Digital Banking- Challenges & Opportunities in Future

Digitalisation has truly revolutionised the banking sector. Online banking has made it extremely easy for banks to offer banking services. Now customers have speedy and convenient banking at their fingertips. Can you imagine that there was a day when you had to drive to the bank physically and wait in a queue just to check your account balance? Today, you can check your account balance within your comfort in as little as ten seconds. The Indian customers have welcomed the digitalisation in banking with open hands. A huge number of adults engage daily in online banking.

While online banking is convenient to both banks and consumers, it has some specific challenges ranging from changing technology to habitual factors. And any bank aspiring to ride on the wave of online banking adoption must be aware of such issues.

The challenges in digital banking can only be efficiently navigated when you know them.

Below are the major challenges faced by the banking industry:

• Changing banking habits of customers

• Lack of cyber security

Security is the first thing that one thinks of in matters involving money. There are customers that are not willing to partake in any activity that puts their hard-earned money at risk. India is yet to have a unified cyber security law. However, there are some strict regulations in place to enforce cyber security like the DPSC security controls that enables customers to securely make digital payments.

• Technical challenges

Another challenge to banking is the speed at which new technologies are becoming necessary. Most bank networks have a massive size and scale and it may get difficult to update their technology time and again. It is critical that a bank’s security measures are updated quickly to counter constantly changing threats of cyberthieves.

• Lack of human touch

While digital banking is largely a success, still a good portion of people don’t trust it. Some people do not trust digital banking unless the bank has a brick-and-mortar presence. This factor can make it difficult for banking to become 100% digitised.

• Changing banking landscape

Digital-only banks and fintech are starting to offer many banking solutions with a seamless banking experience to match with the changing lifestyle requirements of people . Legacy banks must also adopt digital transformation to be efficient online.

• Slow cross-border transactions

Cross-border transactions play a vital role in global trade. Historically, cross-border payments have been incompetent, slow and expensive because of traditional infrastructure and non-uniform development confusing cross-border transactions. Latest technology has to be implemented across banks to quicken cross-border transactions.

• Multi-currency and payment methods

The customers use multiple currencies and payment methods like Credit Card, Debit Card, bank transfers in different currencies, which is difficult for banks to deal with. The global e-commerce has aggravated this problem as the digital banking sector has to integrate different e-wallets and mobile payment methods as well.

• Lack of awareness in senior citizens

Most senior citizens lack knowledge in using digital technology and can’t access the internet easily, making it challenging for the banks to serve them.

While digital banking is slowly taking shape in the country, what’s good is that some banks have already gone digital and are setting examples for older banks.

Below are the opportunities available for banks in digital banking:

• Increased profits and improved outputs

Today, anyone can deposit or withdraw money from their bank accounts anytime and don’t need to wait for any specific time. Digital banking has enabled banks to offer round-the-clock services to their customers, which has led to better customer experiences.

• Increase in customer number

Almost every banking customer is going the digital way. And since the upcoming generations are going to be more digitised, digital banking is definitely going to be peoples’ favourite way to bank, adding more and more customers in the mix.

• Banking 24/7

Mobile banking is the most-preferred medium to bank, which is supposed to be the future of digital banking. As people take their phones everywhere and use them for everything, mobile banking is an excellent opportunity for banks to offer banking 24/7 and generate revenues from multiple transactions.

• More application for bank products and services

With most banking products and services getting online, their use has also increased. In this way digital banking is finding more and more applications.

• Improved service time

Businesses need money and need it to move around fast. Digital banking is fairly capable of moving money fast, which benefits both customers and financial institutions.

• Better market predictions

Digital banking has been one of the most crucial developments in the finance industry. However, along with its many benefits, we also have many key challenges to deal with. Changing consumer habits as well as continuous technical upgradations are some of the major challenges banks must address to succeed in digital banking.