Why banks need to migrate to digital payments?

As most industries move closer and closer to digital transformation, there are even more compelling reasons as to why banks need to migrate to digital payments sooner rather than later.

Things that used to be considered science fiction are now becoming our reality and as the Internet of Things propels us forward at exponentially faster rates, consumers are expecting more and more and it is critical for banking institutions to keep pace with increasing demand for flexibility, ease of use, speedier transactions and security.

In this article, we look at some of the most compelling reasons to migrate.

Lower Cost

While migrating any system is going to have upfront costs, it’s the long-term savings that count. In a digital environment, processors perform tasks faster, more accurately and cheaper than ever before.

Users require faster access to value

An ever increasing understanding of technology, its uses and benefits and the adaptation to change has created a market that no longer accepts what is available, but rather one that demands systems that meet their requirements.  Never before has the consumer held so much power as they do today and when your customers demand more control over their money and faster transaction times, the banks need to deliver.  Digital payments allow the banks the flexibility to provide their customers with the tools they need.

Reducing the amount of cash in circulation

There are a number of arguments to support the reduction of cash in circulation, the most common being:

Risk

In a world where crime is so prevalent, carrying cash can be a security risk.  Not only for the individual, but also for shops and cash in transit companies who have the responsibility of moving large volumes of cash on a daily basis.

Greenbacks are so not green

Globally, people are making changes in their lives to reduce their impact on our planet earth in some way.  The dream of the paperless office is a long standing one and while strides have been made towards realising the dream, there are numerous obstacles that prevent it from becoming a reality.  Reducing the amount of cash in circulation is a huge step in the right direction.

Hygiene

Ever stop to consider how many times a bank note touches somebody else’s hands? Yes, cash moves at an incredibly fast pace and the pandemic has taught us all to be far more vigilant about our general hygiene.  Reducing cash transactions also reduces the spread of germs, viruses and infections.

Behaviour monitoring

While customers demand all the bells and whistles in their banking experience, they still expect state of the art security, but the two often clash with each other.

In order to reduce the burden of constant security questions and checks, banks are implementing behaviour monitoring that detects deviations in typical behaviour as a trigger to possible security breaches.

The way in which these systems operate is exceptionally advanced.  The software will have hundreds of parameters that they monitor.  One of the things that may be measured is the way that a customer uses the mouse as this exposes their hand-eye-coordination.

Over and above all these benefits, there is another compelling reason to migrate to digital and that is to be equipped to meet Anti-Money Laundering (AML) requirements.

What is AML?

In 1989 the Financial Action Task Force (FATF) was formed to devise international standards to prevent money laundering, and subsequently they expanded their mandate to include combating terrorist financing.

Possibly more commonly known, is the International Monetary Fund (IMF) who encourage all member countries to comply with these standards to thwart illegal and/or terrorist financing.

Financial institutions will typically appoint AML compliance officers, but with the sheer volume of customers and transaction, this is impossible to manage without digital processes and workflows, used to monitor and alert accordingly.

In Conclusion

If banks and financial institutions want to remain relevant today, they need to be able to adapt to their customers needs.  Based on the some of the benefits listed above, we believe that migrating to digital payments is no longer a consideration, it’s a priority.

References:

https://www.investopedia.com/terms/a/aml.asp

https://tearsheet.co/uncategorized/how-banks-are-reconciling-security-and-seamlessness-with-behavioral-biometrics/