What is Digital Banking?
Digital banking is the digitization (or going online) of all traditional banking operations and system offerings that have traditionally been accessible only to consumers when they are physically located within a bank branch. It covers things such as Withdrawals, Checking Account, software for applying for Financial Products, Bill Pay, Cash Deposits, Transfers, Management of Savings Account, Management of Debt, Account Services.
Consumer preferences quickly shifted to online and mobile apps, but many financial institutions are struggling to adapt their banking experience to electronic platforms and smaller mobile devices. Sadly, banks can no longer afford to wait to invest in digital innovation as consumers are rapidly willing to switch banking to digital services such as bill pay, mobile payments and loan applications.
The most important difference between digital banking and online banking versus conventional banking is that the interaction between the consumer and the digital bank begins and remains exclusively digitally without the need to enter any physical location. Nevertheless, digital banking is a move further than online banking.
Advantages of Digital Banking
Online banking helps businesses easily transfer expenses to their workers ' bank accounts. Some of the daily transactions can also be streamlined so that practitioners can use their valuable time for something more important.
This involves evaluating how the buyer connects with the company and adjusting those encounters to improve the customer experience. For example, information and context may be adjusted as a consumer transition from a mobile phone to a desktop or from reviewing a brand to making a purchase decision.
Digital banking is making life easier and cheaper. These are also preferred to chart the expenses. There are many benefits of online banking, some of which are, pay your bills electronically, switch funds between bank accounts, secure yourself digitally, anywhere on your device or mobile phone, monitor your transfers, less time consuming, syncing with your finance apps, permanent access to bank data.
Government initiatives related to digital banking globally and promoting cashless where the government and the customer can hold each and every person accountable for their finances. The trends in the digital banking market have led to the increasing use of smartphones, the use of the Internet and the government initiative is seen as an opportunity for the market. As the growing population is turning towards technology, banks are also shifting their division into digital channels to offer their services with one contact to the consumer.
The affordability and user-friendliness of digital banking and the increasing use of electronic devices and easy access to internet services are the driving forces of the digital banking industry over the projected period. The technical development in the application of blockchain is a further expansion of the global digital banking industry. Whereas the could threat of data breaches and cyber-attacks can impede the growth of the digital banking industry.
Data breaches serve as a challenge to market growth.
The main drivers of the digital banking industry are cost-efficiency and ease of use of digital banking compared to the normal banking system. Factors such as growth in the adoption rate of electronic gadgets, and convenient access to high-speed Internet networks, are projected to fuel the demand during the forecast period. Nevertheless, the growing threat of data breaches and cyber-attacks on banking servers can impede the forecasting of the digital banking industry. In turn, technological advances, such as the introduction of blockchain technologies, further boost the global digital banking market.
Mobile banking trends are contributing to the growing use of smartphones and Internet adoption across the globe, and banks are shifting into digital channels to provide their services. The government is also promoting and increasing the use of digital banking services across various global initiatives. The aim of the governments of different countries to become cashless has contributed to the introduction of a number of policies, such as demonetization, which promotes and enables different traders to incorporate digital payments. Furthermore, no merchant discount rate (MDR) or taxes would be levied on either retailers or consumers.
As a result, such regulations and government support are expected to further expand the digital banking market worldwide. They are also collaborating in partnership with FinTech Corporations and other third-party applications to create additional user-centric products and services while offering improved customer experience. For eg, in November 2019, the Government of India introduced a regulation on businesses with an annual turnover of more than $7.0 million to offer low-cost digital means of payment through digital mediums, like BHIM UPI, RTGS, NEFT, Aadhaar Pay, debit cards, UPI-QR Code to customers.