Today’s consumers expect to be able to do just about everything from their smartphones, and that includes managing their bank accounts. Online banks have emerged to meet the demands of a tech-savvy population. They are becoming increasingly popular and are in the process of changing the future of the financial industry.
Online banks allow consumers to deposit checks, manage accounts, transfer funds, and pay bills from their phones. The banks usually have no physical branches, so they have less overhead costs. Banks are then able to pass those savings on to their customers in the form of better interest rates. There are dozens of online banks in the United States, and as consumers realize the benefits of this new style of banking, more are springing up all the time.
The rise of new online banks in recent years has had a significant impact on the financial and fintech industries. Some changes have already happened, and others are likely to occur in the next few years. The following is what you can expect for banking trends in 2020.
Increased Emphasis on Cybersecurity
Typically, online banks are as secure as traditional banks. But as online and traditional banks strive to make banking online simple and accessible, safety and security are always at risk. The more users are able to do online, the higher the risk that bad actors will hack into accounts and commit fraud.
Cybersecurity continues to be a monumental priority for banks. Online banks and traditional banks are constantly improving their security measures while ensuring that their apps are still easy to use. Banks need to put proper cybersecurity strategies in place to stay in front of any potential fraud or other risks.
Everything Is Digitized
As banking moves out of branches and onto smartphones, everything will become digital. Online banks have proven that no paper statements or other paper forms are necessary for a bank to thrive. Consumers are happy to receive electronic statements and fill out forms online instead of driving to branches to receive what they need. They also like to have real-time access to all of their banking information.
Paper checks are becoming increasingly irrelevant. Consumers in 2020 will prefer online transfers rather than exchanging pieces of paper and being forced to visit an ATM to deposit the check. Banks that do not have mobile-friendly apps will see a drop in users if they do not adapt. All banks — online or not — will need to make it possible for users to do everything with a click of a button or the swipe of a finger.
Rise of Automation and Artificial Intelligence
Some form of automation will soon be built into all banks, and the new technologies will help personalize banking for every single user. Automation can improve the user experience, and it also permits banks to control the customer support messaging, ensuring it is uniform and of a high quality. Old and new banks have already adopted automation, but the programs have a long way to go to be truly personalized for the user.
Automation and artificial intelligence will continue to be developed and implemented over the next year. Automated programs and bots can assist users with simple questions about their accounts, and they can also guide the user through an action — whether that’s to pay off a credit card bill or to schedule a recurring transfer.
As banks store more data online, they need to ensure they have risk-free systems in place to protect that data. Banks use redundancy of networks, data, and power to increase their safety and security. It’s critical that all banks have a way to keep data safe during network or hardware failures. The data should be backed up in multiple different sites, and back-up generators should be readily available.
Data protection will continue to be essential for traditional and online banks in the future.
How Banks Are Meeting These Changes
All of these challenges are forcing banks to change rapidly in order to keep up. They are forced to innovate, which they often don’t have the time or capital to do. In an article written by FDIC Chairman Jelena McWilliams, she states “Customers often demand the latest products and services that they have seen their friends use or that may have been featured on social media. For the most part, banks would like to meet and even exceed customers’ expectations. So, if that is the case, then why are more community banks not developing new technologies?”
Still, banks are finding ways to stay relevant in the changing financial industry. Banks are adding and improving their online and mobile capabilities. They often find fintech companies to partner with who can provide the necessary infrastructure.
BMA provides innovative core processing services and fraud and risk management to community banks around the U.S. We take care of everything from online and mobile banking development to ACH and wire transfers. Stay ahead of the curve by partnering with BMA.