What is Digital Banking?

We talk a lot about building digital banking solutions to help financial organizations improve their customer onboarding experiences. But, what is digital banking?

Digital banking is the digitization (or moving online) of all the traditional banking activities and programs services that were historically were only available to customers when physically inside of a bank branch. This includes activities like

1. Money Deposits, Withdrawals, and Transfers
2. Checking/Saving Account Management
3. Applying for Financial Products
4. Loan Management
5. Bill Pay
6. Account Services

Consumer preferences quickly shifted to online and mobile devices, but many financial organizations struggle to adapt their banking experiences to online channels and to the smaller mobile device screens. Unfortunately, banks can no longer afford to wait to invest in digital transformation because customers are increasingly willing to switch banks for digital features such as bill pay, mobile payments and loan applications.

In addition, until the past few years, banks were not envisioning the tremendous shift in consumer behavior that occurred as a result of the millennial generation becoming the largest consumers of financial products. Today, more than 70% of consumers report banking online at least once per month, so banks invest in great online experiences.

The good news is that according to Deloitte’s 2019 Banking and Capital Markets Outlook, banks are finally starting to prioritize their digital banking efforts to match consumer expectations. 28% of banks cite “create digital capability” as their primary digital technology initiative this year, while “modern legacy systems” came in second with 23%. That’s good news for consumers that over 50% of banks are making their evolution to digital banking their top priorities.

What is the Difference Between Online and Digital Banking?

For the most part, these two words are synonyms. But, we define online banking a bit more narrowly than digital banking: online banking primarily focuses on remote deposits, money transfers, bill pay and basic online management of accounts. Other synonyms for online banking include internet banking, virtual banking and e-banking.

So, online banking focuses on digitizing the “core” aspects of banking, but digital banking encompasses digitizing every program and activity undertaken by financial institutions and their customers.

History of Digital Banking

1993

1. Temenos AG is founded, a provider of banking software systems to retail, corporate, universal, private, Islamic, microfinance and community banks.

1994

1. Online Banking is built into Microsoft Money. 100,000 households begin accessing their bank accounts online.
2. Stanford Credit Union begins offering banking services via their website, paving the way for credit unions and banks across the country.

1997

1. Tangerine launches, becoming the first digital-only bank in Canada.

1998

1. First Internet Bank launches, becoming the first digital-only bank in the U.S.

2001

1. Online banking hits 20 million users, with 8 different U.S. banks achieving at least a minimum of 1 million online users.

2002

1. Avoka was founded to help banks and financial institutions in their digital transformations.

2007

1. The launch of the iPhone begins shifting digital banking from desktop computers to smartphones.
2. Kony, Inc. is founded to help banks transform their banking operations with a cloud-based mobility, omnichannel and internet-of-things systems and services software platform.

2009

1. Online banking hits 54 million users in the United States.

2016

1. Millennials succeed in fundamentally shifting digital banking preferences, signaling to banks that they must move all services online.

2018

1. Temenos acquires Avoka, the leading provider of digital customer onboarding solutions for financial institutions.

2019

1. Temenos launches Temenos Infinity, a breakthrough digital front office product with the most advanced cloud-native, cloud-agnostic, API first technology and design led thinking.
2. Temenos acquires Kony, the leading provider of mobile banking apps that support conversational interfaces, artificial intelligence, augmented reality and wearable technologies.
3. According to Temenos’ 2019 State of Digital Banking Report, 65% of digitally active large banks reach the ‘Digital Promised Land’.

Want to learn more about how Temenos can transform your digital banking initiatives? Contact us today!