Propelled by the rapid improvement in internet availability around the world, the digital banking industry is witnessing tremendous growth in recent years. With the increased requirement to facilitate customer engagement, improve profitability and control, the increased need for automation in traditional banking has paved the way for real-time payment transactions.
In fact, digital banking can be touted as a major technological transformation as it allows users to generate automatic payments for regular utility bills including electricity, phone, gas, and credit cards. Apart from convenience, it facilitates round-the-clock banking work, providing 24/7 access to banking functions. The growing risk of counterfeit money in remittances will also inject a favorable scenario for the development of the digital banking market.
Lately, customers are switching banks for digital features, such as mobile payments, bills, and loan applications. Thanks to affordable smartphones and easy access to the Internet in remote areas, these services are increasingly sought after by the rural population.
Driven by these advantages, a large number of participants operating in this business space are focusing on several growth-oriented marketing partnerships to increase sales revenue and expand customer base. For example, in March 2021, Finastra collaborated with the Union of Arab Banks to help banks in Arab League member states offer enhanced digital services to their customers.
Recent parameters that will shape the future of the digital banking industry are listed below.
Growing popularity of retail banking
Retail banking, at present, has become considerably crucial as it ensures that the public saves and invests their money and manages their regular needs with the help of various services including bank accounts, credit cards and debit, term deposits and loans. This type of bank interacts directly with consumers and allows them to access these services from their phones and computers. It can be considered extremely beneficial for students who are settled or studying abroad.
The growing influx of various new platforms, including Banking-as-a-Service, ensures that third parties connect with banks and help financial institutions diversify their products and revenue streams. The digital banking market will also grow with the increasing number of online withdrawals and deposits across the world.
Huge capital funding from investment banks
Investment banking serves multiple purposes and business entities offering various types of financial services including proprietary trading, mergers and acquisitions advisory to assist organizations. It is a special segment of banking that helps individuals or organizations raise capital and provide financial advisory services. This digital bank acts as an intermediary between securities issuers and investors as it allows new companies to go public.
The enhanced security infrastructure associated with investment banking will also contribute to the growth of the digital banking industry in the near future. These banks control a lot of capital as they transact in the millions and billions. They are therefore very popular for financing large projects, such as dams, railways and large infrastructure projects, among others.
Booming demand for transactional services
Digital transactions are gaining momentum in the banking sector due to their increasing benefits to businesses in terms of saving time and money. In addition to improving the customer experience, transactional digital banking improves tracking capabilities to reduce errors. These services help industries improve their business and stay competitive by making transaction easier, faster, more accurate and more convenient.
In summary, digital banking services allow consumers to perform various banking functions from the comfort of their homes. The COVID-19 pandemic has also acted as a significant driver for the expansion of the digital banking market given the growing use of contactless payments, digital wallets and mobile apps, giving consumers an edge in banking, transactions and money transfer conveniently.
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