Digital Banks And e-wallets – How They Are Reshaping The Banking Sector!

Nouveau digital banks are disrupting conventional financial services and how!

They are making them cheaper, easier, faster, and more accessible.

The expectations of modern banking customers have changed. So have the trends in digital transformation.

Competition from mobile-only banks, digital banks, and Fintechs has given conventional financial institutions something to think about.

To be sure, the gamut of services offered by digital banks and are identical to the ones offered by brick-and-mortar banks. Yet, Fintech enjoys certain subtle but undeniable advantages over traditional banks.

FinTech consumers have greater power and control over their financial decisions. This, in turn, leads to enhanced financial literacy.

By incorporating Big Data and the latest digital technology with conventional financial instruments, the FinTech industry has made the life of its customers easy.

Contactless Payments And e-wallets

The Apple Card and the success that it enjoyed drove the rapid adoption of e-wallets. The Mercator Advisory Group conducted a mobile payments research just before the launch of the Apple Card in Aug 2019.

It clearly shows that the traction of mobile payments substantially picked up after the launch of the Apple Card.

According to the Mercator Advisory Group, the initial launch of mobile wallets was greeted with a lot of optimism by the market. Unfortunately, the subsequent adoption of the technology failed to live up to the initial hype.

The lack of user-friendliness when it came to these apps was one of the contributing factors behind this lack-luster acceptance.

Thanks to the launch of the Apple Card, e-wallets once again enjoyed an upsurge in applications across industries. Among these, retail leads from the front with widespread adoption across global chains such as Walmart and Starbucks.

Apple Pay uses near-field communication technology, unlike the e-wallets used by the aforementioned retail giants, which use QR codes or barcodes.

Industry experts are of the opinion that both technologies will continue to enjoy healthy traction within the industry.

Bar codes are independent of carriers or devices. This means that you do not have to split your revenues with a device maker – something all card issuers must do when operating with Apple.

Contactless card usage is also expected to surge in the coming years. Industry leaders are ready to jump on the bandwagon, upgrading their card proposition with additional tap-and-go features.

This can only be good for the speedy adoption of e-wallet technology. With a better part of their day spent on their smartphones, Gen Z and millennials are more comfortable making payments via their handheld devices than plastic cards.

The next step in contactless payments would be a smartwatch or some other form of wearable device. It can be used with ease while even holding a cup of coffee.

The Retail Banking Disruption

How we choose to pay for our goods and services says a lot about the adoption of financial instruments.

According to a Digital Banking Consumer Survey conducted by PWC, 46 per cent of the participants use digital channels exclusively when conducting their financial transactions. This includes tablets, PCs, and mobile phones.

According to the same survey, 82 per cent of those surveyed who belonged between the age groups of 18 to 24 submitted that they use mobile banking.

60 per cent of all smartphone using participants in the survey admitted to availing mobile banking in some form or the other.

Financial institutions all over are experiencing one trend across the board. Previously, they catered to customers who were omnichannel users – banking through their smartphone apps, call-centres, website and even visiting their physical branches.

Slowly but gradually, omnichannel customers have paved the way for Omni-digital customers. Needless to say, this has led to widespread disruption across the traditional business model – staffing, investments, strategy, etc.

Modern banks need sophisticated personalization capabilities and analytics. They also need to become nimble in order to keep up with their younger and digitally savvy consumer base.

Digital transformation affects every facet of the traditional banking model – native core transformation, faster integration, and API rethinking.

Even business agility is affected – product customization, customer value propositions, pricing, real-time distribution and learning, and product manufacturing.How we choose to pay for our goods and services says a lot about the adoption of financial instruments.

According to a Digital Banking Consumer Survey conducted by PWC, 46 per cent of the participants use digital channels exclusively when conducting their financial transactions. This includes tablets, PCs, and mobile phones.

According to the same survey, 82 per cent of those surveyed who belonged between the age groups of 18 to 24 submitted that they use mobile banking.

60 per cent of all smartphone using participants in the survey admitted to availing mobile banking in some form or the other.

Financial institutions all over are experiencing one trend across the board. Previously, they catered to customers who were omnichannel users – banking through their smartphone apps, call-centres, website and even visiting their physical branches.

Slowly but gradually, omnichannel customers have paved the way for Omni-digital customers. Needless to say, this has led to widespread disruption across the traditional business model – staffing, investments, strategy, etc.

Modern banks need sophisticated personalization capabilities and analytics. They also need to become nimble in order to keep up with their younger and digitally savvy consumer base.

Digital transformation affects every facet of the traditional banking model – native core transformation, faster integration, and API rethinking.

Even business agility is affected – product customization, customer value propositions, pricing, real-time distribution and learning, and product manufacturing.

The Challenges to Digitization

Retail banks, which include credit unions and thrift banks, continue to spend tens of billions of dollars developing their in-house IT personnel, software, and hardware services.

The modern consumer demands services that require banks to innovate, both in terms of their business models as well as technology.

Unfortunately, the going consumer perception is that the industry is not innovating at a pace that is warranted.

According to a Banking Report by Salesforce, around 25 per cent of the participants surveyed that retail and healthcare are experiencing digital transformation faster than the banking sector.

As is clear from the discussion above, FinTech ventures are offering new avenues to consumers to manage, lend and borrow money. They are giving the traditional brick-and-mortar banking institutions stiff competition when it comes to keeping up with the digitally savvy customer.

mPokket is a FinTech venture in the instant loan-app segment that caters to college students and young professionals. You can download our app from Google Play Store, install and register with a handful of documents and borrow from Rs.500 to Rs.45,000.

Download the mPokket app today.