Banks have come a long way. The basic business practices have not changed but the process of delivering services and products to customers has evolved. More and more people are choosing the convenience of digital banking. As we become more comfortable conducting our lives online, the time seems right for some genuine challenges to the banking status quo.
Barriers to entry are falling. Mobile banking companies are offering almost the same products to consumers to compete for clients. The changing consumer preferences, evolving technology, and the rise of the fin-tech startups globally is challenging the fundamental banking business models as we know them.
The ability to offer dynamic rates and competitive pricing enables fin-tech companies to secure high levels of customer satisfaction during their interactions or banking relationship. The impact of game-changing technological innovation is inevitable.
Digital banking is the digitization (or moving online) of all the traditional banking activities, products and services that historically were only available to customers when physically inside of a bank branch.
What digital banking means for banks
Traditional banks are facing growing competition from Fin-tech startups. To stay in business and keep existing customers, traditional banks have to work twice as hard to compete with innovative and agile fin-tech startups.
Whilst innovation and the adoption of new technology is still present in established banks, the process of adapting change is heavier and takes longer within a legacy-laden, process-lead environment.
In the long-term digital banking has a lot of benefits for traditional banks. A study conducted in 2015 revealed that 47% of bankers see potential to improve customer relationship through digital banking, 44% see it as a means to generate competitive advantage, 32% as a channel for new customer acquisition.
Cost savings is a huge incentive for banks that are poised to embrace digital technologies. One of the keys for banks to cut costs is automated applications that replace the redundant manual.
Cost savings is a huge incentive for banks that are poised to embrace digital technologies. One of the keys for banks to cut costs is automated applications that replace redundant manual labour.
Digital banking improves overall business efficiency. Not only do digital platforms improve interaction with customers and deliver their needs more quickly, they also provide methods for making internal functions more efficient.
The approach to digital banking can have a huge impact on banks’ bottom line. Late adoption means banks will miss strategically important technological advantages that can improve efficiency or help them to better engage with customers.
Benefits to the customer
Customers demands are changing in all sectors. People expect better, faster and efficient delivery of services.
The risk of falling behind in the digital banking race is real for traditional banks. The threat of losing customers, particularly the future generations is looming if the customer experience isn’t precisely the level of engagement that the newly enlightened customers require.
Financial institutions are doing everything they can to make their products and services attractive to existing and prospective customers.
The consumer stands to benefit in the face of innovation, the digital revolution and fierce competition. Improved services and product offerings translate to 24/7 bank services and availability through mobile devices. It’s quick, usually free and allows consumers to carry out a number of financial transactions without wasting time.
Digital banking is vibrant, alive and exciting for consumers. It points the way to a future where banks can really add value and where customers can secure huge benefits in terms of products and services.
And access to a full range of services (savings, investments, insurance, loans, mortgages, foreign currency, etc.) at any time, via a secured mobile app. Customers are likely to be offered competitive and lower charges (and therefore cheaper banking).
Digital banking is set to revolutionise the way we consume banking services and products. The banking industry is certainly being disrupted by the new age of fin-tech, which promises to transform the face of lending and borrowing.