Banking is one of the planet’s oldest systems. It has been a method used since the times of ancient Babylon, with merchants offering grain loans to farmers who needed to transport goods. It wasn’t until 14th century Italy, that banking came about as we know it today, with the oldest bank the ‘Monte dei Pashi di Siena’, in business since 1472. However, it did have to recently have some help.
Modern technology has changed and developed so much, it means that traditionally slow-moving institutions have had to invest huge amounts of money to remain competitive within the market place. So how much of a disruption to the banking world has ‘going digital’ made?
No more queuing
How many times have you spent hours on end queuing at lunchtime waiting for the bank? It might be a simple case of wanting to cash in some cheques, or pay some bills. Mobile banking has completely changed this. Going to the bank, has become much more old fashioned, with mobile technology so quick, people are able to make transactions as big as paying someone back, or even applying for a mortgage. Digital banking has become such a huge part of the industry, that now to cut down on costs, some smaller banks are only using virtual banking. Smile in the UK and Simple in the US, have been the first to go down this path.
Is it too soon?
Although mobile banking undoubtedly has some of its problems when it comes to protection. Is that the only concern? Phone development has been happening so quick that we are now able to effectively use our phone as a digital wallet. Syncing your phone to your Oyster card, enables you to use London’s tube and bus system.
With regards to security, it certainly might seem safer to go digital. But is it? In the first half of 2015, a total of 117,576,693 personal records were put at risk, with 10% of these breaches coming within the banking sector. For banks, keeping financial information safe is one of the biggest areas of investment for banks. Simple passwords, public computers and ‘phishing’ are the most common scams in the UK, that hackers use to separate people from their money. Getting things online is arguably the biggest stumbling block for every single bank going fully digital.
Going digital could just spell the end of retail banking. Customers are becoming more and more accustomed to switching banks. Consumers are now generally less willing to take their bank’s word for which secondary products, such as mortgages and investments they should take. The bottom line is, people would rather do their own research and don’t always need a personalised experience.
What does it do for small businesses’?
The idea of any large business deal, or any investment happening within a small business not digitally, seems totally redundant. Done are the days of deals happening with cash. The ability to transfer money has been hugely important to the trading world, with so many different platforms now available, stocks have become a much easier means to predict and determine.
Idan Levitov VP of Trading at Anyoption, said ‘Digital banking has completely changed the way the world trades. Simple things such as being able to constantly monitor prices on your mobile phone have been huge.’
What’s the competition like?
One of the biggest changes we could see to banks if they go online is more challengers. However, that doesn’t necessarily mean banks. Services such as TransferWise and PayPal have recently been suffering, but will help save you money on international transfers, cutting corners is some regards. Something which as of yet, the bigger banks cannot offer. Banks will have to come up with strategies to and new methods in order to stay competitive.
There is no doubt that the digital world is enormous when it comes to banking. Not only for people, but also businesses’. It will be fascinating to see just how much further we can go, when it comes to developing things further.
Edward is a freelance writer from Sheffield. Now living in London, he focuses on business and finance.