The era of traditional banking is coming to an end. More and more people prefer to do everything online, and if your bank does not offer such opportunities, it’ll fail. This era of change is also a perfect chance to enter the banking business, which has been in the hands of monopolistic players for many years.
Table of contents:
What is a Digital Banking Platform?
A digital banking platform is an online or mobile-based platform that allows individuals and businesses to access and manage their financial services and transactions through digital channels. It gives a virtual interface between customers & their financial institutions, allowing them to perform various banking activities without visiting a physical branch.
When is it Necessary to Develop Your Digital Banking Platform?
Here step is to decide when it's time to focus on your solution for managing the clients' data and helping them use online banking services.
Each bank has created a cutting-edge tool to meet the most fundamental requirements. Only after developing a digital banking strategy and knowing how it can improve bank operations will you know that your bank or company has to establish its platform.
If you find out that your product will solve your company's challenges and help you meet those goals more successfully, you must begin working to build it.
Key Features That Every Banking Platform Must Have
1) Account management - Customers can open new accounts, view account balances, and access transaction history.
2) Fund transfers - Users can transfer funds between accounts, make payments to other individuals or businesses, and set up recurring transactions.
3) Mobile banking - Digital banking platforms often have dedicated mobile apps that provide convenient access to banking services on smartphones and tablets.
4) Bill payments - Customers can pay their bills online, including utilities, credit cards, loans, and other recurring expenses.
5) Deposits and withdrawals - Some digital banking platforms allow customers to deposit checks remotely using mobile check deposits or make cash withdrawals at partner ATMs without a physical card.
6) Personal finance management - Many platforms offer tools to track spending, set budgets, and categorize transactions, helping users better manage their finances.
7) Alerts and notifications - Customers can receive real-time information about account activities, such as large transactions, low balances, or bill due dates.
8) Customer support - Digital banking platforms often provide customer support through chatbots, email, or phone, offering assistance with account inquiries, transaction issues, or general banking queries.
9) Security measures - Robust security measures, such as two-factor authentication, encryption, and fraud detection systems, are implemented to protect customer data and financial transactions.
10) Integrations - Some digital banking platforms integrate with third-party services, allowing customers to link external financial accounts, investments, or payment platforms for a holistic financial overview.
"Overall, digital banking platforms allow convenience, accessibility, and flexibility to users, allowing them to manage their finances on the go and reducing their reliance on physical bank branches".
Pros and Cons When Building a Digital Banking Platform
Building a digital banking platform offers several advantages and disadvantages. Below some of the key points are:
PROS:
Customization: Developing a digital banking platform allows you to customize the platform you have the flexibility to incorporate features that align with your unique value proposition(USP).
Control and ownership: Building a digital banking platform gives you complete control over the technology stack, infrastructure, and data. You can implement security measures and compliance standards tailored to your organization's needs, ensuring data privacy and protection.
Integration capabilities: Developing a banking platform enables seamless integration with your existing systems, such as core banking systems or third-party applications.
Scalability: By building your platform, you can design it to be scalable, accommodating increasing volumes of users, transactions, and data as your customer base grows.
CONS:
Development complexity & time: Building a digital banking platform from scratch requires significant resources, expertise, and time. It involves various stages, including design, development, testing, and deployment, which can be complex and time-consuming.
Regulatory compliance: The development of a digital banking platform must adhere to strict regulatory standards and comply with data privacy laws, security regulations, and financial industry regulations.
Technology risks: Building your platform involves technological risks, such as system failures, security breaches, or vulnerabilities. Robust security measures and continuous monitoring are essential to mitigate these risks effectively.
Time-to-market: Developing a digital banking platform can take longer compared to adopting existing solutions or partnering with third-party providers.
Considering these pros and cons, organizations should carefully evaluate their goals, resources, and capabilities before deciding to build their digital banking platform.
How To Start A Digital Banking Platform From Scratch?
Now let’s start with building a digital banking platform from scratch. To set up this process, you will need to go through several steps:
✅ Step 1- Market Research
You must research your competition and target market in this phase. As you can ensure that your consumers are happy & that you stand out in the market, you can pick the best features and technology for your platform.
✅ Step 2- Planning
You may start developing a strategy for expanding a company once you have researched the market and examined the findings of your research. You have to build a business plan at the moment.
✅ Step 3- UI/UX and Prototype
The key objective of this step is to design your open banking platform's user interface and provide simple navigation. You will ultimately have a finalized design.
✅ Step 4- Security
Your team should now focus on the security of your banking platform and decide what steps to take to provide it. Data encryption or two-factor authentication are a couple of instances.
✅Step 5- Development
Your developers begin to create your online banking platform in this step. Also, the third-party integrations required to run your product must be set up by your team.
✅ Step 6- Market Launch
Launching your online banking platform is the final phase. At this point, your team evaluates the level of user acceptance of the offering and thinks of ideas for bettering it.
✅ Step 7- Improvement
The last stage never ends. In this situation, you need to roll out platform updates, provide new features, or enhance current ones.
Best Examples of Digital Banking Platforms
We believe that you must study your competitors well to create your own BaaS platform. So let’s learn from their best and learn more about the top digital banking platforms.
Chime
Chime is a FinTech company founded in San Francisco in 2013. It offers free mobile financial services and markets itself as an alternative to traditional banks.
Chime does not charge an overdraft fee, does not demand a monthly maintenance fee, and does not require a minimum balance. This mobile application offers secure transactions, a credit history builder, and automated savings.
The Chime platform is in high demand among American users. In 2021, it became the most downloaded digital banking platform in the U.S., with 6.4 million installs.
Monzo
Monzo is a British neobank founded in 2015. Over 5 million people currently use the platform. Budget control, savings, commission-free international transactions, immediate notifications, and cutting-edge security measures are just a few of the services that Monzo offers.
Revolut
Revolut is a FinTech online banking company headquartered in London. Like Monzo, this company is an internet-only bank.
Currency exchange, stock trading, cryptocurrency trading, and minimal exchange fees are some of the things that Revolut offers. Currently, the application supports 29 fiat currencies in addition to cryptocurrencies including Bitcoin, Ethereum, Litecoin, Bitcoin Cash, and XRP.
What is the future of digital banking?
The future of digital banking will be shaped by advancements in technology, changing customer expectations, and evolving regulations. Key trends include the use of artificial intelligence and machine learning for personalized customer support and analytics, open banking, and APIs for enhanced collaboration and product offerings, a mobile-first approach with advanced functionalities, increased focus on personalization and customization, and emphasis on security measures to protect customer data.
What is the difference between online banking and digital banking?
The terms "online banking" and "digital banking" are often used interchangeably, but there is a subtle distinction between the two:
Online Banking: Online banking refers specifically to the banking activities and services conducted over the Internet. It involves accessing your bank account through a web browser on a computer or laptop. It primarily focuses on the ability to perform banking activities remotely using a computer and an internet connection.
Digital Banking: Digital banking encompasses a broader concept that extends beyond just online banking. It refers to the use of digital technologies, such as mobile apps, smartphones, tablets, and other digital platforms, to provide a range of banking services and experiences. Digital banking aims to provide a seamless and comprehensive approach to banking that leverages digital channels and technologies to meet customer needs.
Conclusion
In conclusion, a digital banking platform is a mobile-based platform that enables individuals and businesses to access and manage their financial services and transactions through digital channels. As technology continues to evolve, digital banking platforms will play an increasingly crucial role in shaping the future of banking.