July 6, 2021 3 mins read

How Digital Wallets Can Help in Creating Future-proof Digital Banking

 

Rising customer demands have compelled businesses to rethink their digital strategy. With the proliferation of digital tools and corresponding platforms, the banking industry is experiencing a significant gap in its offerings and customer expectations. People are now looking for channels that can provide them access to services online and going cashless.

Migrating the core banking operations to a virtual platform (a website or a mobile app) is the new facet of the banking industry. From generating a statement to paying the electricity bill, transferring money to opening a fixed deposit, digital banking enables customers to operate at their convenience.

Statistics Emphasizing the Need for Digital Banking
1. According to a survey, 96% of the customers have used at least one of the online fintech services to transact. (Source: Global Fintech Index Report)

2. In research conducted by Statista, 66.7% of the senior banking professionals agreed that non-traditional financial firms dominate digital wallets and mobile payments. (Source: Statista)

3. Nearly 56% of U.S. users are expected to incorporate digital wallets for online transactions by 2020. (Source: Customer Think)

This implies that it’s time that the banking sector geared up to deploy digital wallets as one of their core financial services. Failing the above, they might soon be out of the race, losing to the digitally equipped ventures.

Digital Banking: A Revolution in Making
Digital Banking is more than developing web and mobile apps. It is about leveraging these digital tools to deliver traditional banking experience virtually. Here are a few challenges that are in the way of the digital banking revolution.

Mapping Customer Demands
Today’s customers prioritize value over price. They are ready to pay more for services and solutions that can ease their pain points. They want to have dedicated customer relationship managers to guide and assist them throughout the online banking process.
Thus, irrespective of the distance between the customer and the local branch, the former can leverage from online platforms even if they aren’t comfortable with technology. To meet the customer’s expectations, the banking sector needs to excel at the forefront of innovation by training its staff in providing such services to the customers.

Sustaining Competition
Digitization has paved the way for startups to enter the Fintech industry. These organizations are digitally equipped and embed all the next-generation features in their solutions, giving their customers the flexibility to use financial services at their convenience. The banking sector needs to invest in the adoption of technology-rich solutions to remain profitable and hold its customer base.

Digitization of the Operations
Digitization is the key to an organization’s success. To completely revolutionized the way the banking sector works, the financial institution needs to digitize its back-end operations completely. Without re-engineering the processes, they cannot leverage the power of technology optimally.

Digital Wallets: Customizable Solution Bolstering Future-Proof Digital Banking
One of the proven pillars of digital banking is the digital wallet. These are the apps linked directly with the bank account of the customer and give users the ease to transact – make or receive payments from their mobile or desktop/laptop.

In a report published by Mercator Advisory Group, there is a steep rise in the number of mobile payments in a single year.

To date, the leading organizations running digital wallets are private organizations or top-tier MNCs. Employing digital wallets as the primary form of banking transactions has a ripple effect on the process of creating future-proof digital banking. Some of the benefits of digital wallets are as follows:

Increased Visibility
Customers can have a handy wallet with all records of transactions made in a particular period. Digital wallets give them the flexibility to track payments/expenses and regulate their spending.

Data-driven Decision-making
The financial institutes can enhance banking operations by leveraging from the customer data extracted from digital wallets in near real-time. This facilitates data-driven decision-making, which helps financial organizations act as per the customers’ demands and be more productive.

Enhanced Security
Security has always been a topic concerning online payments, and a single bug can lead to obscurity. With digital wallets, the data is encrypted and requires two-factor authentication to validate any transaction. This reduces the possibility of cyber hacks, securing the overall payment system.

Minimal Transaction Fees
Online payments often charge customers a small percentage of money in the name of Internet charges. Digital wallets, on the other hand, don’t impose such a scenario. Customers can make payments without the need to pay any additional fees. That is why, even now, there are lesser merchants that allow payments via digital wallets.

Ease of Use
In an interview conducted recently, Ms. Chanda Kochhar, the CEO, and M.D. of ICICI Bank, claimed that the launch of digital wallets for banking transactions will change the shape of future payments. Much of this is because of the ease provided by digital wallets. The current generation of youth expects everything to happen fast, and digital wallets map their needs well. Mobile recharging, transfers, bulk payments, or quick purchases, digital wallets enable them with a few clicks.

Final Words
The banking industry is entering digital disruption, and it’s time that organizations rethink their existing infrastructure and invest funds in developing digital channels. Driven by the urge to help financial institutes grow and expand, Unthinkable offers a comprehensive set of financial software development services at hyper speed. We have a pool of skilled engineers and domain experts who are passionate about designing feature-rich, digitally sound financial applications.

We excel in deploying hyper scalable and hyper-intuitive financial applications at an accelerated pace, reducing the time-to-market. You can reach out to us with your specific needs.

 

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