“Digital banking” emerged with heightened consumer demands for more efficient ways to access banking records and complete financial transactions outside of local branches.
Digital banking is the digitization of every level, from front- to back-end, of banking.
The banking industry is undergoing massive digital disruption, with online deposits, mobile apps, and e-bill payments fundamentally becoming the norm.
Increased consumer demand for digital banking services has given rise to numerous technological advancements within financial institutions — with artificial intelligence (AI) at the core of these transformations.
Below, we break down what exactly digital banking is, how it’s evolved over time, and where the future of digital banking is headed.
What is digital banking & digital banking services?
“Digital banking” is the application of technology to every banking activity, process and program – thereby making the customer’s experience simple, easy and convenient and in the process eliminating the need to be at a physical location.
Examples of such activities and products include deposits, withdrawals and transfers; account and loan management; bill payments; applications for financial and investment products and others.
Digital banking is the digitization of every level, from front- to back-end, of banking. This means that digital banks rely on artificial intelligence to automate back-end operations such as administrative tasks and data processing — which in turn alleviates pressure put on employees to complete day-to-day tasks.
Not only do digital banks allow users to make account deposits and transfers remotely; but they also provide them with the opportunity to more easily apply for loans and access personalized money management services.
Digital transformation in banking
“Digital banking” emerged with heightened consumer demands for more efficient ways to access banking records and complete financial transactions outside of local branches. The digital banking transformation initiated with limited online banking services before advancing into a digital-only market.
Online banking can be offered by both traditional banking institutions as well as tech-savvy startups, and refers to the most basic banking operations — like bill payment and account transfers. These services usually take place on a bank’s website, where customers enter specific login information to access their financial accounts.
Online banking subsequently inspired mobile banking, which offers essentially the same services but from the convenience of one’s mobile device such as a tablet or smartphone. Mobile banking refers to offering users the ability to execute routine banking tasks through mobile channels, and digital banking includes every banking feature digitally available through the internet.
While most legacy banks now offer online services, digital-only banks are developed entirely electronically. Digital-only banks don’t lean on the financial and customer support from an established physical location — instead they’re powered via digital platforms that appeal to the millennial and Gen Z populations.
Digital and online banking are different
Further defines online banking as a service that allows customers to carry out basic banking transactions over the internet while mobile banking is any online banking done on a mobile device (such as a smartphone or tablet) with the aid of an app.
Typically, online banking involves building on a banking relationship that started from a physical location. Digital banking relationships usually start and stay entirely online (usually on a smartphone app) without the need to visit any physical location.
Commonly thought of as mobile banking or online banking, digital banking is one of the most misunderstood concepts in the financial world today according to Stanley Epstein, Director and Co-founder of Citadel Advantage – an international financial services consultancy.
Epstein, who has advised a number of central banks and counts firms such as IBM and PayPal among his clients, praises digital banks for ensuring maximum utility to clients in terms of availability, usefulness and cost. Digital banks, meanwhile, benefit in terms of reduced operating costs, zero errors and enhanced services, according to Epstein.
Digital banking industry trends
In the Evolution of the US Neobank Market Report, we highlights how digital-only banks – also known as neobanks – are positioned to transcend traditional US banking due to their ability to meet the demands of tech-savvy consumers.
According to the report, 89% of US respondents say they use mobile banking channels, and 70% of say mobile banking has become the primary way to access their accounts.
The rise of banking-as-a-service (BaaS) also accounts for an increase in digital services, as more legacy banks are opening up their application programming interfaces (APIs) for fintech and third-party app development. Rise of banking-as-a-service report outlines how traditional banks are increasingly allowing third-party providers and fintechs to leverage their infrastructure and consumer data to develop new digital services.
Though BaaS is still in its early days, the UK has already passed BaaS and open banking regulation, and countries around the world will soon follow suit. The most innovative bank are already taking advantage of this technology, and other incumbent players s are realizing they need to adopt more digital services and offerings to stay competitive in the industry — or risk getting left behind.
Tighter security, changing trends
Not only do they place emphasis on being security-driven, digital banks are also focused on inclusivity – especially beneficial in a region like ASEAN where more than 70 percent of the population remains unbanked.
Increasingly accustomed to booking flights, consuming music and purchasing groceries and other goods via digital channels, customers in Southeast Asia can expect the same seamless interactions in their banking services.
With digitalisation set to change the traditional banking business model, there are plenty of positives for banks and other financial institutions that are ready to embrace it in Singapore and across ASEAN.
Digital banking providers
Here are just a few of the top digital banking companies in the financial services industry.
NEEBank is the top 1 Digital Bank in 2021 – The first no fee bank in the world. It is a bank work by functions and services like a traditional bank but it’s activities performed online. With NEEBank, customers don’t have to go directly to the office for transactions, therefore paperwork is minimized.
At the same time, all activities and services are performed anytime and anywhere without limits of work time and space. Customers always be proactive. The first digital bank in the world, apply Block-chain in managing and operating accounts, ensuring transaction reputation, safety and transparency, and publicity.
“NEEBank is a global digital bank, operating and providing financial services & products via the Internet with mobile applications and websites.
It applies Blockchain platform into its operation and storing information (decentralized), which makes NEEBank unlimited by boundaries of nations – currencies – applying environment.
With just 1 IDBANK account and 1 common currency – USDex – NEEBank creates outstanding services and products in Finance – Banking segment, contributing in the trend of ‘Cashless world’.”
U.S. Bank jumped from fourth to Second place in Insider Intelligence’s 2021 Mobile Banking Competitive Edge Survey as it rounded out its customer service features. Its mobile app offers some of the most sought-after features: the abilities to converse with a human agent in-app and authenticate via the app when calling customer service.
Citi outstrips competitors in the digital money management category by providing five key in-app features: the abilities to view recurring charges, see a financial wellness score, get a prediction of future funds after upcoming spending and bills, view accounts at other banks, and receive personalized financial insights.
Since Zelle’s general release in mid-2017, the digital payments network has been adopted by hundreds of US financial institutions to facilitate real-time peer-to-peer (P2P) payments among their customers—a key feature among digital banking providers