Digital banking was already trending before the pandemic arrived. The speed accelerated due to people adapting physical distancing to be safe and healthy. All your financial transactions can happen online without making physical contact with anyone. Moreover, P2P lending platform and digital wallet contributed as digital tools to make your life easier.
This is the current picture, but what about the future? Read on to know about the 7 significant ways digital banking will transform in the coming ten years.
1. More Cashless Transactions
Your wallet will get thinner because you won’t need to carry cash everywhere you go for a purchase. All the merchants and shop owners will offer various payment options -electronic or online instead of cash. These modes of payments are more efficient and convenient for both buyer and seller. It’s only a matter of time when you’ll get to know which country’s economy will go completely cashless first.
2. Increased Payments Through Digital Wallets
Do you know that more than 50% of the transactions in the Asia Pacific region are made via digital wallets? And it’s pretty evident that their popularity is going to increase with time. The reason being that there is a rise in the number of payment capable loT devices and also in the number of E-wallet companies. Earlier, there used to be a limit on the amount. But now, you can do major payments and fund transfers through digital wallets.
3. NBFCs vs Traditional Banking System
NBFCs (Non-banking Financial Companies) are giving loans to the public. According to the Indian companies act, NBFCs can acquire shares, bonds, securities, debentures, etc. There are many functions that NBFCs can’t perform, such as the banking system. But the increasing inclination of people towards NBFCs indicates the possibility of their expansion. NBFCs and P2P lending seem to overtake a major share of banking business in the future.
4. Dependence on AI for Credit
Whenever you apply for credit in a bank, it follows a cumbersome process of checking your credentials. It involves calculating the collateral value, professional background, credit history, criminal records, etc. With the rise of digital banking, all these details can be checked instantly through AI (artificial intelligence). It’s a powerful tool that has made immense data and analysis available to the banks and NBFCs to make a quick decision.
5. Micro-profiling of the Customers
With AI, the digital banking sector can chalk out a more accurate individual profile of every customer. Banks can offer suitable financial recommendations based on each customer’s location, product preference, and spending habits. This includes borrowing, purchasing bonds, and other budgetary decisions. This AI-driven profiling will also help customers in choosing their preferred p2p lending platform and digital wallet app.
6. No More Branch Visits
You are not new to the online money transfer and payments being made by digital wallets. But as the technology is progressing, more advanced transactions are also being done online. So no need to wait in long queues for account opening, buying insurance, and applying for a loan! Instead, you will be doing online transactions from the comfort of your home. There are going to be fewer reasons for you to visit a bank’s branch personally.
7. Connectivity of Banks Via APIs
APIs are the Application Programming Interfaces that allow 2 software to communicate and share the data. This exchange can also be between apps and other communication systems. Banks can now swiftly connect with p2p lending platforms, digital wallet companies and other 3rd parties to exchange data. In this way, a robust digital ecosystem is built between financial institutes for exchanging information on clients and products.
At present, you are enjoying online payments through digital wallets and loans via p2p lending. However, IT and finance Experts are building more cutting-edge digital banking solutions and software for the future. Thus, consumers and bankers need to be updated with advanced features and techniques to take their maximum leverage.
Aatish Khanna works with the Content Marketing team at Money Club - a digital chit fund platform that makes saving, borrowing, and investing your money more efficient. He writes on topics to help his readers understand processes so they can make better financial decisions. He's the go-to person that his family, friends, and colleagues turn to for all their money matters. He loves to play board games and aspires to one day build his one finance-related board game and app.