Top 5 challenges and issues in the online banking sector to stay in the know
Online banking has several benefits, of which two of the most important are speed and convenience. People who are actively involved in online banking can access their accounts, view their statements, make transactions, pay bills, and much more from the comfort of their homes or on the go. Despite the benefits, there are also several challenges facing the sector. In this blog, we explore the main concerns pertinent to the online banking industry.
Shifting banking habits
Online banking usage has witnessed a pandemic-induced surge. Owing to the lockdown restrictions, online banking adoption soared and now people are increasingly opting for online banking to visit the bank. As consumers continue to adopt digital at break-neck speed, businesses have begun strengthening their capabilities to offer fully virtual, contactless banking solutions. It is up to fintech players to ensure that customers are aware of their full product portfolio, further enhancing the online banking experience for them and partnering with the customer across their financial lifecycle.
Security
Security is one of the most significant challenges for online banking owing to the concerns that are associated with banking online. Although banking systems are designed to stay virtually impenetrable, cyberattacks and fraudulent activity are a growing concern. Often users don’t realize until it is too late that their online habits may be making them susceptible to fraud. Fraudsters prey on poor privacy habits on the part of the user. Issues like weak passwords and using unsecured networks make people vulnerable to online attacks, like login credential theft and phishing, which could result in fraudulent bank transactions.
The online banking sector needs to focus on demonstrating and explaining the security of their online systems, while also educating customers on how to improve their privacy and security habits. Practices like multi-factor authentication and using passphrases are always good starting points.
Technical issues
Using the internet comes with its own risks of experiencing technology as well as service interruptions. System stability and efficiency can impact your ability to access your accounts if your internet is slowed or stopped entirely. Similarly, no matter how sophisticated the tech, bank servers are still prone to both intentional and accidental downtime.
Lack of personal relationship
Some complex customer needs are difficult to meet through digital banking alone. The benefits of having a personal relationship with your bank are often overlooked, as navigating challenging banking scenarios can often be made easier by the involvement of bankers. Having an in-person banking relationship can help customers compare their options and find solutions tailored to their needs, something which isn’t as easily achievable through self-service.
The changing banking landscape
The changing banking landscape has seen a rise in digital-only banks and FinTechs offering streamlined banking solutions. Considered nimbler and more transparent than traditional banks, the neo banks have completely embraced the power of digital to offer a seamless banking experience. They are posing significant competition for traditional banks. Traditional banks must continue to adopt digital transformation and adapt their services to be as easily available and efficient online as they used to be in-branch. While banks work towards honing their competitive advantage in the changing banking climate, fintech players are focusing on enhancing customer loyalty and engagement by reinforcing their wealth of knowledge, user-friendly platforms, increased digital product offerings and transparent and swift communication.
How these challenges can be turned into opportunities
Online banking is among the most significant developments in the finance industry. However, despite its many benefits, customers should also be in the know about the key challenges facing the online banking industry. Changing consumer habits and FinTech innovations, as well as security and technical concerns, are all major concerns in online banking that companies must reconcile to add value to the lives of customers sustainably. It is also important to pay extra attention to the user interface and experience of these app-based lending platforms so customers don’t feel the absence of banking professionals helping in the navigation.
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