How the banking and finance industry is changing in the digital world

Last updated on January 31st, 2023 at 03:28 pm

The banking and finance industry has been here since the advent of civilisation when the very first currencies were minted. Since then, many banking programs and finance methods have come and gone. People used to keep their wealth in religious sites such as mosques and temples, as they were considered safe places to store money.

The banking sector evolved with time, and more modes of safe-keeping came into being, like steel safes built to protect the money. With the massive population rise from the 1990s, a more convenient method had to be established to ease banking. Waiting in queues for transactions or waiting for days for a loan approval wouldn’t cut it anymore. Digital banking provides a tailored solution to individual needs cost-effectively and efficiently.

Changes in the banking and finance industry through digitalisation

●  Technology

Technology has paved the way for banks to evolve and adapt new methods. As people are becoming increasingly tech-savvy, for the banks to sustain their survival, moving to the digital sector is the only option they could opt for. The advancing technology has made it easy for banks to keep records of transactions. Thanks to artificial intelligence (AI), conducting real-time data analysis of large volumes of data and providing customised solutions to customers have never been easier.

• Convenience

With digitalisation, time efficiency has reached new heights. You can access most banking services from the comfort of your home with the click of a button. This has made accessing banking services easier for people living in rural areas or other inaccessible zones in today’s time.

• Cost Efficiency

Banks have been forced to reduce costs to sustain themselves. Banking programs are being digitalised to reduce human resources and allow customers an opportunity to conduct their banking needs themselves.

• Blockchain

A blockchain is a public digital register that records transactions in many devices without disrupting and changing data when accessed from one device. Blockchain has helped tremendously in the digital world by changing the ways of banking and financing. The pandemic, in recent years, has led to its thriving success in the form of cryptocurrencies and NFTs. Bitcoin, one of the trendiest cryptocurrencies, is part of a blockchain.

●  Security

Security is of utmost importance for customers in order to trust a bank. The reason to keep money in banks rather than at home is that it is considered safer there. Banks provide a sense of assurance and protection to customers. Digital banks had to ensure their medium’s security through which customers would transact to make them feel safe and gain their trust.

Impact of digitalisation in the banking sector 

By going digital, the banking sector has improved dramatically by providing services which were earlier next to impossible. By digitalising, banks provide enhanced customer services, convenience to customers and help in time. The rural areas which didn’t have access to banks now transact easily using digital methods. In times of emergency when banks are closed, online transactions save lives. It is safe, reliable and quick, which is essential in times of crisis. 

Strengths and weaknesses of digital banking

• Strengths 

1. Digital banking provides an enhanced customer experience.
2. It’s secure with many layers of security.
3. It makes transactions easy in remote areas.
4. It demands low or no minimum deposits to open accounts.
5. Transferring funds is now quick and easy.
6. It offers easy access to accounts from anywhere in the world.

• Weaknesses

1. There is no healthy personal relationship between customers and banks.
2. No digital system is completely theft-proof.
3. Spending money has become a little too easy.
4. Because of its easy nature, many fake accounts are created to scam people.
5. No option for depositing cash is available. You still need to go to an ATM to handle your cash needs.
6. An active and stable internet connection is required to bank digitally.

 Conclusion

The world is digitally progressing, therefore the banking and finance industry needs to digitalise too. As an employee in this industry, you need to be at par with its progress. At Imarticus, you will learn how to understand various banking sales and operation methods. There are various finance courses in India but Imarticus offers practical experience and great job opportunities to its students with its post graduate diploma in banking and finance. These courses assign their students case studies, assessments and various practical industry interactions.