch banking, phone banking, debits cards, and PoS transactions.

Artificial intelligence-powered chatbot, and iPal also handle over one million queries/chats for ICICI Bank now.

Canara Bank reported an increase in the e-transactions ratio to 73.40 as on September-end from 59.30 per cent.

While the growth in digital transactions is noteworthy, some bankers also point to the need for caution. “There is definitely more room for celebrations if this growth had happened without demonetisation.

“For example, dip in ATM transactions in some key banks might be due to closure of ATMs and non-availability of cash in many regions for long months after demonetisation,” said a top executive of IDBI Bank.

There is a need to see if the shift to digital continues this year as well with no shortage of cash, he added.