This is the future of banking – and privacy is a big issue
There’s no getting around it: banking is on its way to the future of digitized services. It has many advantages, but also clear disadvantages. Cyber-attacks are a major concern today for many companies, especially banks, who are constantly looking for innovative cyber security solutions.
Recently, a company called Onyxia—which created a platform to help cybersecurity managers detect cyberattacks—announced a successful fundraising campaign, and the excitement is building. This is good news for cyber security, but it is certainly not enough. What does the future hold for digital banking and lending? More importantly, how can privacy and security be maintained in the world of digital banking?
“During the last decade, we have seen a flood of banking services move towards digitization. This trend is becoming more dominant in our lives and at an unprecedented speed,” said David Galperin, founder and owner of marketing communications and media group The Gil. Group.” This change opens up many new opportunities for all of us, but also brings challenges to privacy and network security.”
It’s not just about efficiency
Banking is expected to change significantly this decade. Some “traditional” banks will survive, but most will have to become completely virtual institutions. New banks are likely to be 100% virtual from day one.
A virtual bank means that information is stored in the cloud. This makes services potentially faster (and more secure) because they are based on blockchain technology – the latest interface to the internet. The use of virtual banking assistants based on artificial intelligence for payments, investments and quick money transfers also increases speed.
Speaking of remittances, cash is probably rarely (if ever) used, as are credit cards. It is expected that banks will try to pay only through mobile devices, with an emphasis on mobile devices. Cryptocurrencies play a much more important role at the expense of “regular” currencies.
The competition between banks is intensifying. We can already see how banks are competing for the hearts of potential and existing customers by offering better and more versatile digital services. This can be done, for example, with personalized packages according to the financial habits and activities of each customer.
However, efficiency is not the only parameter here. As consumers become aware of their needs and choices, the establishment of new cooperative banks is likely. They force all banks to focus on customer service, not just efficiency.
Competition will be tough
Galperin, whose company developed a mechanism for digital loan communication between banks and taxi drivers, also offers interesting predictions for the loan and mortgage markets.
“The public transition from bank loans to loans from non-banking companies is increasing, especially for housing loans. We see that non-banking companies are already offering customers easier and faster approval of mortgage applications,” he argued. “Traditional banks are already a bit behind, so the competition is likely to only intensify.” The same probably applies to other loans, such as medical loans and student loans.
Another important change in the loan market is artificial intelligence loan monitoring. This tool could potentially monitor borrowers’ finances, alert them when there are problems with their loans, or make suggestions to optimize loan management. The most important thing is for borrowers to be more active and aware of their financial situation.
A necessity, not an advantage
The pandemic may not have been the only reason for the shift from face-to-face to digital services. However, it has made both financial institutions and their customers realize that digital services are not an advantage, but a necessity. The rush to digitize banking services is experiencing several security and data protection difficulties. However, this train has left the station – and it will not be stopped by old trends or red tape.
Banks are well aware of the dangers of hacking and cyber-attacks and are expected to make significant efforts to minimize these risks: Banking is protected by artificial intelligence for a start. In addition, passwords and PINs are replaced by biometric authentication through fingerprints and voice recognition.
“Many cases of data theft are the result of careless handling of sensitive user information, mainly due to ignorance or underestimation of online threats,” added Galperin. “For example, weak passwords are easy prey for fraud. Those who use unsecured networks for online financial activities are vulnerable to phishing and credential theft. These are just two examples. In general, it is the responsibility of banks to make users aware of these issues if we want to benefit from the digital age, not fall victim to it.”