- Cecilia Escobar
Harness the Potential: Exploring the Advantages and Expansion of Digital Banking.
The evolution of technology has led to digital, online, and mobile banking transforming the banking sector by simplifying transactions such as bill payments, money transfers from anywhere and with flexible hours, check deposits, online purchases, and checking your account balance, all with just a click on your mobile phone, computer, or any other digital medium.
The benefits of digital banking
One of the major and growing benefits of digital banking since the COVID-19 pandemic has been financial inclusion.
Financial inclusion refers to individuals and businesses having access to useful and affordable financial products and services that meet their needs, such as transactions, payments, savings, credit, and insurance, while also considering responsibility and sustainability.
Customer service is available 24 hours a day, 365 days a year through most service channels.
Time-saving, as there is no longer a need to wait for office hours, and matters can be attended to even on holidays. There is no need to go to branches and avoid long waiting queues.
Financial savings and control, as digital banking sometimes offers zero fees for certain transactions. You can access your transactions and balances, and block or enable your debit and credit cards without intermediaries.
Reminders, in this rapidly changing world, reminders, notifications, and alerts from your digital devices through digital banking are always helpful. You can even schedule automatic payments.
Online shopping, regardless of the time, by clicking, you can get a book, a television, pay for a course, or make donations to any organization.
Avoiding counterfeit money, by having activity in your account through digital banking, you can avoid counterfeit money. It is important to note that, due to the constantly changing digital era, physical money is becoming increasingly archaic.
In addition to the benefits, digital banking offers other significant advantages:
Global access: You can access your banking services anytime and from anywhere, as long as you have an internet connection. This is particularly useful when traveling or living abroad, as you are not limited by the physical location of a bank branch.
Lower cost: Digital banking tends to have lower costs compared to traditional banking services. By avoiding the need to maintain physical branches and additional staff, digital banks can offer more competitive fees and, in some cases, even eliminate certain charges.
Greater convenience: Conducting digital banking transactions is convenient and time-saving. You can make payments, transfers, and other banking operations from the comfort of your home or wherever you are, without the need to physically visit a bank branch.
Integration with other platforms and services: Digital banking can easily integrate with other online applications and services, allowing you to manage your finances more comprehensively. For example, you can link your bank account with personal financial management apps, online investment services, or digital payment platforms.
Personalized services: Digital banks often offer a personalized experience based on your needs and preferences. They can use algorithms and data analysis to provide tailored financial recommendations based on your specific situation, helping you make more informed decisions about your finances.
Continual innovation: Digital banking is constantly evolving and regularly introduces new features and services. This includes emerging technologies such as NFC (Near Field Communication) payments, biometric recognition for enhanced security, chatbots, and virtual assistants to provide customer support, among other technological advancements that enhance the online banking experience.
In summary, digital banking provides convenient access, reduced costs, personalization, and ongoing innovation, making it an attractive option for those seeking modern and efficient banking experience.
Digital security
Security measures for users of digital banking are increasing and being reinforced as technology advances. We would like to say that digital banking is completely secure, but that is far from the truth.
However, we can affirm that financial institutions, intermediaries, and any type of online transaction have sufficient measures for users to navigate safely and reliably when using their online financial services.
Some measures to protect users from hackers include:
Login details. One of the first security filters is that personal data is required when logging into any platform. The password is extremely important. As a security measure, users are asked to choose an alphanumeric chain with special characters, and the session can only be opened from one device at a time. To assist with security, Forbes Advisor recommends choosing long passwords and avoiding common sequences. It is important to avoid personal information such as name and date of birth and not store information.
Offer encrypted data. Avoid using public Wi-Fi, as you may encounter unencrypted networks and fake access points. You can enable a private network.
Opt for receiving banking alerts. This not only helps you remember any pending payments but also assists you when reporting potentially fraudulent or suspicious activities.
Forbes Advisor offers other security protocols such as:
128 or 256-bit data encryption.
Encrypted email messaging.
Automatic logout functionality for mobile and online banking.
Two-factor authentication.
Continuous account monitoring.
Electronic signature verification.
Digital Banking and Delivery Service
The term "delivery" refers to the delivery service offered by a retailer to deliver their products to the buyer's home. During the pandemic, the use of delivery apps and services was a lifesaver for local businesses, small and large companies, and international chains.
Europapress published figures on the growth of the delivery modality, claiming significant growth in Spain during the COVID pandemic, reaching a market share of 7% of the total business volume in the hospitality sector.
On the other hand, in Latin America, things are slightly different. According to a study by Statista, the food delivery service stood out during 2020 and 2021 with a growth of 20% to approximately $5.4 billion. These achievements have made this business a disruptor within corporate finance and startups, paving the way for SMEs and local businesses.
For the United States, the food delivery service reached $18.5 billion in 2020, according to a report by Expert Market Research. There is a probability that the market will grow in the next 5 years with a 10.5% increase, reaching a value of $33.7 billion.
User Preferences in Digital Banking
Forbes Advisor published the results of the Ipsos-Forbes Advisor US Consumer Confidence Survey, which indicated that 78% of Americans prefer digital banking, 41% conduct their transactions through mobile apps, and 37% of users prefer to use the website.
These data are surprising considering that the United States is considered the birthplace of capitalism. One would expect a higher percentage of preference for digital banking due to the benefits it provides in terms of speed and time savings.
On the other hand, the neighbors of the United States in Latin America present different figures. A study by the Inter-American Development Bank (IDB) "Accelerating Digital Payments in Latin America and the Caribbean (LAC)" published in 2022 indicates that traditional payment methods are still stronger than digital ones, although there has been an increase in financial services infrastructure.
According to their data, as of 2020, only 45% of the population in Latin America and the Caribbean did not have a bank account, and 80% did not have credit cards.
Despite these very low figures in financial activity in LAC, there has been a considerable increase in the digitization of commerce. They highlight the rise of local trade and SMEs. In 2021, approximately 60% of the total volume of e-commerce transactions was carried out via mobile phones.
According to Statista's data in their publication "Percentage of Digital Banking Users by Country in the European Union in 2020," Denmark and Finland had the highest percentage of users in digital banking and online services, at 94% and 92% respectively. They were followed by the Netherlands with 85%, Sweden with 85%, Estonia with 80%, the UK with 80%, Belgium with 75%, and Luxembourg with 71%.
What should we focus on?
We believe that digital banking is a necessary aid in these changing times. The evolution of the local economy, small and medium-sized enterprises, the new needs of users, and their international impact require great care in the area of digital security.
We must not lose sight of the fact that there is still much to be done to have greater security, such as creating efficient regulatory practices in the financial sector and continuous innovation. In other words, creating standards to promote strong financial inclusion and generate trust in financial institutions.