Over the past several years, financial institutions have experimented with and implemented new technologies to improve efficiency, security and customer experience. Although online banking is currently challenging traditional banking practices in several aspects, there are ways that traditional banks can fight back. Here are a few key offerings of digital banking, along with ways traditional banks can beat them at their own game.
1. Improved service
Digital banks offer customers 24-hour service and the ability to conduct a variety of transactions in their own time. AI-powered chatbots allows customers to ask questions, perform transactions and create accounts through one platform, at any time. This on-demand service appeals to customers as saving time and effort in their banking experience.
However, one of the key missing components of an online banking platform is human interaction, which can be easier and more rewarding than filling out a checklist on a website. Customers can easily convey any special requests or needs. By providing excellent customer service with genuine and knowledgeable human interaction, traditional banks can offer a more complete service than online banks.
2. Heightened security
To keep up with innovative offerings like video chat and digital account operations, online banks can utilize SD-WAN solutions to maintain reliable connectivity and efficiency for their security needs. Solutions such as antivirus and anti-malware programming, firewalls and biometric and/or facial recognition technology provide additional levels of security to protect customer information.
Traditional banks may less susceptible to cybersecurity threats. Despite online banks’ level of security, their fully-digital presence makes them more vulnerable to cyberattacks compared to traditional banks. It may also be much more difficult to regain what has been lost in the event of a data breach, due to the ways cybercriminals can hide.
3. Streamlined services
Digital transformation is all about streamlining and improving operations; the concept of a digital banking solution is no different. Digital bank users can achieve their banking needs through a single platform. In one “visit,” customers can view their balance and recent transactions, transfer money between accounts and pay bills. Some digital banks also have the option to sync accounts with budgeting apps to further manage budgets and spending.
This streamlining allows digital banks to significantly reduce the number of different products and services they offer. By comparison, traditional banks can provide many more services and options to better fit the individual needs of their customers, and make sure they feel important and well looked after.
Moreover, traditional banks should not feel the need to provide all these services in-house. There are plenty of fintech partners they can lean on, with very specialized capabilities in these services, to help diversify their products and services.
There are often various costs associated with banking, both for the institution and the customer. The low overhead of digital banking allows for a significant reduction in cost and fees and may offer lower-cost options for individuals interested in opening multiple accounts.
Reducing costs may also mean reducing services and, at times, customer experiences. There’s no such thing as a free lunch; the less a customer pays, the less they may get. Many community banks offer more products and services, as well as helpful staff and peace of mind for small financial cost.
5. Environmental consciousness
Working to become more environmentally friendly is becoming an important step for all institutions. Digital banks are succeeding in reducing their carbon footprint and overall waste.
Many traditional banks are making great headway in becoming more environmentally friendly, and have the added benefit of making these changes optional. Many of the customer-facing changes can be approved or rejected by the customer, such as electing paperless statements, giving them more control over their banking experience. Digital banks are challenging traditional community banks in many ways. But community banks can leverage the substantial competitive advantages they already possess to continue providing a greater and more comprehensive experience than digital banks.