Transfers the financial sources and funds through online programs instead of traditional methods called digital Banking. By using digital banking you can deposit and withdraw or even transfer your cash. You can manage your account, manage your loans and you can pay your bills online also. These activities are only performed in banks only.
As technology is developing in the world, most people are using mobile and other electronic gadgets and easily accessible online and digital services. Now the banks are not able to expand because people like to access online fast services like paying their bills, online money transfer, online loan applications etc.
Today banks are not dependent on their brick and mortar structure for a long time. Most banks are growing towards digital services because most consumers do not want to go to the bank physically. Banks are also converting their services into digital platforms and attract more young customers by providing them digital and advanced features because young consumers are likely to use advanced features and the latest technology. Banks are also adopting advanced technology to compete in the online banking sector.
History of Digital Banking
- In 1993 Temenos AG was started. It is a banking software that provides support for retail banking, private banking, corporate banking, community banking, system provider and other banking facilities.
- In 1994 online banking was started in Microsoft money. This financial software was the very first software for the banking accounts to be accessed for standard households.
- In 1997 Tangerine was started, which was the digital and only bank in the locality.
- In 1998 the United States started an Internet Bank which was the only Bank in that locality.
- In 2001 Online Bank grew to over 21 million people. This further grew to 1. 2 million people with 8 different US Banks.
- In 2007 the very first iPhone was launched and the customers were given access to digital banking and they could check their banking status in it.
- In 2009 Online banking grew to 55 million customers in the US only.
- In 2016 the Banks were given the command to go for more and more digital online transactions and thus attract customers.
- In 2018 Temenos declared to get more and more digital customers for the different financial organizations.
- In 2019 Temenos hired mobile app companies to capture the market of digital banking services.
Digital Transformation
In the beginning, only households can reach these digital banking benefits. With the time passing those services which are held in the physical structure of banks shift toward digital services with the progress of technology, customers like to use more online services in the banking sector. Banks are required to adopt advanced digital services to compete with banking sector competition.
Benefits of Digital Banking
Cost Reduction
If banks invest their money to update the digital banking services then it will cause a reduction in the cost of structuring traditional banking locations. It will also reduce the cost of labour, maintenance of the building, rent cost which is needed with the physical structure of a bank.
Agility
By adopting digital data transfer now becomes a very easy and quick task. This is a time-saving procedure that gives spare time to utilize in other tasks or activities of online banking. It takes very little time for the consumers and makes them able to utilize their time effectively.
Security
Most people are using digital banking services and it has become very successful but security is the major priority while using digital banking. Digital banking provides their customers secure servers to do safe transactions and customers can monitor their transactions also. If you are using digital banking on your mobile then you can secure your password to log in such as fingerprints, face recognition and biometric authentication.
Increase in Revenue
Digital banking is highly reachable which can attract more customers and can develop a huge market. which results in revenue increases to the banks and they can provide their services to more people because after providing advanced services to their customers there will be a rise in demand for services. With
Attract and Retain Customers
Customers who get good and advanced services will stay loyal to those companies that adopt innovative services. All the banking services have a constant check on performance and update new ideas and services to attract and bind their customers.
Stay Ahead of the Competition
Banks are updating new ideas of digital banking to be in marketing competition. They can predict the marketing trends and help their customers to stay updated with market trends and successfully retain their customers to their services. It is very helpful to attract a large audience and to be ahead in their Market.
Remain Compliant with New Legislation
Many policies are changed over time which has some restrictions also. Technology and services are changed according to the trends of the market. These restrictions and changes in policies make the companies be Compliant with New legislation which helps them to innovate a systematic and updated system that will be fair and followed by the latest rules of the digital bank marking.
Convenience
Digital banking is very convenient and customers will be able to use it according to their convenience on their mobile phones. These latest technologies make the customers able to access the banking services 24/7. You have the flexibility to know the balance on your phone and transfer the money according to your comfort.
Utilize The Latest Features
Many banks have the online latest features and provide their customers with the best service experience. These applications offer their customers with best financial solutions and advice like saving and purchasing assistance, you can avail of all these conveniences with one application only. These latest features help you to complete your transactions, checking account balance etc. you can transact money to anyone in few minutes by using your mobile application
Control
You can control your financial status is a very important advantage of digital banking.
In online banking, there is no restriction to operate your account and transact money using your mobile application like physical banks and it is easy to track your money transactions. It is an easy way to receive and spend money. Banks are continuously doing efforts to develop more advanced features in digital banking services like getting alert notifications at low balances or activate your credit or debit card online using your digital banking application.
Benefits Beyond Banking
online banking provides many other benefits to their customers to make their life easier. Digital banking provides a larger base for their customers to know more about online banking and better use their financial resources.
Challenges in digital banking
Legacy Platforms
Legacy is one of the main challenges in digital banking. As the Legacy are quite old and have the important information of banking, these become inaccessible with the transfer to digital banking. However the files may be carried on and uploaded, this may take a lot of effort to upload and upkeep these files.
Finding the Right People to Transform
Many customers are used to the old way of banking and for them, it may take some extra time to get used to digital banking. However to make accessibility easy to the digital platform it can be overcome but transferring to a digital platform may cause the loss of some part of society totally. This can be a barrier in mindset for certain audiences.
Winning and Retaining the Customer’s Trust
Getting the customers’ trust is the main objective of any institution. But if it takes to cyberattacks, digital threats, frauds, cheating to customers etc. one may hesitate to go for digital banking. This may lose the momentum of the main work to digital banking. So we may find that the user is quickly shifting to another method of banking. Sometimes banks may not be able to make customers feel comfortable with access to online banking then also banks may not be able to retain their customers.
Meeting Regulatory Requirements
It may take more capital to upkeep, as one has to first educate the bank employees. The staff again has its own limitations. Here new regulations and new rules must be known to the staff so that they can pass the information to its customers in the proper manner. The online banking rules should be known to staff and customers for their momentum.
Future of Digital Banking
Digital banking fully depends upon AI (artificial intelligence). Banks are also making efforts to adopt advanced technology and new features according to the Artificial intelligence technology developed. It is also a time as well as a money-saving tool that makes services easy and quick.
Artificial intelligence is the best tool to teach people how to utilize digital banking effectively. AI technologies can help to make the working flow easier while working to develop financial solutions.
Digital banking is the main tool to lead the industry trends. Everyone is using smartphones and easily accessing digital banking services. BaaS accounts make their customers able to work in their digital place.
