With the advent of online shopping and even online-only banks, here’s a look at how technology is changing the world of banking — and your wallet.
Seamless Transactions and Money Management
Cash is no longer king, at least when it comes to transactions.
“Technology has revolutionized banking by making transactions more seamless. Cash is almost obsolete,” said Kirk Chisholm, wealth manager of Innovative Advisory Group. “Most people pay with their credit or debit cards for transactions at retail stores or online.”
Although carrying cash makes it easier for you to tell when you’re running out of money, a debit and credit card makes it easier to track spending. Most banks offer online portals where you can log on and review transactions from past months, allowing you to track spending and income. The one downside to skimping on cash? You don’t have dollar bills for the vending machine.
Increased Accessibility and Affordability
Developments in mobile banking have made it easier to access your money when you’re away from a computer. Having access to your accounts from your phone also means you don’t need local banks as much to manage your money, allowing online banks to swoop in with better rates.
“Technology has made banking more affordable and accessible to the masses,” said finance blogger and expert Aja McClanahan. “Mobile technology especially makes it easier for people [to] bank beyond their immediate geographic location. Because of this, the industry giants now have a lot more competition from smaller banks who are offering lower fees, better interest rates and full-on online and/or mobile features.”
McClanahan added that increased accessibility helps “people who might have been too busy or too intimidated to go into a branch.” This opens up banking to new demographics, she said.
Shoppers and Fraudsters Are Going Online
As shoppers flee malls and turn to online shopping portals, so are fraudsters. So, unfortunately, while spending your money has become easier and more convenient, so has online fraud become, well, a thing.
“With more and more services moving online … coupled with the migration to EMV card technology (chip) in the U.S., the threat of card fraud shifting from card-present transactions to card-not-present transactions has become a reality,” said Ryan Zlockie, vice president of authentication solutions at Entrust Datacard. “This is evident given that other countries — such as Europe — have seen the same migration to online fraud after EMV was put into place.”
Zlockie mentioned that while fraudulent online purchases might be more commonplace than in previous years, banks now have the opportunity to increase customer satisfaction and retention by getting customers to sign up for real-time mobile notifications. These notifications can alert customers of potentially fraudulent purchases, or at least keep customers in the loop about account activity.
Managing Recurring and One-Time Payments Is Easier
Sending and receiving money has gotten a whole lot easier. Not only has this made it easier to manage recurring payments, it’s also made it possible for small businesses without brick-and-mortar stores to pop up just about anywhere.
Julie Rains, personal finance writer of Investing to Thrive, said, “We’ve been able to set up checking account drafts for decades. Automatic monthly drafts transferred funds from a checking account to a merchant on a regular basis. But this process was often clumsy and stopping the draft, cumbersome.”
She said many merchants now allow you to pay online through an ACH transaction. You just need to enter your bank account information and authorize the transaction. And while that’s made it easier to set up recurring withdrawals from your account, it also means you can stop recurring payments more seamlessly.
Additionally, businesses can now function online entirely. Merchants can even visit conventions to sell goods, and use services like Venmo and PayPal to get paid.
Banks Need to Invest in Clients More
Banks can sell products more easily than ever before. However, Benoy Tamang, CEO of eFileCabinet.com, said that because banks have less face-to-face interaction with customers, it’s become more important they prove they are invested in their customers.
Customers, he said, “want to know that you actually care about their financial future. This means offering them tools that help them manage their money better, like retirement planning tools, budget calculators, and so on.”
Customers Can Switch Banks Easier
Being lax on products, even with a mobile app, can spell disaster for a bank. After all, it’s become easier than ever before for customers to research and sign up for the competition.
“With increasingly fast and painless digital capabilities for account openings from traditional banks and new entrants, consumers have more choice and are exploring their options,” said Laura Crozier, global industry director of banking at Software AG, which offers a digital business platform. “Banks know they cannot take consumers’ loyalty for granted, and that value has to be delivered constantly.
“According to Accenture,” she continued, “over half of consumers consider themselves open to switching to a bank with which they don’t currently do business. Millennials are the most open-minded, with over 70 percent of 18- to 34-year-olds being open to switching to a financial services provider not even traditionally considered part of the banking industry (like Apple, PayPal, Google and Amazon).”
Banking Has Gotten More Complex
Technology that doesn’t integrate with other platforms does clients a disservice in some cases and might add complexity to the banking process.
Between bank branches, ATMs, call centers, mobile apps and online portals, having so many options and features to sift through can be a headache for customers. Crozier said, that “for the vast majority of banks, these channels have been developed … in response to consumer demand for flexibility, and to drive down costs through the retail branch network (where branches cost about 65 percent of revenue).”
Unfortunately, while banks are listening to customer demands, Crozier said, “the technology behind each channel has frequently been [designed] independently from the bank product out to the consumer, as opposed to strategically, from the consumer point of view into the bank. So while consumers benefit from a variety of options to bank when they want, where they want, the channels don’t necessarily communicate with each other in a timely manner — leading to increased complexity for users.”