The advancement of technology has directly influenced several sectors globally, with the commercial sector being one of the most benefited (and experiencing the most transformations), as it has moved from physical markets and businesses to a globalized digital market (e-commerce).
However, the growth of e-commerce has been thanks to the use of technology at a financial level, since different online financial tools and platforms have been developed that have made it possible to satisfy the needs of consumers and businesses.
This is where traditional and digital banking come into play, seeking to gain customer loyalty through services that provide the best financial solutions. Below, we’ll explore some key factors that can determine who can win this battle for customers:
Types of processes in financial operations
Today, customers are looking for financial services that allow them to optimize their processes and minimize the time required for their financial transactions, especially given that many commercial and business processes are digitalized. This is where digital banking takes advantage of traditional banking, as most customers seek automated and digitalized services to enter the vast world of global online commerce.
This is because, through digital banking, customers have access to financial tools that make use of technology and offer optimized and secure processes, which minimize possible errors or manual errors, which are more frequent in traditional banking and in manual or face-to-face processes.
This is because digital banking allows customers to access financial tools that leverage technology to offer optimized and secure processes, significantly reducing manual errors or mistakes, which are more common in traditional banking and manual or in-person processes.
Security and financial information
Digital banking can expand its customer base by outperforming traditional banking in the security and financial information game. This is thanks to the fact that digital banking offers financial services that use tools such as blockchain, the cloud, and even artificial intelligence. However, when it comes to financial information, thanks to the expansion of Open Banking, traditional banking has caught up with digital banking, as it has embraced the use of more open or transparent technology and standards to cooperate with automated, direct processing and the efficient use of multiple sources of financial information data to offer better financial products and services.
Asset custody
An important point for clients is asset custody. In this case, both digital and traditional banking offer this service to meet the needs of each client. Clients who operate with fiduciary assets (usually cash) can rely on custody services through safe deposit boxes and certificates, which allow them to safeguard these types of assets.
For its part, digital banking offers customers custody services for digital assets, such as cryptocurrencies, digital currencies, smart contracts, or non-fungible tokens (NFTs). Many financial institutions (which are part of digital banking) even offer custody services for fiduciary assets similar to traditional banking.
User experience
When we talk about user experience, digital banking generally tends to offer a better experience to customers, especially when compared to traditional banking, since for some people it can be a cumbersome process to go to a physical branch of a traditional bank, especially to be able to make a deposit, withdrawal or some type of transfer.
Through digital banking, customers can carry out any type of transaction quickly and easily, as digital banking features platforms and applications designed to facilitate and optimize financial operations, offering a more satisfying experience for the end user.
On the other hand, traditional banking is highly valued by people who want to receive in-person service, which can be an effective tool in certain situations requiring human contact and more personalized service.
It’s important to note that in recent years, traditional banks have been implementing technology into their financial services, allowing them to offer new solutions and a better user experience to their customers as they have expanded their physical presence and improved their online service.
Should digital banking and traditional banking compete?
It’s important to emphasize that traditional banking doesn’t necessarily have to compete with digital banking, as in many cases, the collaboration between these two systems creates a synergy that delivers positive results for end customers. Below are some examples of collaboration between Fintech and traditional banks:
– Technological leverage: This is perhaps the best-known type of collaboration when a traditional bank hires a fintech to leverage its technological platform and provide better service to its users. Instead of renewing or developing a new technological platform (its own), it leverages a pre-existing modern platform (developed by a fintech).
– Financial Infrastructure: Fintechs sometimes rely on existing financial infrastructure, such as payment networks, banking agreements, permits, and regulations. Collaborating with traditional banks can facilitate fintech access to this financial infrastructure and expand its reach and influence.
– Risk management and regulatory compliance: Traditional banks have a long history of risk management and regulatory compliance, a product of decades of experience. In this case, fintechs can partner with traditional banks to leverage this expertise and address the sector’s regulatory challenges.
What do you think about this topic? Do you know of any other features that digital and traditional banking offer that satisfy their customers?
If you have any questions or queries, you can write them below (comments section).
