What is digital banking service system? Use of digital products in each business is a factor of success. If we utilize the power of digital media, then we can increase the sales as well as the customers’ loyalty. The internet has changed the face of the world; its presence facilitates various matters as well as presenting digital services for various financial purposes. One that utilizes the internet with full potential is the world of banking.

What is digital banking?

Through the digital banking feature, banks around the world are trying to get closer to their customers. But what exactly is digital banking? And what services are in it?

According to the Financial Services Authority Regarding Digital Banking Services by Commercial Banks, digital banking is an electronic banking service developed by optimizing the customer data in order to serve customers faster, easier, and in accordance with the needs (customer experience), and can be done entirely independently by the customer, taking into account the security aspects.

Risk Management in digital banking service

Banks that carry out digital banking services are required to apply risk management, the principle of prudence, as well as fulfill all the provisions contained in the Regulation of the Financial Prosecutor Authority. Digital banking service system is a key element for the success of economy in Pakistan.

Banking Requirements for Digital Banking Services

Banks that want to provide digital banking services must meet the following requirements:

1. Have a risk profile ranking with a rating of 1 or 2 based on the rating of the bank’s financial strength in the latest evaluation period;
2. Have adequate information technology infrastructure and sound security management of digital devices
3. Included in the group of commercial banks based on business activities that can at least carry out electronic banking business activities as stipulated in the provisions of the Financial Services Authority.

Application Process for Digital Banking Services

Banks that have plans to implement digital banking services must first obtain approval from the Financial Services Authority. In this case, the bank can apply for approval of digital banking services through the following process:

Document Preparation for digital banking services

In the submission process, banks are required to complete documents containing the following:

Proof of readiness to provide digital banking services which at least contains the following items:

1. Supporting organizational structure, such as supervision from management;
2. Policies, systems, procedures, and authorities in the issuance of digital banking service products;
3. Information technology infrastructure readiness to support digital banking service products;
4. Results of analysis and identification of risks inherent in digital banking service products;
5. Readiness in the application of risk management, especially security controls to ensure the fulfillment of the principles of confidentiality, integrity, authenticity, non-repudiation, and availability;

Analysis of legal aspects in digital banking

Customer protection and education program must be provided with ease to each client of banking industry.

Examination Report from an independent party

Furthermore, the submission of the approval must be accompanied by the results of an inspection from an independent party to provide an opinion on the characteristics of the product and the adequacy of the security of the information technology system related to the product, compliance, and standards that apply nationally and internationally.

This report also shows the capability of a bank to offer financial services with fully controlled system. Because a single weak element in financial world can cause a loss of thousands of dollars for customers.