The future of banking is already upon us. Termed as “digital banking”, this dream come true puts focus on banking customers, empowers them to take more control of their finances, and minimizes the level of stress and the number of actions users make to perform banking operations.
Digital Banking Definition
Digital banking can be referred to as the complete integration/use of digital technologies for providing banking services. The concept results in high-end service delivery, increased customer convenience, and quick problem resolution.
Moreover, the introduction of digital banking makes it possible for financial institutions to improve their standards and ensure a higher level of security. This is significant considering the risk and impact of cyberattacks in today’s world.
All in all, digital banking is quickly replacing online banking. Its success as the new norm for banking and financial services pays huge dividends to the providers and users of such services.
Features of Digital Banking
Digital banking, being an innovative aspect of banking, comprises some pretty remarkable features. These features can be described as:
Multi-Platform Operation and Access:
Banking operations have to function optimally across multiple platforms. Why? Because users are increasingly interested in that. Cross-platform functionality means you can pick up a task or proceed with a transaction when on a different digital device.
For instance, customer A may own a mobile phone and tablet and on getting to a checkout, they use a payment terminal to complete a transaction which was started on one of their own devices. Such flexibility fosters shorter delays between transactions. It ultimately increases productivity since the user quickly completes their task and moves on to something else.
That aside, the multi-platform feature is important for security. For example, a customer who lost their mobile device and believes their bank app might be compromised, can easily access the same app on their home desktop and change their password or block all access.
The good news is that digital banking knits together payment terminals, ATMs, mobile and desktop platforms, and just about any platform you can think of.
Advanced Services:
Advanced services such as credit monitoring, financial management and investment options are some of the perks of digital banking.
These services outpace those offered in online banking.
Focus on the Best Possible User Experience:
User experience has always been at the forefront of the banking and financial industry. You surely can’t afford to treat customers wrongly while they commit their funds to you. And how do today’s banks foster a good user experience? By providing open channels of communication, quickly resolving complaints, and continuously building towards customer interests and preferences.
With digital banking, the initiative to do the above is matched with actions. Platforms now analyse user activity to understand their most popular choices, auto-complete actions, and make relevant suggestions. This makes the end goal of improving user experience a reality.
Technology Integration:
Digital banking outrightly depends on the utilization of digital devices for banking. So, there is a deep relationship between this form of banking and technologies in general.
A lot of innovations are focused on serving the banking industry. That explains why you can now find deposit ATMs, cardless banking terminals, and the like. This is good for the industry. But what is better is that tech integrations continue to expand, covering aspects such as banking security, and service reliability.
The Digital Banking Scene in Nigeria
The Central Bank of Nigeria has been a major force behind advancements in the banking industry. From replacing magnetic strip ATM cards with EMV cards to enforcing the recapitalisation of banks, the institution has taken transformative steps to drive banks towards digitalisation.
One less obvious result of the CBN’s effort is an increase in the number of online banks such as Kuda, Opay, and VBank. According to CIT Vericash article, over 16 of the 18 neobanks (online banks) in Africa were primarily operating in Nigeria and South Africa as of 2021.
These neobanks stand out from traditional banks since they operate completely remotely, without owning any physical branches. They are specialized institutions known for strikingly low fees, high savings interest and rewards, as well as innovative products and consistent service.
Advantages of Digital Banking
Enhanced Security:
Both traditional and online banking processes are secure. However, with the introduction of digital banking, the safe gets safer. Biometrics, two-factor authentication (2FA), and multi-factor authentication (MFA) are a few things that make this possible.
Technologies such as these ensure that users are properly authenticated by checking whether they are eligible to access specific services or data. In addition, these same technologies perform user verification by checking the identity of users or customers.
Increased Accessibility:
Many technologies integrated into the digital banking system improve how people access and utilise financial services.
For example, residents in remote parts of Nigeria can access digital banking services and avoid travelling long distances to a bank branch.
In the same vein, platforms linked to digital banks may allow users to change their preferred language or increase the size of text on the screen. These features make using the platform a breeze.
Resource Optimization:
We’re sure you’ve come across Leo the UBA chatbot - and many others.
These software interact with customers to help resolve complaints or to assist them access certain services. They are generally becoming smarter, providing faster and more helpful responses. In addition, they can attend to multiple customers at a time.
The characteristics of chatbots and many other technologies introduced by digital banking make it possible for banks themselves to allocate more resources to demanding areas/tasks.
For example, let’s say a neobank has set up a chatbot that addresses customer queries efficiently. In this case, the human customer care agents can be tasked with other duties, increasing the overall productivity of the bank.
Disadvantages of Digital Banking
Technical Issues:
Technical issues such as system downtimes and malfunctions could blur out the benefits of digital banking. These problems quickly become a big concern if they are recurring or occur during odd hours such as midnight.
Security Risks:
It is a popular belief that anything digital is hackable. Based on this, digital banking comes with security concerns. Platforms that are not secure enough expose customers to hackers. They have the potential to lose huge funds.
Impact on Communication:
Automated systems used in digital banking are not always as effective as face-to-face interactions. Moreover, certain individuals prefer human interactions over speaking with machines. That being the case, digital banking inherently impairs the interest and engagement of the public.
Fees:
Customers sometimes encounter hidden fees while using digital banking systems. For instance, financial platforms may place charges on account maintenance or use of sophisticated features without the knowledge of potential users. Paying such fees creates an inconvenience for users, sometimes rendering them incapable of using the service.
Conclusion
Digital banking in Nigeria has come a long way. To express this point, Opay, one of the country’s biggest neobanks, has a whopping 30 million users.
Many other online banks operating in the country have equally significant numbers of customers and they process a humongous amount of transactions yearly. Their success and continued operation is a testament to the progress of digital banking in Africa’s economic hub, Nigeria.