Future of digital banking: Fostering market growth

There is no doubt that technology is reshaping the world as we know it, and FinTech is no different. Digital transformation has been and continues to be, an enabler and driver of change, especially in the world of digital banking. This transformation means that the nature of financial services is shifting and changing to answer a broader range of consumer and business needs. Digital banking is no longer the future, it is now, and Telcos have a significant role in enhancing customer experience and increasing the growth of this market. 

Digital Banking vs Online Banking

To fully understand digital banking, we need to know what it is. Many often confuse digital banking with the likes of online banking, but the two are quite different. 

Online banking refers to traditional banking services that have been made possible via the internet and the use of a desktop or mobile banking app. Customers can conduct financial transactions and fund transfers using these platforms, meaning that they no longer need to physically go into a bank branch. But, these consumers still require an internet connection, bank card, account information, and access to a device like a laptop, mobile device, tablet, or smartphone to use these services. 

Digital banking extends the financial services that banks offer and makes financial services available to those who do not have bank accounts. These services provide enhanced financial inclusion, convenience, and control to consumers.

Digital banking is a more personalised consumer experience focused on providing a wide range of consumer segments with the financial services that fit their needs and requirements. These services include online banking, digital payments, mobile wallets, mobile banking, applying for loans, rewards programs, insurance, micro-lending, credit profiling, and the list goes on.

Digital banking makes use of several different technology advances to make these services possible and utilise data and insights to develop product suites and services to answer the needs of both consumers and enterprise customers. We examine this in more detail below. 

Global Digital Banking Trends 

Several digital banking trends are coming to the forefront of the banking world globally, aiming to offer consumers more financial and lifestyle-related services. These trends include: 

• Lifestyle banking – financial institutions are redefining their consumer segments based on different metrics, including lifestyle, values, aspirations, etc., to target their customers with more personalised products and offerings. Lifestyle banking uses Artificial Intelligence (AI) technology, analytics, and data to gain this insight and to solve different consumer lifestyle pain points. The aim of which is to enhance consumer experience and satisfaction.
• The merge of digital experience and real-life experiences – this is made possible by the increase in the use of mobile devices, augmented reality, the use of wearables, virtual reality, chatbot, and video solutions. This technology has made it possible to interact and connect with consumers on a deeper level and provide more personalised communication and experiences, which foster loyalty and reduce customer churn. 
• Simplification – for digital banking to be successful, it needs to follow a customer-centric approach. At the centre of this approach is the need for a simple and straightforward user experience across all services, apps, and platforms. This includes easy to use functionality, straightforward instructions, understandable language, and easy to navigate interfaces.
• Business Intelligence to enhance banking efficiency – Artificial Intelligence (AI) and Machine Learning (ML) innovation have made it possible to automate different tasks that transform customer service and satisfaction. This enhances banking efficiency and the analytics and insight gained from these interactions and processes can identify various problems or opportunities to improve products, services, and communication with customers. 
• Banking Security to stop fraud and loss – one of the biggest concerns surrounding digital banking is security and the risk of fraud and loss. Luckily technology is making headway in this regard. According to a recent report on the future of digital banking, AI technology is set to have a significant impact on cybersecurity which will be built around enterprise-wide predictive analytics, verification, alerts, security vulnerability, and threat recognition, thereby stopping hackers from exploiting vulnerabilities and protecting data. 

Digital Banking and the opportunity for Telcos

There is no doubt that digital banking will continue to impact the world as we know it, but what opportunity does this provide for Telcos? The rise in smartphone use and mobile banking is increasing exponentially across the globe, putting Telcos in the perfect position to offer a range of new value-added digital banking services.

Telcos can use innovative technology, analytics, data, and insight to understand the customer base and create services and offerings that speak to different customer segment needs.

By tailoring digital banking experiences to consumer needs and lifestyles, Telcos are able to add value and enhance customer experience, which in turn offers growth within the market and opportunities to increase revenue.

Conclusion

Technology is being used to transform digital banking as we know it. New technological advances are changing the kinds of services and offerings that financial institutions can provide, how they interact with customers, and how these services function. In this way, digital banking is more customer-centric and is focused on creating a positive customer experience. Digital banking offers Telcos an opportunity to expand on their current offerings and services and tap into a new market centred around providing value-added services within the FinTech space.