Digital banking, which first appeared in the early 2000s, has become a new trend in the banking industry in both developing and developed countries. Similarly, digital banking is regarded as the ideal solution for radically improving the customer experience typically associated with traditional financial institutions. However, some people are still unfamiliar with the concept of digital banking.
Digital banking refers to the automation of traditional banking services. Customers of a bank can use their digital banking system to access banking products and services via an electronic/online platform with a mobile device. Digital banking entails digitizing all banking operations and replacing the physical presence of banks with an everlasting online presence, making a convenience for a consumer for not having to visit a branch.
It goes without saying that the benefits of progressing to a more technologically sophisticated way of doing things far outweigh the costs. Similarly, as a technological byproduct, digital banking aims to make life easier for banking users. Below are some significant advantages of digital banking:
Digital banking has a lot of things to offer, providing that a person has a stable internet connection and an internet-enabled smart device. Here are some examples of digital banking products:
These cards are used not only to withdraw cash but also to enable other types of digital payment. Cards can be used for online purchases as well as at point-of-sale (PoS) machines. Banks can also issue prepaid cards, which are not linked to a bank account and function solely on the money loaded onto them.
Currently, UPI is the most popular form of digital banking. UPI employs a virtual payment address (VPA) to allow users to transfer funds without entering their bank account number or IFSC code. Also, UPI allows you to consolidate all of your bank accounts into a single location. Funds can be transferred and received at any time of day or night. Google Pay is an example of the UPI. UPI payments are free of charge.
This payment method has eliminated the need to remember four-digit card pins or enter CVV (Card Verify Value) information. Mobile wallets save bank account and card credentials, allowing users to easily add funds to the wallet and make payments to other merchants who use similar apps. Mobile wallets, on the other hand, usually have a limit on how much money can be deposited in the wallet. A small fee may also be charged when transferring funds from the mobile wallet to the bank account.
These are typically portable devices that read a card to authorize and complete a payment. This is the payment method used by supermarkets and gas stations. However, as digital banking has grown in popularity, PoS terminals have evolved into more than just physical PoS devices. Virtual and mobile PoS terminals have emerged, which use the NFC (Near-Field Communications) feature of mobile phones and web-based applications to initiate payment.
Also known as e-banking, internet banking refers to obtaining certain banking services such as fund transfers, account opening and closing. Nowadays, most people carry out e-banking via mobile devices. Because internet banking is limited to core functions, it is a subset of digital banking.
According to a Deloitte research report on must-haves for a fully digital bank, each digital banking product must have the following as key drivers for success.
These features seem to greatly enhance the financial management for humans. However, digital banking cannot totally replace humans in the banking sector. Customers prefer human interaction for more important and irregular decisions, such as taking out a loan or negotiating loan terms.
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