In 2020, traditional retail and commercial banking institutions globally were forced to hurriedly make changes to technology and their working models. The urgent need for virtual customer service and work-from-home systems exploded into the industry with no warning. Until then, traditional retail banks considered these endeavors as cost-prohibitive and risky although the digital banking trend was already dominating in some markets. The general reluctance by the traditional institutions to evolve was that there’s room for everyone.
The retail and commercial banking industry realizes now that digital-savvy customers emerged out of the most unlikely candidates during the pandemic. Thus, the dinosaurs of the banking industry have to face the inevitable; Digital banking is where the post-pandemic industry is at so they need to lead the way or get out of the way. Many see that the long-term benefit of digitized banking, in addition to meeting the customer demand, is that technology actually reduces costs. Therefore, they are utilizing blockchain technology and artificial intelligence to reconceptualize their approach to stay relevant in the industry.
Online banking was introduced years ago, banks and their customers adapted and used it primarily for mundane service tasks such as a method to receive monthly statements, bill payments, and transferring money between accounts. However, mobile banking is the frontrunner as the preferred method of banking in 2021, with benefits and features driven by customer demand.
So, welcome to Banking 2021, where digitized banking enables data-processing and back-end administrative tasks to become automated. The self-service customer end-to-end banking options have evolved from basic transactions and statement review with online banking to now include complete loan servicing, advanced money management services, account access at other financial institutions, peer to peer payment, and up-to-the-minute credit scores, all in minutes from a handheld smart device using facial recognition authentication with mobile banking.
The curb-appeal of a brick & mortar bank that is saturated with function-specific employees is no longer important to a customer. In fact, digital-only banks, also known as neobanks, have no physical locations, therefore they function exclusively on a digital platform. Neobanks are transcending traditional banking options due to their ability to execute routine and specialty banking transactions on command via a handheld device. They are cost-efficient and the savings and convenience are passed along to the customers, often without service fees. It is unlikely that traditional banks will be eliminated, however, digital banking and neobanks are the new normal…or neo-normal.
Written by Kourtney Manley, Business Analyst at OnlineApplication