Digital banking is the digitization (or moving online) of all the traditional banking activities and programs services that were historically were only available to customers when physically inside of a bank branch. This includes activities like
- Money Deposits, Withdrawals, and Transfers
- Checking/Saving Account Management
- Applying for Financial Products
- Loan Management
- Bill Pay
- Account Services
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Consumer preferences quickly shifted to online and mobile devices, but many financial organizations struggle to adapt their banking experiences to online channels and to the smaller mobile device screens. Unfortunately, banks can no longer afford to wait to invest in digital transformation because customers are increasingly willing to switch banks for digital features such as bill pay, mobile payments and loan applications.
In addition, until the past few years, banks were not envisioning the tremendous shift in consumer behavior that occurred as a result of the millennial generation becoming the largest consumers of financial products. Today, more than 70% of consumers report banking online at least once per month, so banks invest in great online experiences.
The good news is that according to Deloitte’s 2019 Banking and Capital Markets Outlook, banks are finally starting to prioritize their digital banking efforts to match consumer expectations. 28% of banks cite “create digital capability” as their primary digital technology initiative this year, while “modern legacy systems” came in second with 23%. That’s good news for consumers that over 50% of banks are making their evolution to digital banking their top priorities.
What is the Difference Between Online and Digital Banking?
For the most part, these two words are synonyms. But, we define online banking a bit more narrowly than digital banking: online banking primarily focuses on remote deposits, money transfers, bill pay and basic online management of accounts. Other synonyms for online banking include internet banking, virtual banking and e-banking.
So, online banking focuses on digitizing the “core” aspects of banking, but digital banking encompasses digitizing every program and activity undertaken by financial institutions and their customers.