Behind-the-Scenes of Virtual Banking
In today’s digital world, we no longer have to go to a branch office or ATM machine to do the majority of our banking. For the most part, consumers can manage all bank transactions from the comfort of their home on mobile devices, especially during the COVID-19 pandemic. However, virtual banking has the potential to be so much more than just cashing checks. Many organizations around the world offer financially empowering services such as budgeting and saving plans to meet specific goals for their customers, like buying a house or car. However, there is quite a bit of work that goes on behind the scenes that dictates the success of such ventures, particularly from an identity standpoint.
Virtual Banking Industry Growth
The global digital banking platform market is on track to reach $9 billion by 2026. The concept of the virtual bank is largely credited with beginning in Hong Kong, rapidly expanding to the rest of Asia and then the rest of the world. Every institution, from established global banks like HSBC to start ups like Mox, are getting into the game and rightfully so. Virtual banking is quickly growing globally due to the profitability of the business model. Zero infrastructure is needed to build or maintain branch offices as every service and transaction is conducted via devices like phones and tablets.
This model has indeed been quite profitable for many organizations around the globe, such as PT Bank Tabungan Pensiunan Nasional Tbk (BTPN), one of Indonesia’s largest banks. BTPN was tasked with the challenge of reaching a population of over 250 million scattered over 17,000 islands. Virtually, of course. Creating branch offices on various islands was not financially feasible, so the organization virtually launched its Jenius application to serve its disparate consumer base. The bank quickly reached two million subscribers much faster than it had anticipated. As a result, BTPN has become much more profitable. Also, its flexible new system allows BTPN to introduce new services such as its recently released Wow application, which caters to small business owners.
Identity is Key in Digital Banking Experience
Some of the challenges during the shift to virtual banking include the need for a technology solution that allows for secure and quick onboarding of new customers and businesses that delivers an exceptional digital experience throughout the customer lifecycle. Due to these factors, digital identity plays a critical role in the success of virtual banking. Banks need to understand who their users are, which devices they are using and what their preferences are in order to offer consumer-friendly, personalized services. Plus, all of this needs to be accomplished in a secure and frictionless manner, minimizing the number of clicks and logins, while also connecting to downstream apps and services like credit cards and loan offerings.
The Future of Digital Banking
Mobile technology has opened the door for innovation in banking and personal finance management. For example, with AI-enabled apps, banks can offer consumer analytics, reminders and personalized advice. It is important to understand though, that none of this would be possible without the backend identity management solutions to support these mobile banking apps and services. With new passwordless authentication advancements such as biometric authentication, consumers can now access their banking information from anywhere with just the tap of their finger, while multifactor authentication (MFA) also remains a key element for logging into important financial apps and accounts. Looking ahead, brick-and-mortar banks are not going away anytime soon, but it’s clear that banks must adapt to consumer expectations quickly to keep from being outpaced in our rapidly digitizing world.