Large-scale investment in digital banking initiatives was well underway when temporary branch closures early in the pandemic forced financial institutions to accelerate implementation. Banks and credit unions pivoted quickly to launch digital end-to-end account opening, lending, and PPP small business loan services to meet surging demand in communities most affected. Banking institutions partnering with digital technology create profitable synergies.
Before the pandemic, digital banking enabled access to financial data through desktop, mobile, and ATM devices for essential account services, including automated bill payment and ACH transfers. Banking transformation will continue to build upon specialized digitization and personalization connecting a broader spectrum of bundled financial services.
New initiatives focused on innovation will remain a top priority for banks and credit unions in 2022. Rapid marketplace changes will further challenge financial institutions to leverage data and analytics, focus on speed and simplicity, streamline operational efficiencies, and and reduce costs and friction points, with the agility to meet customer expectations and increase profitability.
More Than a Technological Upgrade
Fintech and big tech solutions geared toward the growth of digital banking are as integral to digital transformation as innovations in how business is conducted. Synchronized physical and digital banking channels for government, business, merchant, and individual bank customer segments will position banks to weather external pressures moving forward.
Fundamental socio-economic shifts will continue to drive digital payment and online banking innovation beyond traditional brick-and-mortar institution capabilities. Updated systems that provide 24/7/365 account availability, enhanced customer support, and financial service capabilities, and eliminate geographical barriers will ensure the long-term sustainability of financial institutions.
Strategically, financial institutions have never been in a better position to reset the current and future banking ecosystems standards. Successful banking models will encompass digital payment technologies in all aspects of the workforce, customer service, and business culture.
Traditional and non-traditional competitors will continue to pave new pathways for next-generation customers, influencing how banks and credit unions approach business. To participate, bank technology experts recommend phased incremental, small-scale changes to individual components, which can be implemented quickly, rather than wholesale technology overhauls. This ensures systems function smoothly and personnel adjust and train accordingly.
Leverage Modern Payment Technology
Leveraging technology will help the banking industry overcome legacy system barriers to digital transformation. Commercial banks that partner with third-party digital payment technology providers can work together, making the incremental changes necessary to service bank customers’ online needs.
Ongoing deployment of remote and hybrid workforce environments will fuel the growth of hyper-converged infrastructure-type models able to integrate technologies and protect customer data. The future evolving digital culture will add nodes for seamless data centers, cloud platform usage, branch optimization, and personalization transformation in security-first financial institutions.
Value-added merchant services designed to attract and retain loyal bank customers will leverage automation to transact across channels and fund, insure, and deliver third-party business services. These enhancements provide additional revenue streams for financial institutions. The projected growth of payment technology trends in 2021 includes the further release of mobile applications, which surged in 2020. According to the Digital-First Banking Tracker, in Q2 2020, U.S. banks saw a 60 percent increase in mobile banking application downloads, and nearly 45 percent of customers surveyed indicated digital and mobile banking as their preference.
Expanded automation of bank systems will include robotic process automation across business channels, artificial intelligence and machine learning to identify and pursue profit-generating patterns, and implementation of Interactive Voice Recognition (IVR) technology that responds to basic inquiries.
Open Banking Accelerating Innovation
Traditional banking models can no longer support the digital needs of account holders, especially given the recent limitless opportunities of open commerce and open banking systems. According to Accenture, 30 percent of small businesses and 40 percent of large companies currently use open banking systems. These systems cost-effectively utilize application programming interfaces (APIs) to expose critical data, algorithms, and bank processes to bolster existing revenue streams and generate new commerce channels through integrations with other platforms.
Open banking systems reduce the the time to market for new products and services, including those available through third-party financial service providers. This solution can be replicated for reseller purposes and provide digital relationship management tools that help identify the emerging payment and business marketing trends not currently bundled in bank offerings.
Another innovation gaining momentum is the adoption of real-time payment models, as merchants and buyers who transact regionally and globally drive the push to transfer, receive, and settle funds in seconds. Merchant expectations, regulatory pressure, and globalization provoke the digital movement of real-time payment in financial systems.
The Gap Between Physical In-Branch and Digital-First Banking
Before the pandemic, banks and credit unions attracted customers quickly, based on branch location proximity to customer residence or business, community reputation, and financial institution support of convenient user technologies, such as mobile banking.
Moving forward, an omnichannel approach will preserve the best in-branch and digital-first banking attributes. Digital-first financial institutions will stand out against the competition to meet new user expectations and interact with customers across all channels, conveniently and professionally.
With advanced fintech capabilities, banks will manage multiple vendors more successfully. Banks upgrading systems from antiquated technology to merge physical and digital banking into one cohesive omnichannel experience are more likely to thrive as the internet-savvy culture needs to evolve. Bank customers still place a high value on physical branch locations due to the personal touch they can provide for customers. Branches utilize their representatives to meet the needs of their clientele, catering to the still present needs of ATM usage. Still, online and in-branch interactions create opportunities to cross-sell bundled services and establish long-term relationships as life and business events require financial assistance. This includes purchasing a home, vehicle, insurance; obtaining a loan, savings, business, or merchant account; and other financial service enhancements catering to customer needs.
Digital payments allow banks to generate more revenue with 24/7/365 availability and the fee income generated by deposits. Banks offering merchant account services beyond simply opening a checking account are often the lifeline for commercial businesses.
With iCheckGateway.com, banks can deliver payment and merchant account services in one secure, hosted payment platform. iCG’s services facilitate ACH transfers, online credit card payments, Remote Deposit Capture (RDC), and eCheck processing. Its hosted payment portals support shopping cart plugins, SMS invoicing, mobile payments, and more through APIs. Banks can build more clientele and enhance customer relationships as they lead meeting the evolving digital economy needs with a tech-first approach.
iCheckGateway.com provides digital payment technology solutions that ease the transition to digital banking transformation. Contact our relationship managers for more information.
Date Originally Published: January 25, 2021
Date Updated: August 1, 2022