Digital banking, in its earliest form, has been an option for financial organizations and their customers since the 80s and during the launch of the early internet and digital networks. It grew in popularity in the last decade, but the onset of the COVID-19 pandemic and the succeeding lockdowns have highlighted the need for the much wider and faster adoption of digital banking. Using digital channels consumers and businesses of all sizes were able to continue carrying out and completing their transactions despite the changing lockdown restrictions. During this time, many consumers and retailers alike grew to appreciate the convenience of having complete control over their finances at the tip of their fingers. Consequently, this has helped turn digital channels into a basic payment option for individuals and organizations who need to complete financial transactions.
In 2021, the total amount of global transactions that were carried out using digital channels reached USD 6.752 trillion. Of this amount, USD 4.176 trillion came from digital commerce, USD 2.466 trillion were from mobile point-of-sale payments, and USD 108.90 billion came from digital remittances. These numbers are expected to continue to rise in the coming years, with the predicted transaction value of digital payments reaching USD 7.86 trillion and USD 10.715 trillion by 2022 and 2025, respectively.
Realizing the Potential of Digital Banking Technology
To accommodate the major shift to digital banking services, financial institutions should make use of banking software that is designed for the digital age. Used in conjunction with other advanced technologies that harness data, a modern banking program will play a key role in empowering banks to respond to the changing needs of the market and take these institutions a step closer to making the following possibilities a reality.
The New Heights That Can Be Achieved with Agile Data Architecture
Siloed data architecture used to suffice for the purpose of managing data in banks, but this is no longer the case in the digital age. This system of managing information is not conducive to sharing and collaboration, and using data silos often leads to the development of inconsistencies and inaccuracies. These days, financial institutions have options other than data silos. Third-party service providers like Oracle are working with many bank architecture concepts that address core infrastructure concerns and suit the particular goals of their clients. Among the features and capabilities that these new architecture concepts offer banks are consumption-ready microservices and pre-integrated components, which can be easily deployed for the use of digital banking customers.
In addition, these well-designed systems can be deployed quickly and easily. They can be implemented on cloud and on-premise, and this extra level of flexibility empowers banks to acquire core functionalities quickly and easily. The swiftness of this process removes any impediment that may prevent banks from responding to the needs of the changing market.
The Opportunities Offered by Open, Innovative Banking Ecosystems
Many digital transactions need to go through multiple financial institutions so that they can be completed. Banks make use of different formats, systems, and standards, and navigating these variances while the transaction is being processed can take a lot of time. This, in turn, can compromise the consistency of the cost of each transaction and erode the confidence that consumers have in the banking service that they use.
The good news is that Application Programming Interfaces (APIs), which are designed to augment interoperability and integration between different systems and platforms, can help banks work around this issue. Banks that deal with multiple third-party services providers now have the option to use end-to-end API management programs, making it much easier and more cost-effective for them to maintain their operations and fulfill the service-level agreement (SLA) time that they pledged to their customers. At the same time, using end-to-end API management solutions will eliminate the inconsistencies in the transaction process and reduce the cost of completing them.
Building an Experience-Centric Approach to Retail and Corporate Banking
There’s a common fear that digital innovations will eliminate what makes everyday transactions human, but this technology is in fact at the forefront of providing everyday consumers with customized experiences. This can be done by collecting consumer data and using advanced algorithms, machine learning, and process automation, among other innovations. Machine learning, in particular, can help financial institutions understand their clients better, and this can help them design products and services that are better suited to the needs of their market. The wide adoption of these technologies will drive the shift from transactional experiences to a more relationship-based engagement with every customer.
The future of banking is digital, and banks that can prepare for a more tech-savvy market will be able to reap the benefits of this shift. Now more than ever, these organizations should be making every effort to anticipate the changes brought about by digital innovation in the financial services sector. (PR)
