Conventional Banks Forced To Go Digital

Future of Banking – Conventional Banks Go Digital

  • May 8, 2020
  • 3 min read
  • 47 reads

Is conventional banking as we know it gone for good?
The demand for digital banking has increased since the coronavirus pandemic.

Many states being completely shut for business apart from essential workers has made conventional banking frustrating for not only the customers but the employees as well. Social distancing across the nation has also impacted how banks do in-person transactions.

Banks have had to change their face to face service to digital options, but many are not ready for the change.

New Digital Banking Demand

There is a new demand on the financial industry as a whole. Coronavirus pandemic has bought with it pressure for conventional financial organizations to change the way they do business quickly.

But maybe it’s not a bad thing.  Bank digitization has been heading our way for a long time. The pandemic has sped up the process.

Pre adapted online organizations will flourish while others suffer the disadvantage of being too late to the digital party.

Benefits Of Digital Banks

  • 24/7 access to your funds
  • No or Low Fees
  • Generally higher interest rates
  • No bank lines

Most banks are not yet ready to fully integrate or implement a completely online system. Opening new accounts, cashing checks, and authorizing identities are most commonly processed in person.

Identify fraud with complete online applications is a concern for the industry. Many internal policies will have to change quickly to keep up with desperate customer demands.

The majority of customers still use a branch to open a bank account or to get a personal loan. However, more and more customers put less importance on branches and locations than ever before.

PWC consumer digital banking survey found that the reliance on an in-person bank was still important to 61% of those surveyed. There was less reliance on in-person banking in younger demographics.

COVID-19 is forcing a change in the way banks are run. Conventional banks and credit unions are not prepared to go digital without some use of their branches.

When the government sends out the economic impact payment, there will be millions of customers needing branch service to deposit or cash out the check. While most will have the funds transferred directly into their bank account, many will not have that facility.

What Is Digital Banking

Digital banking is the digitalization of all banking services to not only reduce risk but also to improve efficiency and customer experience. Customers will be able to open accounts, loan, transfer, make payments, and withdraws all from their smartphones.

Some banks and credit unions were on the ball and ready to go digital. Cost reduction and security have been significant driving motivators for banks and the like.

Banks, on average, spend $350 per customer account to keep open in overheads and running costs. Going online will reduce the cost of doing business.

“Digital banking makes life easier for consumers. People are increasingly enjoying the simplicity of managing all their finances in one place, setting up automatic payments or making deposits, anytime and anywhere, without the need to queue in a bank.”Ian Bradbury, chief technology officer – Fujitsu

The majority of consumers are becoming increasingly comfortable with using online bank facilities.

The younger generations of customers are still more likely to prefer digital banking than older. They are most likely to use online lending. They would prefer to borrow or open accounts based on the recommendation of family.

Digital lending has been available for a long time. Younger generations are likely to apply for an online loan. The benefit of moving away from conventional finance facilities is that it enables you to shop around to ensure you are getting the best deal.
online loan rates here

What To Look For In A Digital Bank

  • Look for low or no account or transaction fees.
  • Read the Fine Print – Make sure that you read over all contracts and ensure you know what fees are associated with each account if any.
  • The sudden urge to go digital will increase the number of people looking for online alternatives to their general bricks and mortar bank.
  • Look at their website and app – are they easy for you to navigate, do they offer everything you need, transfers, payments, loan applications.

Have you made the change from conventional banking to digital? Comment below.

Author Kimberley Smyth

Kimberley is the US Country Manager for Financer.com. She has gained years of experience in small business management and has two successful start-ups under her belt. She now focuses her energy on helping others achieve financial freedom through smart money management and investment opportunities.

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Last Updated: June 1, 2020

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