The sales director of the financial services business IDnow, explains the importance of digital banking and why all finance-related organisations need to adopt this approach.
We have become very dependent on smart technology in our daily lives. Many of our regular practices, including financial management, are managed by digital applications. A recent study by IDnow suggests that over 60% of UK adult bank customers believe that digital processes, like online banking or simple digital app services, are extremely important or important when determining which bank they choose to protect their money.
The importance of digital was highlighted further by respondents explaining what frustrated them with managing their finances. Restricted opening hours, lengthy processes and having to visit a branch to create an account were all concerns people raised that could be mitigated with digital alternatives. Traditional high street banks and innovative challenger businesses could learn something by listening to the potential customers they are trying to attract.
The importance of safety
UK customers recognise that while digital is the preferential path forward for banking, it still comes with some uncertainties. Over 50% of those surveyed had created a bank account online and felt comfortable doing this. The remaining 47%, however, were unsure, mentioning cybercrime and digital bank fraud as reasons for their uncertainty.
While many customers want digital, they also want their money to be safe. The business is responsible for ensuring safety by implementing the highest security standards. Security and a seamless process are vital right from the start. In the report, 15% of respondents voiced their concerns about making errors when remotely signing up for a new account and 13% had cancelled or stopped the process of opening an account in this way.
Traditional versus fintech
Fintech has been a popular term in the finance industry for some years, and while their use is growing, only under a quarter of respondents in the survey stated they banked with a challenger bank. This figure increased slightly to a third in the London city area. In the last few years, we’ve witnessed a considerable drive for digital adoption in multiple industries. What initially began as a necessity has now become more of a standard. Interestingly, many people in the report continue to deal with traditional banks but with similar demand for digital. It is a significant opportunity for institutions which prepare and embrace new technologies.
While digital accelerated during the pandemic, it’s not surprising to learn that digital adoption was predominantly driven by the younger generation, who tend to be more tech-savvy. In the report, 37% of respondents aged 55 or over opened an account online, compared to 63% of 18-24 years, 62% of 25-34 years and 63% of 35-44 year-olds.
There still seems to be a requirement for the high street branch, which customers of any age can visit and discuss their financial-related issues. While digital bank accounts were the most popular with the younger generation, the same age group was also the most likely to abandon opening an account online. Their attachment to online technology means they have higher expectations of a simple onboarding experience but are more likely to recognise when something in the process is not right, and their safety has been compromised.
Cyberthreats look likely to continue unless companies can increase their level of security and educate customers on the need to protect their information. For banks and financial institutions to tackle these concerns and meet customer demands, they must invest in the appropriate technologies that provide the highest levels of security at all stages of the digital banking process. Combining the best security, with offering a simple and seamless user experience are the ingredients needed to create a positive digital banking future for everybody.
