Digital banking vs online banking: What’s the difference?
Online banking and digital banking; they both sound very similar. As a society we are becoming increasingly relaxed in our use of language, taking words and concepts and merging them to such an extent that they lose their intended meaning. In this article, we will explore the key differences between online banking and digital banking to help you make an informed choice.
Online banking: a brief overview
Let’s start with the easy one, the form of banking that most of us now use to some extent. Online banking is a facility that enables you to process core transactions via your laptop, desktop computer, or smartphone. Online banking has revolutionised our relationship with the banking system, as we no longer need to visit a physical branch to manage our everyday financial transactions.
We can now process the following transactions securely by either logging on to a mobile app or increasingly with a few swipes on our phone:
- Transferring money to friends/family
- Paying bills
- Setting up and cancelling Direct Debits
- Checking our balance and rectifying any accidental slips into the red
- Moving money between our accounts
- Sending money internationally
- Some banks will even allow you to pay cheques in
There are always going to be winners and losers. The elderly and the isolated are most likely to suffer as a result of reduced access to a physical high street presence. However, more and more of us no longer carry cash at all. The ease with which we can now access our bank accounts, 24/7, 365 days of the year, means that cash is rapidly becoming obsolete in many quarters.
The downside, of course, to online banking is that you can’t pay in physical cash. Whether or not you have access to high-speed broadband and your general internet connectivity can also impact on your overall experience.
Digital banking explained
So, what is digital banking, and how does it differ from online banking? While online banking only deals with the essential transactions; the nuts and bolts that most people will need to manage their finances seamlessly, digital banking goes much deeper and mandates comprehensive re-engineering of a bank’s internal systems. Digital banking is a titan, potentially encompassing every digital program and transaction ever undertaken by either a financial institution or the customers that they serve.
Most of us will have dozens if not hundreds of ‘customer profiles’; one for every online shop or service that we access. Digital banking similarly utilises historical, transactional and profile data on order to come up with predictive offerings, in addition to providing specific functions such as:
- Booking tickets
- Buying from an online shop
It helps business owners to run the back end of their business efficiently and allows consumers to enjoy the 24/7, 365 shopping experience that we have all become so accustomed to
Digital banking is the future. It is at the cutting edge when it comes to innovative new ideas and processes, and big data and analytics heavily drive it. By fully embracing the latest in digital technology, banks and other financial institutions are set to benefit in the following ways:
- Reduced costs and overheads – Switching to digital banking removes the need to invest in legacy hardware or software to ensure that systems are always up to date
- Higher levels of sales – the ability to tap into the psyche of their customer base gives them a competitive advantage over those reliant on older methods
- Enhanced customer experience means more customers – and a better chance of retaining existing ones
- Full compliance – Digital banking and technologies make it easier to stay compliant with the latest regulations than older, legacy systems
How do I go digital?
To truly go digital, you will need to choose a bank with more than just a state of the art website. You will need one which has demonstrably invested in the right people with the right skills who can help it to make the transition.
Remember everyone is different
There is no denying that the benefits to digital banking far outweigh the negatives. However, it is worth bearing in mind that we are all unique and we all evolve at a different pace. It is easy to get so caught up in the benefits that institutions may forget about those with limited technology access or skills. The traditional models may have a loyal customer base.
This is merely a very high-level overview of the key differences between online and digital banking. With technology moving at such an incredible pace, we can only be excited to think about how this will impact our lives in future years.