Digital banking involves offering banking services through digital media such as a personal computer or mobile through the internet. Theoretically, online banking remains one component of digital banking. However, it may take several forms depending on the user access and services offered by banks.
With internet banking, customers can access their bank accounts through online means. In addition, digital banking includes corporate banking functions and aims to offer all the banking services that a traditional bank provides through branch services.
Basics of Digital Banking
Digital banking offers customer services through a digital platform without customers needing to reach out at the physical branch locations. Retail banking functions are more or less covered with online and mobile banking functions. Corporate banking through digital platforms requires substantial technology configuration.
Offering comprehensive banking services through digital channels is challenging. However, artificial intelligence and machine learning are reshaping the banking industry. AI-empowered software and programming have enabled the banking industry to evolve.
How does Digital Banking differ from Traditional Banking?
Online access to banking services makes banking 24/7 which is not a realistic concept with brick-and-mortar banks.
Digital banking channels include phone banking, internet banking, cardless ATM access, and regular ATM banking. The wide array of options and innovative use of technology makes accessibility the prime feature of digital banks.
Further, digital banking seamlessly makes banking transactions such as account opening, cash deposits, funds transfers, and investments. In addition, innovative technology powered by artificial intelligence, machine learning, and cloud computing makes access to complex banking services faster than traditional banking.
Salient features of Digital Banking
So what additional services can digital banking offer over traditional banking?
Essentially traditional banks without digital banking are scarce now. It means all banking services have evolved into digital banking mode. The race to outperform the competitors now remains for the innovation and convenience offered to the customers.
Here are just a few of the banking services that are made possible only with digital banking:
- Digital banking gave birth to internet banking offering 24/7 access and convenience to customers;
- Digital banking spread its branches in the shape of mobile banking, ATM banking, and cardless banking;
- The future of digital banking is taking shape with internet-only banks;
- Digital banking has evolved from a cashless banking experience to digital currencies such as cryptocurrency, e.g., Bitcoin.
Advantages of Digital Banking
The competitive nature of tech-based banking has made sure the cost of falling behind digital and internet banking is too significant to ignore. As a result, shifting to digital banking is fast becoming a compulsion for customers and banks.
Convenience and Accessibility
The foremost and most visible advantage of digital banking remains access to banking services for everyone. Customers can deposit checks with a scan through a mobile app at any time these days. Fund transfers and cash deposits are performed in minutes.
Digital banking offers convenient banking solutions at your fingertips, from account opening to complex banking services such as loan approvals.
Cost-effectiveness
Tech-based and innovative banking services solutions mean fewer costs for customers and banks. Banks need to invest heavily to cope with technological advancements, but the cost-effective operations outweigh the investments easily. Moreover, with digital banking methods, customers enjoy a reprieve in banking fees and time-saving.
Innovative use of technology
Cash or Cheque deposits through online means and ATMs are an outdated concept.
International funds transfers in minutes, digital loan approvals, online foreign exchange transactions, investments, and merchant services are just a few of the hallmark services possible with digital banking.
Competitive products and prices for customers
Digital banking has made the banking market fiercely competitive. Customers can compare mortgage and investment rates at their fingertips.
There are no more “hidden costs” concepts, with more and more information available online. It has led banks to reduce costs and offer competitive products to customers. For example, most banks still charge for funds transfers at branches but offer complementary services online.
Limitations of Digital Banking
Cybersecurity is the first point that strikes everyone when listing the risks associated with digital banking. However, as much as banking is fast moving towards digitization, cybersecurity is also becoming challenging.
Some experts also predict more joblessness with excessive use of technology. Loss of information and privacy also remain concerns primarily associated with cybersecurity. For banks, any loss or breach of security can impose devastating effects, not merely limited to monetary losses.
Key Takeaways
• Digital banking proved to be a blessing when it was difficult to travel to the bank for a straightforward money transfer. People can now reduce their trip expenses and journey time. Additionally, working-class, older people nowadays find it quite comfortable to conduct their banking business from the convenience of their homes.
• You do not have to go through the bank alone to report lost or stolen credit cards. In addition, one can now activate cards, put lost cards on hold, report cards as lost or stolen, and get a replacement card online with the press of a button.
• You no longer have to wait until bank business hours to do any banking tasks, thanks to digital banking. You may now complete the necessary transactions whenever it is convenient, 24 hours a day, 7 days a week, even on holidays.
• In the past, filing tax returns required a ton of documentation. The filing of IT returns, and subsequent tax payments, are now possible through digital banking. The burden of the tiresome tax-return filing job is lessened as a result. You can also pay government challans online.
