The Latest Trends in Digital Banking

The banking industry was one of the first to fully realize and harness the digital revolution, with financial institutions first experimenting with online banking possibilities as far back as the 1980s. A business model that once relied on locality and face-to-face interactions has now transformed into an industry where nearly 90% of American bank account holders use mobile banking of some kind. 

While the needs of banking customers have remained the same (ensuring the safekeeping of money, providing loans, fraud protection), the methods by which banks provide these services continue to evolve at an accelerated pace. With trends showing that we can expect upwards of 3.6 billion online and mobile banking customers by 2024, it’s more imperative than ever that banks create an effective and efficient digital banking experience. Here we look at the latest digital banking trends in 2022.

Simplified banking

Today’s customers want access to their money easier and quicker than ever. Mobile apps and online banking increasingly make that process more efficient while creating a seamless user experience. This has given consumers the confidence to build a digital relationship with their bank.

Voice calls and instant messengers are now the norm, while many banks are looking toward further communication innovations such as artificial intelligence (AI), chatbots, or speech recognition tools. Recent studies suggest that chatbots alone will save the banking industry $7.3 billion by 2023.

Fraud protection

Across consumers at nearly all financial stages, fraud alerts rank as the most important online banking feature. Of course, fraud has always been a hazard in the banking industry, but cybercrime has been rising in recent years, with banks now losing more than $1 trillion globally to fraud each year. While 95% of US account holders say they trust their banks to protect against fraud, customers expect tools and features that get smarter over time as cybercrime evolves.

Personalization

Like with any app looking to attract new users, design matters. Modern banks win over customers with layouts that boast a clean design, seamless usability, and vivid visual elements. Customers also expect digital banking and apps to be personalized to their exact needs. Banks are increasingly providing customers with products that match their financial profile, whether based on income, credit history, or the industry they’re working in. 

Gamified features for meeting individual financial goals, customized spending trends, and other financial insights provide customers with the personalized information that they require for everyday banking.

Real-time payments

Real-time, digital payments have had a meteoric rise in recent years. With payment apps like Venmo and Cash App providing instantaneous money transfers between bank accounts, most banks are now integrating P2P payment options in their mobile banking and app services.

The benefits of real-time payments are clear; it’s fast and easy. Transfers can be made at any time, and funds are available instantly. Second to its convenience, customers are also embracing the technology because it’s safe and secure. Customers who rely on real-time payments cited the ability to avoid cash or physical credit/debit cards as one of their reasons for using P2P payments.

The rise of neobanks

As digital banking offerings continue to expand, customers who require a brick-and-mortar location to do their daily banking are falling by the wayside. Enter the rise of neobanks — or digital-only banks. Neobanks provide a wide variety of functions solely through their online platforms,  while still providing customers with many of the same services of a traditional bank. 

Neobanks cater to tech-savvy consumers, 14.4 million of whom were neobank account holders in 2020. Trends show that figure should reach nearly 40 million neobank account holders by 2025. While neobanks are seeing significant growth with competitive interest rates and ease of use through seamless smartphone apps, traditional banks with their own digital banking services are still winning customers with their hybrid strategy of offering both in-person and online support. 

While the primary functions of banks and their customers’ needs have gone mostly unchanged since the late 1700s, how banks provide those services has changed dramatically — especially in recent years. With the ongoing shift toward digital and data, online banking still has a huge opportunity for growth and expansion.