Digital banking has been around for years now, but it has become the new normal, especially after Covid 19. What is driving the banking industry’s digital wave, and what does it mean for businesses going forward? Are digital banks like Starling, Chime and Digital International Bank really safe? Are there risks associated with the switch to digital banking?
What Does Banking Going Digital Mean?
You’ll hear the phrases “banking going digital” or “switch to digital banking” mentioned a lot in the modern business world. What do they mean, and what do they have to do with your business?
“Banking going digital” means the digitization of all banking services. Everything from simple bank transfers to more complex services like loan applications can be done digitally. The switch to online banking is made possible by fast, always-available online banking systems. With more and more businesses going digital, digital banking wouldn’t have come at a better time.
You may already be using digital banking services in your business without even knowing it. Some of the core technologies powering the digital banking wave have been around for decades. Recently, online banks like Fidor have made digital banking even more popular and relatable to most people. Covid 19 made it almost the standard way to transact with banks.
Digital banking is not exactly a new or disruptive thing as it has been in development for years and is still in different stages of adoption. Even today, some banks still rely on traditional methods for some services and digital for day to day services such as withdrawals. However, recent development has seen many banks move a good chunk of their activities to digital systems.
Why the Shift to Digital Banking?
Going digital has been an industry buzzword for more than two decades now, and for good reasons. Here are some of them:
Increasing Transaction Speeds
What would you prefer, having customers line up to pay you invoices in a banking hall or online through a digital banking system? The shift to digital banking saves businesses and customers a lot of time because transactions can be completed faster. Of course, you are encouraged to ask customers who use online baking to get a good VPN that offers dedicated IP so that they can be protected. Most of them will be logging into online banking systems with personal devices to do transactions digitally. The transactions are swift compared to traditional banking methods.
Better Service Delivery
Let’s face it. No one likes to leave what they are doing and go to a physical bank to ATM to transact. With digital banking systems, banks can offer services to their customers more conveniently. This leads to better customer experiences even when a bank is struggling internally.
Digital banking is more cost-effective than traditional banking because it reduces labour costs for banks and businesses. It emphasizes self-service and remote transactions, meaning firms and banks do not need to hire staff to handle day-to-day transactions physically.
Security – Digital Banking Offers Better Security
There are concerns regarding the security of online banking systems, given the rise in cybercrime. However, online banking systems are still viewed as a safer alternative to traditional banking because people don’t have to handle money or interact with third parties physically.
Most of the breaches with online banking systems can be addressed through internal system upgrades. End users can also be trained on how to stay safe while transacting digitally, like VPNs and strong passwords.
Better Rates for Business and Customers
As you may notice after using a digital service with your bank, the rates are significantly lower than traditional physical banking. For example, most banks will charge a substantially lower transfer fee on their digital platforms than teller transfer requests. Rates are cheaper on digital banking systems because banks save a lot of money with the systems.
Better Integration with Other Systems
For businesses, digital banking is a godsend because it means they can integrate their ERP systems and accounting software with their banks. With this integration, you can track finances and keep and access transactions much more quickly than using traditional physical banking systems. Some banks even allow corporate clients to link their accounting systems to the banking system via a secure API.
The Downsides of The Switch to Digital Banking
While there are many positives to the switch to digital banking, there are a few downsides, such as cybersecurity, the learning curve and poor connectivity in some areas. However, these are all issues that can be overlooked or solved.