The best option for managing and transferring your money nowadays is to use digital banking instead of traditional banking. A massive digital revolution that has swept through many spheres of our financial dealings has immensely touched the banking sector. One of the main players and the centre of this financial revolution is the neo banks, otherwise known as digital banks. Digital banks are leveraging their capabilities to reimagine banks for the digital century.
Understanding the Digital Banking System
One clear feature that sets digital banks apart is that they do not have traditional branches that have to be built at every turn. Instead, they operate the entire banking process only through digital infrastructure, such as their websites or mobile apps.
This mode of operation allows for drastic cuts in operating costs, which the digital banks can then use for new technology and even better customer service. Digital banks run on cloud computing and enjoy amazing scalability and reliability. Therefore, they don’t have to face physical limits on their activity beyond those forced upon them by traditional banks.
The digital banks use a cocktail of Artificial Intelligence and Machine Learning to offer exceptional, even ahead of them personal banking experiences. The use of these technologies allows fraud detection systems, for example, and predictive analytics to get better than modern bank customers expect.
There have also been reports showing that the AI in the fintech market, valued at around $8.23bn in 2021, will skyrocket to $61.30bn by 2031. The exponential boost illustrates how reliant on these advanced technologies the financial industry currently is.
Blockchain technology is another pivotal aspect of digital banks: it makes transfers safer and more transparent than ever, and the same technologies allow digital banks to be considered safer than traditional banks.
These measures sometimes include such safeguards as end-to-end encryption and multifactor identification. Add to that the severely strict Know Your Customer protocols, and the digital banking environment is perhaps one of the safest and most reliable for clients.
What the Future Holds for Digital Banking: AI and Machine Learning
When used together within the confines of the financial sector, Artificial Intelligence and Machine Learning dramatically affect how banks function and relate to their customers.
There are many ways in which the combination makes for much more efficient and personal banking services:
- Process Automation: AI can automate boring and time-consuming processes, including particularly the validation of data and the examination of transactions. Not only does it make the delivery of services much faster, but also reduces the risk of human error and the concomitant inefficiency of the operation;
- Personalised Services: machine learning algorithms can be used to analyse past trends of the user’s transactions and behaviours and provide more tailored services. The banks will be able to adapt their products and services to make them a perfect fit for what the user needs, which in itself will ensure that the user will be happier and more loyal for it;
- Fraud Detection: AI can spot quite well strange and suspicious trends of transaction. As a consequence, digital banks will be allowed to act promptly and to head off the risk of money being lost for both the bank and the customer as a consequence of fraud;
- Virtual Assistants and Chatbots: AI make customer service better by creating smart virtual assistants and chatbots that can help you give you a hand straight away. Not only it improves overall customer experience by allowing an instant response, but it also helps the actual customer service teams do their job: the machines will handle the boring basics, and the real person will be allowed to handle to more sophisticated or harder bits. This literally saves time and resources, and may make all the difference.
- Credit decisions optimization: AI can also explain why credit analysis has become so important. AI can make credit decisions so much faster than the old decision-making models, but also better. We will see some of the reasons why it is now so invaluable later in this article, but it is an accurate way of assessing risk and awarding a line of credit.
Furthermore, it is critical in managing so much data; speaking of which, this is another reason why data management systems are now so critical to today’s digital banking. There is simply too much data to process, analyze, and store for today’s banking industry. Customer data platforms will help banks manage massive datasets at high speed and take advantage of them to the fullest.
AI and ML will only become more important for digital banking in the coming years. They not only help things run more smoothly but also enable a more exciting, tailored experience that better meets customers’ needs. Adapting to what customers want and staying ahead of the game will be how to succeed in the world of digital banking in the future.
The Rise of Customer-Focused Approach in Digital Banking
With the rise of technology, customer tastes have changed, and digital banks have appeared to meet these needs. Today’s customers are tech-savvy and expect banks to make their lives easier. The average bank is not able to provide adequate service with clunky websites, sluggish response time, and unavailable customer support. Digital banks, on the other hand, are mobile-first, fast, convenient, easily accessible, and cheap. Their services provide 24/7 availability and no fees, something that appeals to today’s customers.
Digital banking innovation is always customer-oriented. New features like built-in investment opportunities and automatic savings plans give customers more freedom in managing their funds and make it easier for them to do so. The growing number of fintech leaders like Jeton shows that the direction the market is moving in terms of banking services is more software-based, open, and with the customer in mind.
