Digital banking has already delivered a great number of improvements to the ways in which we can manage our money and interact with our banks. The fact that over three quarters of UK banking customers now use online/mobile banking at least once a month is a great example of this. However, we consumers are now demanding ever greater integration of financial services into our daily lives, as well as flexibility and control over our money.
In response to this, banks are starting to work more closely with relevant (non-banking) partners to deliver the long-awaited “Digital Promise”. Nowhere is this truer than in the UK where a long history of financial innovation, a growing financial technology sector and high penetration of other digital services combine to make this a realistic prospect.
The “Digital Promise” has three aspects:
- Better household money management.
- Seamless integration into daily life.
- The bringing together of often disparate services.
As you will see, the Digital Promise is about far more than making banking mobile – it is about helping consumers to interact with their financial services providers when, where and in the way that they choose.
a. Better household money management:
The ability to check our balance, update scheduled payments and monitor recent transactions on demand, 24-7, has been a welcome addition to the traditional banking services. The popularity of this service is evidenced by the 7m daily logins to internet banking services in the UK. However, despite these advances, today’s bank statement – digital or paper – is rarely more than a historical view of our finances, culminating in a current balance.
Of course, there have been numerous attempts to help customers get more insight into their finances through categorisation and graphic representation, but most of these have failed to attract a large number of us due to the initial difficulty in getting them set up correctly and the effort to maintain them.
However, it finally looks as if our banks and financial technology companies have woken up to the needs of their modern customers and are creating a new breed of digital money management service that is virtually effortless to maintain and easy to use. This promises us all up-to-the-minute guidance on budgeting and increased financial control.
b. Seamless integration into daily life:
Customers across the world are used to being constantly connected with the digital world through social networks and mobile apps – Facebook alone records 750 million daily logins. The physical world is also becoming more digital, with everything from Near Field Communication (NFC) tags on posters to smart watches and personal health monitors.
At its simplest, digital banking will enable seamless pricing and payment based on digital inputs, for example, car insurance based directly on actual distance travelled and driving style, or health insurance influenced by inputs from a digital wrist band. More complex will be the provision of relevant offers, promotions and targeted financial services (e.g. unsecured loans) based on purchasing habits, gauged via our mobiles at the store checkout.
Whilst most of us in Britain have said goodbye to cheque books, banking is still cluttered up with physical paraphernalia. Cards are still the dominant payment type and our wallets are stuffed with them. Many UK banks also provide a physical device or card reader to generate codes for logging in to digital banking. Tomorrow we will say goodbye to these separate physical identity tokens and use apps on mobile phones or simply our physical selves as proof of identity. Besides not having to remember separate items to run our lives, building in identity verification in more seamless ways will finally rid us of the tyranny and irritation of PINs and passwords and make access to banking just a click away.
c. Bringing everything together:
Even in today’s digital age, most of us are forced to manage our banking around the banks that provide the service. We have separate logins for each account which, for the average American, means 6 passwords, usernames and/or PINs. Realisation of the “Digital Promise” will mean the financial world comes to us. Services bringing together a combined view of our finances incorporating all our providers (and even our non-financial assets) have been around for awhile but plagued with security concerns. This is a problem which will inevitably be solved for the good of customers, who will benefit from an integrated experience rather than the inconvenience of segregated product providers.
Although we have already seen many improvements born out of digital banking there are undoubtedly more to come as the “Digital Promise” is delivered. These innovations will make managing our money quicker, easier and more efficient.
The information displayed in the infographs has been taken from The Way We Bank Now (PDF).
Tariq Khatri is partner for FS Performance Improvement
The views reflected in this article are the views of the author and do not necessarily reflect the views of the global EY organisation or its member firms.
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