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What Is Digital Banking? An Overview of Services, Types and Products
There has been an incredible digital transformation in banking. Competing with fintech companies has become a considerable challenge for banks and credit unions. This is especially true as the number of bankers turning to digital solutions increases annually. According to Statista, the increase of digital banking users in the United States alone has grown steadily over the years. In 2018, 61.3% of the U.S. population was using digital banking for financial services. By 2019, that figure grew to 62.7%, then 63.8% in 2020 and 64.6% in 2021.
Experts now forecast a final growth of 65.3% by the end of 2022.What does this mean? Banks and credit unions must be intimately familiar with digital banking services and all they entail. Here's what you need to know to get started.
What Is Digital Banking and Digital Banking Services?
Moving away from traditional banking services many were used to, digital banking services take your customer's entire banking operations experience to a digital platform. This means not only can their checking, savings, and loan accounts be accessed online, but their whole paperwork line, like pay-in slips, cheques, etc., are accessible via cloud banking.
Simply put, digital banking means all banking activities are available digitally.
What Does a Digital Banker Do?
Leverage Edu describes the responsibilities of a digital banker to be:
- Assisting with customer acquisition
- In charge of meeting sales targets on all major digital channels
- Deliver sales customer service digitally (more often than not, 24/7)
- Request customer feedback to continuously improve digital banking services/products and more.
Is Digital Banking Different From Online Banking?
Although online banking is an extension of digital banking, they are not the same. In fact, digital banking services encompass the digital experience of banking throughout several channels and devices:
- Website, mobile banking apps
- Mobile devices, desktops, laptops
It also involves all banking activities, whereas online banking refers to just the daily practices performed via devices connected to the internet.
What Are the Five Most Important Banking Services?
What's important to one digital banker will likely not be exact to another. However, the five most popular banking services considered important to consumers are the following.
Providing Debit/Credit Cards
Debit and credit cards are important services to offer in digital banking. Easy access to a current debit/credit card — or the application for a new one — is essential to the overall financial stability of most bankers. Debit and credit cards, in particular, also make online shopping a breeze.
Checking Accounts and Savings Accounts
Banks offer a variety of checking and savings accounts. Allowing bankers to access and open new bank accounts digitally is essential to making their experience with you more convenient and secure and their life easier.
Loans and Mortgage Services
Loans and mortgages are a crucial part of any bank's profit. They're also a vital part of most people’s livelihood since it allows them to expand their financial capabilities to buy homes, invest, start a business, purchase a car, further their education, and more. Offering loan and mortgage services online increases interest in your offers and fulfills the financial needs of your customers without the added hassle of leaving their homes.
Overdraft Services
Whether users are interested in opting in for an overdraft service or more inclined to participate in overdraft protection, offering these services digitally will allow you to cater to both types of users. It will also enable users to opt-in or out as they please since they won't have to make a special trip to the bank’s physical location.
Wealth Management
Every 106 million, or one in every three, people in the U.S. are said to be economically insecure. An excellent way to combat this growing concern while attracting more consumers to your organization is to offer wealth management services such as financial and portfolio advice, legal, accounting, retirement, and educational planning.
Digital Banking Industry Trends
Many digital banking trends are disrupting the popularity and effectiveness of traditional banking institutions. However, these three are making the loudest noises in the industry right now.
The Omni-channel Experience
The digital era has brought a lot of opportunities for financial institutions and brands to connect and provide digital banking services to customers, no matter the time or where they're at. However, customers no longer just want multiple channels to reach you on — they want an omni-channel experience at every touchpoint.
This means banks and credit unions provide the same consistent and positive experience throughout ALL digital banking channels. In fact, 75% report that they expect a consistent experience across all channels they choose to engage with you on.
Real-time Payments and Transactions
Long gone are the times when people were fine with getting up early to go to the bank and get the money they needed to make a financial transaction or pay a bill. Digital solutions from home have become much too convenient, comfortable, and easy to do — but that's not enough for today's customers.
They not only want the digital capability of paying bills and shopping online from wherever but also expect real-time dealings. According to PYMNTS, real-time payments are expected to double in 2022 after tripling from 2019 to 2020 (5.7% to 17%).
Shift to Mobile Banking
The shift to internet and mobile banking has increased substantially in recent years. The use of smartphones for banking went from something many thought only younger generations would adapt to quickly to being something for every generation. Insider Intelligence reports that 97% of Millennials prefer online and mobile banking, 91% of Gen Xers, and 79% of Baby Boomers.
The Types of Digital Banks
When it comes to digital bank options, consumers have a few to choose from:
- Neobank
- Non-bank
- Challenger bank
- New bank
Neobank
A neobank refers to virtual banks that do not have brick-n-mortar branches for customers to visit. Customer support is on the phone or online, services are on the web and mobile, and confirmation processes are instantaneous.
Non-bank
A non-bank financial institution is an organization that provides banking services without having an official banking license or isn't overseen by an international/national banking regulatory agency. Some examples include insurance firms, pawn shops, venture capitalists, and some microloan organizations.
Challenger Bank
Challenger banks are newer, smaller retail banks that strive to compete with bigger traditional banks by prioritizing user experience and offering digital-only services.
New Bank
Law Insider defines a New Bank as "a savings bank that is a party to a consolidation agreement and is not engaged in the business of banking prior to the consummation of the consolidation or merger provided for in the consolidation agreement." Essentially, they are savings banks that weren't in the business of banking until the consolidation agreement.
How Can You Drive Customers to Choose Your Digital Banking Solutions Over Competitors?
The digital banking world is growing rapidly, and the competition is fierce. As more people turn to digital banking services, more competition arrives on the scene. Here's how your bank or credit union can remain competitive by offering solutions to increase customer satisfaction.
Feature-rich Card Management
Managing cards online is different for everyone. Packing your users' experiences with rich features that improve their experience is essential to driving them to your solutions over competitors’.
Loyalty Programs
More than half (56%) of today's consumers prefer organizations that offer loyalty programs and rewards. This is especially true if your bank or credit union keeps perks personalized and relevant to the user receiving them.
Bulk Payments
Time is of the essence for adults today. Having bulk payment options allows your customers to create a bulk list of payments that must be sent out from a single account. This is significantly popular since it cuts out the time and effort it takes to send out each individual payment every time.
Notifications
Whether for security purposes, financial purposes, or a simple reminder, notifications are crucial to keeping your customers up-to-date on everything to do with their banking accounts.
Remote Account Opening
It is no longer a benefit, but a must, to offer remote account opening options to your bank customers. According to FICO, nearly half (41%) of all Americans are more likely to open an account if it is digital.
Application for Loans in a Few Clicks
Loan application processes once took significant time and effort to complete, starting from making a physical appearance and discussing one's options in person to waiting to hear back on whether they were approved or not. Today, however, bankers prefer that their loan applications be completed in a few clicks. In fact, Business-Standard reports that at least 40% of borrowers indicated more willingness to take out loans if done digitally.
Mobile Contactless Payments
Mobile payments are another feature on the rise as more people have their phones on them and seek a solution to pay debts and services without physical contact.
Personal Finance Management (PFM)
Managing personal finances don't come easy to everyone. A PFM feature allows more users to take full advantage and control their financial opportunities, become more responsible with their money, and prepare for major life events.
Automatic Bill Payments
Users who can pay bills automatically benefit immensely from saving money on late fees due to forgetfulness and mistakes. At least 39% of people report that automatic bill payments are their primary way of paying their monthly bills.
Instant P2P Payments
The ability to quickly send funds to another person is also increasing in popularity as more people gravitate to a more cashless economy.
The Highest Level of Security and Insurance
Above all else, your bank must provide the highest level of security and insurance. This is your customers' livelihood on the table. If they don't feel safe in your digital hands, they won't hesitate a minute to go to your competitor.
Cotribute: Your Greatest Connection to Digital Banking Service and Experience
More people are moving to the digital world to manage their banking needs. You will need digital banking platforms you can trust to stay competitive and reach the vast number of bankers in your market.
Cotribute's Digital Customer Acquisition platform makes the digital onboarding experience for users as easy and seamless as your customers have come to expect. Schedule a demo to get started.
What Is Digital Banking and Digital Banking Services?
Moving away from traditional banking services many were used to, digital banking services take your customer's entire banking operations experience to a digital platform. This means not only can their checking, savings, and loan accounts be accessed online, but their whole paperwork line, like pay-in slips, cheques, etc., are accessible via cloud banking.
Simply put, digital banking means all banking activities are available digitally.
What Does a Digital Banker Do?
Leverage Edu describes the responsibilities of a digital banker to be:
Leverage Edu describes the responsibilities of a digital banker to be:
- Assisting with customer acquisition
- In charge of meeting sales targets on all major digital channels
- Deliver sales customer service digitally (more often than not, 24/7)
- Request customer feedback to continuously improve digital banking services/products and more.
Is Digital Banking Different From Online Banking?
Although online banking is an extension of digital banking, they are not the same. In fact, digital banking services encompass the digital experience of banking throughout several channels and devices:
- Website, mobile banking apps
- Mobile devices, desktops, laptops
It also involves all banking activities, whereas online banking refers to just the daily practices performed via devices connected to the internet.
What Are the Five Most Important Banking Services?
What's important to one digital banker will likely not be exact to another. However, the five most popular banking services considered important to consumers are the following.
Providing Debit/Credit Cards
Debit and credit cards are important services to offer in digital banking. Easy access to a current debit/credit card — or the application for a new one — is essential to the overall financial stability of most bankers. Debit and credit cards, in particular, also make online shopping a breeze.
Checking Accounts and Savings Accounts
Banks offer a variety of checking and savings accounts. Allowing bankers to access and open new bank accounts digitally is essential to making their experience with you more convenient and secure and their life easier.
Loans and Mortgage Services
Loans and mortgages are a crucial part of any bank's profit. They're also a vital part of most people’s livelihood since it allows them to expand their financial capabilities to buy homes, invest, start a business, purchase a car, further their education, and more. Offering loan and mortgage services online increases interest in your offers and fulfills the financial needs of your customers without the added hassle of leaving their homes.
Overdraft Services
Whether users are interested in opting in for an overdraft service or more inclined to participate in overdraft protection, offering these services digitally will allow you to cater to both types of users. It will also enable users to opt-in or out as they please since they won't have to make a special trip to the bank’s physical location.
Wealth Management
Every 106 million, or one in every three, people in the U.S. are said to be economically insecure. An excellent way to combat this growing concern while attracting more consumers to your organization is to offer wealth management services such as financial and portfolio advice, legal, accounting, retirement, and educational planning.
Digital Banking Industry Trends
Many digital banking trends are disrupting the popularity and effectiveness of traditional banking institutions. However, these three are making the loudest noises in the industry right now.
The Omni-channel Experience
The digital era has brought a lot of opportunities for financial institutions and brands to connect and provide digital banking services to customers, no matter the time or where they're at. However, customers no longer just want multiple channels to reach you on — they want an omni-channel experience at every touchpoint.
This means banks and credit unions provide the same consistent and positive experience throughout ALL digital banking channels. In fact, 75% report that they expect a consistent experience across all channels they choose to engage with you on.
Real-time Payments and Transactions
Long gone are the times when people were fine with getting up early to go to the bank and get the money they needed to make a financial transaction or pay a bill. Digital solutions from home have become much too convenient, comfortable, and easy to do — but that's not enough for today's customers.
They not only want the digital capability of paying bills and shopping online from wherever but also expect real-time dealings. According to PYMNTS, real-time payments are expected to double in 2022 after tripling from 2019 to 2020 (5.7% to 17%).
Shift to Mobile Banking
The shift to internet and mobile banking has increased substantially in recent years. The use of smartphones for banking went from something many thought only younger generations would adapt to quickly to being something for every generation. Insider Intelligence reports that 97% of Millennials prefer online and mobile banking, 91% of Gen Xers, and 79% of Baby Boomers.
The Types of Digital Banks
When it comes to digital bank options, consumers have a few to choose from:
- Neobank
- Non-bank
- Challenger bank
- New bank
Neobank
A neobank refers to virtual banks that do not have brick-n-mortar branches for customers to visit. Customer support is on the phone or online, services are on the web and mobile, and confirmation processes are instantaneous.
Non-bank
A non-bank financial institution is an organization that provides banking services without having an official banking license or isn't overseen by an international/national banking regulatory agency. Some examples include insurance firms, pawn shops, venture capitalists, and some microloan organizations.
Challenger Bank
Challenger banks are newer, smaller retail banks that strive to compete with bigger traditional banks by prioritizing user experience and offering digital-only services.
New Bank
Law Insider defines a New Bank as "a savings bank that is a party to a consolidation agreement and is not engaged in the business of banking prior to the consummation of the consolidation or merger provided for in the consolidation agreement." Essentially, they are savings banks that weren't in the business of banking until the consolidation agreement.
How Can You Drive Customers to Choose Your Digital Banking Solutions Over Competitors?
The digital banking world is growing rapidly, and the competition is fierce. As more people turn to digital banking services, more competition arrives on the scene. Here's how your bank or credit union can remain competitive by offering solutions to increase customer satisfaction.
Feature-rich Card Management
Managing cards online is different for everyone. Packing your users' experiences with rich features that improve their experience is essential to driving them to your solutions over competitors’.
Loyalty Programs
More than half (56%) of today's consumers prefer organizations that offer loyalty programs and rewards. This is especially true if your bank or credit union keeps perks personalized and relevant to the user receiving them.
Bulk Payments
Time is of the essence for adults today. Having bulk payment options allows your customers to create a bulk list of payments that must be sent out from a single account. This is significantly popular since it cuts out the time and effort it takes to send out each individual payment every time.
Notifications
Whether for security purposes, financial purposes, or a simple reminder, notifications are crucial to keeping your customers up-to-date on everything to do with their banking accounts.
Remote Account Opening
It is no longer a benefit, but a must, to offer remote account opening options to your bank customers. According to FICO, nearly half (41%) of all Americans are more likely to open an account if it is digital.
Application for Loans in a Few Clicks
Loan application processes once took significant time and effort to complete, starting from making a physical appearance and discussing one's options in person to waiting to hear back on whether they were approved or not. Today, however, bankers prefer that their loan applications be completed in a few clicks. In fact, Business-Standard reports that at least 40% of borrowers indicated more willingness to take out loans if done digitally.
Mobile Contactless Payments
Mobile payments are another feature on the rise as more people have their phones on them and seek a solution to pay debts and services without physical contact.
Personal Finance Management (PFM)
Managing personal finances don't come easy to everyone. A PFM feature allows more users to take full advantage and control their financial opportunities, become more responsible with their money, and prepare for major life events.
Automatic Bill Payments
Users who can pay bills automatically benefit immensely from saving money on late fees due to forgetfulness and mistakes. At least 39% of people report that automatic bill payments are their primary way of paying their monthly bills.
Instant P2P Payments
The ability to quickly send funds to another person is also increasing in popularity as more people gravitate to a more cashless economy.
The Highest Level of Security and Insurance
Above all else, your bank must provide the highest level of security and insurance. This is your customers' livelihood on the table. If they don't feel safe in your digital hands, they won't hesitate a minute to go to your competitor.
Cotribute: Your Greatest Connection to Digital Banking Service and Experience
More people are moving to the digital world to manage their banking needs. You will need digital banking platforms you can trust to stay competitive and reach the vast number of bankers in your market.
Cotribute's Digital Customer Acquisition platform makes the digital onboarding experience for users as easy and seamless as your customers have come to expect. Schedule a demo to get started.
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