The Future Of Digital Banking

Gone are the days of the brick and mortar banking, where you had to stand in line for hours to get a simple task done. It has changed by leaps and bounds in the past few years. Even till five years back, mobile banking was thought to be the new trend and now it has become the norm.

It is no longer a simple online transaction or a trip to the ATM; digital banking has evolved with time. It has become more personalized, catering to the specific needs of the consumer.

Digital banking has taken over our lives and we are slowly but steadily reaping all the virtual benefits. It has become so popular than its regular version, that banks are giving a second thought before launching any new building plans.

In the western world, especially in the US, banks are taking extra caution, time and effort trying to improve their online experiences and in many cases even shutting down their physical entities.

So, here, we should take a moment and ask ourselves, what is digital banking and how far have we truly come?


What is Digital Banking?

It is simple yet so difficult to define the buzzword “Digital”. But, if one has to, then it can be explained as that entity that makes the obvious invisible and the invisible, obvious. It tricks our minds into thinking the presence of something, when in reality it is not. And, when it comes to Digital Banking, it is about making services so seamless that the customer utilizes the invisible in their daily lives. It is as if you have a virtual wallet with virtual money, which cannot be physically felt, yet we know that it exists and lets us buy things.


ATMs: The Automated Teller Machine has been part of our lives for years now. You need money, you simply go into an ATM and voila physical notes come out of a boxed machine. Maybe one of the most used services of Digital Banking in India is definitely the ever-present ATMs.


Online Payment Services:  One out of every ten person now shops online. But, have you ever stopped to think how the online payments are made? The simple answer lies in Online Payment Services. They are services present online which helps you in paying for things, sending money and accepting payments without having to reveal your financial details. They are easy to use, quick and definitely safe. Of course, the most popular site for this purpose is Paypal. But, there are many who have been making the rounds. WePay, Skrill, Propay, Click2Sell, Braintree Xoom, PayZa are only to name a few. So, if you are a freelancer working from home in India or just an online shopper, these sites are virtual lifesavers.


Banking goes Social: Facebook has changed the way social networking sites are perceived. We spend more time on Facebook, Twitter and GooglePlus than with our real friends. The banking sector has noticed this distinct change in our online behaviour. They have realised either you go social or you become obsolete. Not only have banks tried to create comprehensive online presences, they have tried to incorporate our need to Facebook and bank. Kotak Mahindra Bank is one such example where they have come up with Kaypay. All you have to do is create an account and simply transfer money to your Facebook friends. You no longer have to wait to ask for their account details or to even add them to your bank. Almost all major Indian banks, which have enabled IMPS person to merchant pull services, are eligible for Kaypay now. While you are at it, do check out Chirpify, which alternatively uses Twitter and Instagram.


Mobile Banking: Carrying credit cards in huge wallets, is slowly becoming a cliché.  All you need now is your smartphone. This is quite similar to the Online Payment services we previously talked about; only this has gone mobile, making it even easier to handle your money. With Apple Pay and Google Wallet, you can simply tap your phone on the payment terminal of the store and your payment is done. They basically safely store your credit cards, debit cards, gift cards, loyalty cards, offers, and more. They enable you to shop, send money and even receive payments all at the tip of your finger. Though Apple Pay and Google Wallet are the big players in this sector, there are a few alternatives you can try out like Lemon Wallet and Square Wallet.  There are also numerous mobile apps, which let you do the same. Some mentionable ones are Zipmark, Groupon app, Bump Pay and Dwolla.


ERP: It is not only the individuals who are rejoicing the online boom in the banking sector, small businesses love it too. Enterprise resource planning helps to automate many bank office functions, which are related to technology, softwares and human resources. Companies like Intuit help small businesses to flourish. Everything they need can be found under one digital roof. From managing money, to automating payments to merchants and employees, helping with taxes, they do it all. Intuit India has even launched Fasal where more than 400,000 farmers get updates on marketing information, best prices for crops and the financial support they need. There are others like Stripe and ClickBank, which are trying to help small startups and small businesses, get the early boost that they need so much.


Bitcoin: A simple Google search gives you the definition of Bitcoins. It is “a type of digital currency in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.” Though it has been years since Bitcoin were introduced to the world, its relevance still stands. Instant peer-to-peer transactions and worldwide payments with almost zero processing fees are still attractive to many. There are no middlemen or banks. All you have to do is go to online marketplaces like Mt.Gox and buy your bitcoins. You can easily transfer your Bitcoins to others if need be. They even let your inner Math Geek free where by solving complex math problems online, you get to ‘mine’ Bitcoins as rewards. Since they are after all coins, they are stored in your cloud wallet for your various uses or just to save.


What is the current trend of Digital Banking?

Omni Channels: From single channel, banks are now moving to Omni channels. Customers can now have a holistic brand experience. The bank gets a unified view of the consumer behavior, which further helps, in personalizing their banking experience. Through Omni channel banking, banks get an opportunity to deliver better results by gaining a holistic insight into customer channel preferences and behaviour. Banks understand from where a consumer prefers to store her money and how they like to spend it.


Sequential usage: Sequential Usage has become a common occurrence and on an average a person starts off his banking from a desktop and finishes from his smartphone. It has been noticed that most people use their phones to surf the Internet, use their tablets to make their purchases, but end up using their PCs or laptop to make big transactions on the bank websites. Each one of us now multi task, we juggle between our many screen lives, banks are also making sure that the transition is always smooth and seamless.


Digital Disruptions

However, not all is sunny in Silicon Valley and Wall Street. Digital banking is facing some of the most serious problems ever. There are many regular disruptions, which sometimes make the consumer crave the simple life of banking of the olden times.


Identity Theft: This is probably the most threatening online disruption. There is a real threat of someone stealing your identity and spending your money. With hackers and viruses amass; a whooping 39% of the world’s PCs are now infected with financial malware, which are specifically designed to steal your money. What is more shocking and maybe a little disheartening to know is that, though identity theft can be reported easily, it takes months, sometimes years to fix the problem. Every bank take hundreds of measures to make sure this doesn’t happen. And, though no serious online bank theft has been reported yet, the danger of it happening will always loom large.


Viruses: With viruses like Heartbleed, the threat of multinational banks being taken online hostages has become a grim reality. It is affects a piece of software called OpenSSL, which is, used for maintaining security on popular web servers. Basically it simply means, OpenSSL stores our usernames, passwords and cookies, which are used widely on every popular websites now a day. Yes, even Facebook and Google. So, due to a small bug present in the OpenSSL, instead of sending you the limited information you have asked for, the server of the website you are using, basically is opening many other data to the person. Now, when this falls in the hands of a malicious and talented hacker, you can imagine, why your heart will be bleeding. Your online information will be easily available for use. But, do not worry, an easy solution is just change your password regularly and make sure they are not just your pet’s name or your phone number.


Technical Difficulties: This is the most common problem one can face. Websites go through online upgrades regularly making them unavailable for use. They also easily crash from time to time which delays your online banking experience. Everyday simple problems like a slow Internet connection or a slow computer can also create trouble.


Phishing Scams:  It is as fishy as it sounds. It operates by impersonating an online bank or a payment site and sending forged emails to unaware users. It is sent to users in forms of links, which redirect them to websites, which are designed to look like the login to a legitimate site. Here, they would ask you to update your personal information. This, of course leads to stolen identities and online frauds.


Terrible Customer Services: Yes, we have all faced them at one time or the other. We know it is much easier to talk to a person who is present in front of you, than the automated responses available on Customer Services. We sometimes, end up holding for hours as we wait to get our calls transferred to a bank executive. We say patience is a virtue in this case.


A side Note: Though problems are many, one cannot deny that banking has gone digital and it can only see brighter days from here. But, one must not tread without caution. It is always better to be safe than the sorry. We suggest you tick off the following checklist before you dive into the world of Digital Banking.


Valid Security Certificate: These basically are mechanisms by which one can certify if web pages are hosted by a real entity or not. If you encounter a warning where it says that a webpage does not have a VSC, do not share your personal information.


FDIC Insurance: Make sure before your start using a bank they have FDIC Insurance. If they do not have one, and the bank goes under, you will lose all your money with them. This insurance makes sure that your money is safe and that the bank is reliable.


In India, RBI has a subsidiary called the DICGC or Deposit Insurance and Credit Guarantee Corporation. It insures all bank deposits such as saving, current, recurring and fixed for upto Rs. 1 Lakh of each deposit in a bank.


Even with all the problems faced, Online Banking is the faster way forward. There is no denying how dependent we are becoming on it. Banks will continue to come up with newer tricks to make sure they stay relevant in the fast moving world of technology.


Arunima Dey is a digital marketeer by day and a script writer by night. A social media geek, self- proclaimed film nerd and a comic book aficionado. She loves to read, write, eat, cook, watch anime, daydream and randomly break into a song and dance. She spends half her waking hours on Netflix and Google. The other half, working. She believes in the big picture but feels it is the little pixels that make life beautiful. She sometimes randomly blurts out her thoughts at