The coronavirus has made every face-to-face task more difficult. With health risks and shutdown mandates, the shift to digital practices is increasingly common. In many industries, businesses are looking long-term with these shifts, experimenting with the way they can improve customer dynamics and options.
In banking, digitalization is essential. As businesses and the public struggle with conducting face-to-face business in a pandemic world, banking industries are attempting to accommodate their clients with mobile apps and digital options that will last for years to come.
Here, we will explore mobile apps, cybersecurity, and customer service practices as they apply to the future of digital banking.
Pew Research found that more than 9 in 10 millennials own smartphones. This number is likely even higher among the burgeoning Gen Z, which is coming into its own in terms of buying power and market base. Because of the essential and constant use of mobile technology in the lives of the younger generations, the banking industry was already focusing on its mobile platforms before the pandemic.
Mobile banking applications are emerging as a primary method of conducting financial business. Statista reports that 86% of U.S. banks now offer bill payment via a mobile app.
In the same report, it is indicated that 69.3% of millennials used mobile banking in 2018. These numbers show not just a fad or a trend, but a shift towards a future of digital banking in mobile form. With the exceptional convenience of conducting business from a smart device, financial institutions stand to please customers while increasing interest and revenues from their products.
Digital banking through mobile platforms already offer the following features, with more emerging every day:
- Account access
- Balance checks
- Bill pay
- Check cashing
- Money sending and receiving
- Cash advances
- Account opening, freezing, and closing
- Cashback credit programs
The use of mobile applications for digital banking will continue as millennial spending and payment preferences trend in that direction. With the ability for mobile apps to conduct business that would otherwise take a trip to an office and valuable time out of one’s day, these developments are the future of digital banking. Now, even electronic signatures can be used in banks and on mobile apps to legally secure documents you would otherwise need to schedule an appointment to handle.
The catch with all this ease and digitization, however, is managing the security threats that come with it.
Since the beginning of 2020, studies have shown a nearly 50% increase in the use of mobile banking. But along with this increase in use comes the doubling down of cyber attacks that threaten user data. Because of this, cybersecurity is a focus of digital banking currently and in the future.
With the millions in losses that data breaches can cause financial institutions and their clients, nothing is more important than securing customer data. The future of digital banking looks toward solutions in the following forms:
The technology that makes cryptocurrencies like Bitcoin possible is spreading throughout the tech industry. Blockchain allows users to interact with a virtual data marketplace from all over the world. Where normally such an open system might seem liable to compromise, blockchain remains secure due to its unique nature.
With cryptographic hashes linked together in data modules called blocks, users attempting to hack or alter information would be required to alter the whole chain of thousands if not millions of blocks. This is virtually impossible, as it would take immense computing power. Blockchain is a potential cybersecurity solution in the future of digital banking due to this ability to prevent theft and interference while maximizing accessibility.
When it comes to cybersecurity, little has as much potential as AI. With the ability to scan millions of data points and make decisions at rate and scale no team of humans could achieve, AI can better catch instances of fraud and unauthorized access.
The use of AI in digital banking cybersecurity will be a growing trend in the future, as financial institutions look for solutions to quickly catch and prevent fraud. AI makes this prevention possible through functions like machine learning, which allow the computer to adapt to its environment and make choices without being explicitly programmed to do so.
In digital banking, this means better security from cyber threats. AI can scan endpoints for signature verification and lockout discrepancies where needed. This significantly reduces the time it takes to locate and stop a data breach, potentially saving companies and individuals thousands to millions of dollars.
Seeing some of the most change across digital banking is the role of customer service. While it is unlikely that robots will take the jobs of all customer service agents within financial institutions, the reality is that automated processes can help customer satisfaction. In digital banking, customer service will change with the integration of this automation.
AI tools like chatbots can provide quick responses to customer inquiries where normally customers would be waiting on hold for a representative. These tools, using machine learning to parse through semantics, can assist customers with tasks like reporting fraud, navigating an app, and verifying their account history all with minimal customer and company effort.
In marketing and customer relations, automation can even allow for more personalized financial product recommendations or budgeting suggestions. These tools can help customers with their spending habits and help to build loyalty to the brand through innovative and intuitive customer outreach.
A Digital Future
Perhaps in the future, automation paired with our close relationships with mobile technology will allow for adaptive tools and digital signage that brings a virtual bank straight to our living rooms and offices. For now, we have innovations like blockchain technology and mobile banking applications that change the way we interact with financial institutions.
While it is impossible to predict the future, that of digital banking will almost surely be one steeped in mobile accessibility, enhanced cybersecurity, and automated customer service processes that will speed and simplify banking processes. This is great for the average user. For financial institutions, the adoption of these technologies sooner rather than later will help them thrive in the mobile world.
The original version of this article was first published on Future of Work.