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How Has The Digital Revolution Changed Banking?

Banking has seen significant changes in the past 10 years, how has digital effected the industry?

25Nov

The digital revolution has had a major impact on almost every aspect of our lives. From the way we interact with others to how we watch television or work at our desks.

This is no different to the way that banking has changed, the change has been deep and impacted on every aspect of banking from the way that customers are managed through to the investments made.

Online Banking

For those outside of the banking industry, the chances are that the biggest change that has been noticed is the increased use of online banking.

Previously moving money consisted of either going to a bank and making a transfer or transferring money over the phone. With the widespread use of online banking, this is no longer a necessity and instead becomes a simple case of entering details online to access your account.

This allows for people to quickly check, transfer and manage their money from almost anywhere in the world. It not only means that management can be quicker, but it also means that money stays in the banks adding to the potential cash reserves and the financial positives that this can bring. This is because no longer do you need to get out cash to pay a personal debt, instead it is quicker and easier to just transfer the money through online banking.

Data Driven Investments

As the digital revolution has taken hold, one of the main changes has been that data can be gathered from more sources. This could be anything from up-to-date financial data to the perception of a certain company or brand on social media.

With this increase in data, the investments that banks make can become more accurate and therefore more profitable.

Following on from the financial crisis of the late 2000’s, the necessity for safer and more considered investments from banks has meant that increased amounts of data are needed to make informed and educated decisions.

Monitoring Of Activity

The last 5 years has seen a considerable increase in the numbers of bankers being arrested and punished for illegal practices. This includes incidents like the libor fixing scandal or insider trading, many of which would not have been picked up without the increased use of digital technology.

Through picking up internal emails or instant messaging, evidence can be found far easier than before, meaning more prosecutions and therefore more publicity of what happens to those who break the law.

However, this is not simply a case of punishment once people are caught, instead a major aspect that the digital revolution has given us is the ability to track anomalous actions. This means that if a payment over a certain amount or a result that seems strange appears on a bank’s system, then it will automatically be flagged. This helps with keeping illegal activities within the industry banking in check.

Customer Safety

One of the key aspects of using a bank is that people want to have their money kept safe. It is the basic reason why banks exist in the first place, everything else is essentially just adding to this core foundation.

Therefore, the ability to monitor anomalous activity from credit cards or debit cards is vital to stop people having their money stolen.

The digital revolution has meant that it is easier than ever for criminals to access your information and spend it without needing to even speak to another human being. Without the need for signatures or pin numbers, the banking system has created algorithms to flag potential fraud on customer cards.

After this has occurred the customer is contacted and are required to authenticate any payments that fall outside of the acceptable level. This could be anything from excessive spending to the use of the card in a different country.

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