Imagine being able to do all of your business transactions online, from receiving your monthly paychecks to purchasing groceries, paying bills, applying for a loan, and more. What technologies will banks need to make these transactions happen? Although the retail, music and travel industries have already taken the leap to the digital realm, banks have been slow in following suit. Experts believe that banks need to make the shift towards offering digital business banking services in order to survive.
The following are a few reasons why banks need to change their stance on online and mobile banking.
Digital Banking Meets Customer Expectations
An increasing number of customers and businesses are expecting their banks to interact with them digitally. In 2015, the Boston Consulting Group conducted a survey which included 660 businesses in 23 different industries and 13 markets. Approximately 85 percent of the respondents had some experience conducting banking transactions online. Out of this group, more than 70 percent considered the bank’s digital capabilities as a critical factor in bank selection.
In another study, up to 80 percent of the respondents residing in developed Asian countries indicated that they were willing to move their assets to a bank that conducted their transactions on a digital platform. The figures from developing Asian markets were lower but still significant, with over half of respondents preferring banks offering digital services over banks that had none.
Entices Different Markets
Although digital services are more in-demand among retail banking clients, this does not mean that corporate clients are not interested in the shift. Corporate clients are willing to pay a premium to banks that are capable of offering digital banking services.
Medium and large-sized companies that are earning more than $50 million annually are the most flexible and are the biggest adopters of digital services. Processing payments, requesting financial documents and interacting with relationship managers online are some of the most frequently used services for these businesses. Next are small businesses with 84 percent, while 68 percent of micro-organizations (businesses with annual revenues of $3 million) are users of digital banking services.
Difficulty in dealing with branch staff is seen as one of the main problems for bank customers. Having a digital platform can help make banking transactions quicker and more efficient. Clients can open an account, make payments, apply for a loan, resolve credit card issues and more without having to physically visit a bank. However, customers have high expectations when it comes to accessing their financial information online. According to the same BCG survey, two-thirds of the survey participants wanted access to their financial data within three clicks or less.
Enhances Consumer Experiences
In the past, it was possible to identify which banks were the key players in the field by counting the number of branches that they had in a particular area. With creating a digital platform, banks can continue to serve customers without the need to build several physical offices in each city. Instant messaging bots, for instance, allow banks to interact and provide solutions to clients conveniently and quickly. For clients, there is no longer a need to travel for miles or stand in long lines to get information or obtain financial services. On the other hand, the digital shift can help banks save on operating costs.
With digital services, clients are given the power to determine which financial products and services they need based on the information provided by the bank’s website. This reduces the amount of clients that relationship managers need to handle. As a result, relationship managers can spend more time with other clients. Digitalization of banking services also reduces the amount of administrative tasks as well as the number of back-office employees.
Generates Valuable Data
Finally, a digital platform will allow banks to gather more concrete and measurable data from their clients. By analyzing the data, banks can provide their clients better services. The data can also be used to offer clients products and services that are specifically tailored for their needs.