Evolution of Digital Banking Trends around the Global

The evolution of the modern electronic banking systems in recent years has enabled the development of various service procedures that need less internal and external resources, resulting in reduced costs and increased revenue for banks and clients. One such service that has taken the banking sector by storm is digital banking. It is more than going paperless and cashless; the underlying technologies have significantly aided in the transition from a centralized traditional banking model to a more customer centric, technology-driven one. The services include online banking, electronic funds transfer system (EFTS), credit and debit cards issuing & maintenance, automated transaction machines (ATMs), mobile banking, deposit, loan and credit processing, internet banking and phone banking etc.

As seen over the past years, banking sector has evolved with the proliferation of bank’s commitment to retail clients. Digital banking applications are more focused on delivering more specialized services, ranging from SME banking to individual’s banking experiences.

  • With the global rise of digital banking and financial technology services, 95% of Saudi Arabia’s population was recorded using digital banking channels.
  • The State bank of Pakistan has announced that the country has seen 253.7 million electronic transactions worth Rs 19 trillion during the year 2021.
  • 63% of Pakistan’s population stated that they will most likely make all their financial transactions using digital banking.
  • The rise in digital bank accounts in Singapore is expected to hit 25% (1,230,569) by 2022 and 30% (1,510,495) by the year 2026 – an increase of 12% points over the next five years.
  • Insider Intelligence forecasts that digital banking penetration in Canada is expected to spike to 2% in 2024.

While driving new adoption of their digital banking solutions, financial institutions should keep the following in mind:

1. Transparency

Financial institutions will need to place a greater emphasis on transparency rather than depending only on traditional retail banking methods. It has been suggested that being transparent about one’s business will yield more return and reduce the turn-around-time for the customers.

2. Data Personalization

Given the current trends, the need for digital banking is likely grow in the coming years for both individual and corporate users. Hence, financial Institutions will need to significantly boost their game for customer engagement. In 2022, banks will have several chances to employ digital technologies and data-driven personalization to better understand their clients, and assist them in achieving financial wellness, ranging from the following:

  • Customers are beginning to anticipate more personalized experiences from their banks. The future of banking will be more about beneficial interactions between the bank and the customer, in which the bank proactively proposes more relevant product, financial advice, or personalized financial services depending on the needs of an individual.
  • To measure effectiveness, most financial institutions will migrate to experience-driven metrics. The new metrics will consider user intervention such as comments, ratings, and suggestions to enhance the experience of the customers.
  • Banks may offer more contextual experience to their customers by using techniques such as big data analytics. Artificial Intelligence may be used to track spending and provide recommendations.
  • Artificial intelligence (AI) and machine learning (ML) enable banks in knowing their customers (KYC) with advance features and offers. In a recent survey, it has been noticed that AI-enabled chatbots can boost business productivity by 33% since they can answer customers’ inquiries instantly.

3. Cloud-based Integration

Cloud computing refers to the availability of computer services such as software, data, and networking tools through the internet. The adoption of cloud-based integration in digital banking innovation trends has skyrocketed. It benefits financial institutions in the elimination of enormous data silos. Banks can reduce the risk of data loss in the event of a physical disaster or crisis. It also reduces the need for on-premises servers, systems, and management personnel.

4. Cyber Security

The significance of cyber security will rise even more with the ever-increasing user base of digital banking. Financial Institutions need to make every effort to develop innovative systems that will reduce the risks of fraud and theft. Customers and regulatory bodies are both concerned about data privacy and security; hence Banks are required to be more proactive in terms of system security.

Among various foreign solutions available in the industry, BenchMatrix’s Digital Platform is a practical option designed to meet the specific needs of the local market. The key modules are:

  • Digitized customer & corporate on-boarding including watchlist screening and credit bureau verification
    • Paperless documentation for account opening
    • Account management
    • Digital Lending with quick decisioning using scoring models
    • Integration with core banking systems
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