Understanding The Future of Digital Banking

The transition from traditional banking in brick and mortar buildings to digital banking online has forever changed the banking industry, and the way money is managed and moved between individuals, merchants and financial institutions. 

Financial institutions without a digital presence to provide customers digital banking services will not be able to provide the level of service the majority of customers have come to expect from banks and every entity that conducts financial transactions. 

Business and retail banking customers are looking for the best personalized digital banking experience that they can access anytime and anywhere. Individuals are looking for the same so they can manage and control their finances on the go without having to visit their physical bank branch.  

Digital banking has allowed for banks to serve more customers than ever before through as many different online channels as possible, all while providing a growing number of real-time and same-day banking services.

What Is Digital Banking?

Digital banking involves taking traditional banking services previously only available in brick and mortar banks, like money deposits, withdrawals, transfers or account management, and digitizing them so they can be completed electronically via online channels. 

Banks and credit unions have gradually made the adaptation to their banking services, and improved their digital technologies through the years as digital banking has evolved into the banking industry norm. 

Digital banking services like payment tools are being made available through mobile devices over the past decade bolstered this digitization of banking services, and created the concept of mobile banking that’s become essential to the industry. 

What's the Difference Between Digital Banking and Online Banking?

Digital banking and online banking are essentially the same, but there is one key difference between the two.

Digital banking seeks to digitize all services a financial institution traditionally has made in physical branches to deliver customer services more conveniently than ever. 

Online banking seeks to digitize the same services, but is limited in the types of services that can be provided to customers. Physical banks now typically offer online banking services that keep customers from needing to visit actual branches, but some core banking services like opening an account or procuring a loan are required to be completed in person. Digital banking allows for all banking services to be completed remotely and electronically. 

Is Digital Banking Safe?

Digital banking has its unique risks, but it is just as, if not more, secure than traditional banks. Digital banks must meet the same federal regulations and requirements as traditional banks. 

Digital banks also leverage data via the open banking network of financial data that enables the safe and secure movement of money between financial institutions. Using artificial intelligence and machine learning algorithms, digital banking platforms screen transactions for fraud almost instantly. The level of mitigated risk digital banking provides customers over concerns about privacy gives them increased peace of mind their finances are secure. 

What Are the Benefits of Digital Banking?

Digital banking offers customers a number of advantages over traditional banking, like improved efficiencies while managing their finances, cost-savings due to limited fees for making payments and deposits, greater agility to bank on the go, and enhanced security for a superior customer experience.

The Future of Digital Banking Services

Digital banking is always evolving, and the quality of digital banking services is only getting better and better through automated processes, new technologies, and more. Some trends and emerging technologies in the digital banking industry include: 

  1. Artificial Intelligence (AI) 

AI is a collective set of data intelligence trained to repeatedly complete human-like tasks like checking an account balance. If there is an error in the process, a human operator “corrects” it forever, because AI never makes the same mistakes twice since it learns over time. AI processes are constantly refined, and help customers with banking assistance services like calculating a budget based on spending habits and other personal financial wellness tools. 

  1. Big Data

Big data fuels the digital banking industry because it is open access and available for FinTech innovators and data science experts at companies like Envestnet | Yodlee to enrich and refine over time. 

The open banking network also gives customers more control over who has access to their financial data. A customer can use their financial data to authorize payments and deposits, get budgeting tips, or gain insight on the best time to make specific investments. 

  1. Increased Personalization

Digital banking makes banking personal for every user. Their financial data is uniquely personal to them, and they can give access to third party APIs via secure portals to leverage the data and provide them highly personable financial guidance across all of their banking needs. 

  1. Blockchain

This cryptocurrency technology leverages “blocks” of data that are sequenced records of various specific transactions that get stored into a blockchain database. Cryptocurrency allows customers to make purchases or transfer funds to others online without the same intermediaries in traditional banking, enabling them with more control over their finances and who has access to their data. 

Make sure to check out our on-demand webinar on this topic.

Digital Banking Solutions From Yodlee

FinTech companies like Envestnet | Yodlee offers a variety of digital banking solutions customers can leverage.  Envestnet | Yodlee’s banking solutions empower financial institutions, FinTech innovators, entrepreneurs and developers with data solutions that meet their specific banking needs. 

Explore Digital Banking Solutions From Envestnet | Yodlee