The finance industry has evolved tremendously over the last few decades. Banks are perceived as a source of reliable and stable institutions that safeguard assets and wealth of billions of people across the globe. They are the most secure firms in the world today. Change is the way of life, and the banks across the globe take it seriously. Changes to existing infrastructure and models are implemented over a certain period of time ensuring minimal distress to the customers.
It is well understood that any compromise of the banking system can lead to major negative repercussions to the customers as well as the bank. For decades the banks have been upgrading their system in sync with technological advancements introducing easier and more efficient ways for transactions and wealth storage.
Currently, innovative cashless payment systems are taking over the traditional credit and debit card market which have been in existence for 60 years. Now, one can perform instant transactions on bank accounts using smartphone applications, thus increasing the convenience and safety of the customers. The modern payment systems are encouraging the bank account holders to opt for smartphone applications rather than plastic cards. Another payment method includes QR codes which facilitate lightning fast transactions and transfer of information using mobile devices.
An online installment loan, which includes fixed monthly payment and repayments terms, can be availed using online banking features introduced by companies across the globe. Cashless payment systems are synonymous to speed, volume, interoperability, and high-end security.
We are witnessing a major shift in the banking sector from traditional methods to digital-oriented systems offering better transparency and efficiency. It is projected that in the next 20 years, the banking systems will change completely in first world countries. The banks are struggling and competing to keep up with the technological advancements, and are striving every day to provide better and faster services to its customers.
Let us discuss the recent breakthroughs in the banking sector. Digital wallet, a term not understood a few years back, has now become a global phenomenon. It is an online wallet where one can store money and use it to purchase different products depending on the guidelines and the agreement of the developers.
After the introduction and proper marketing of digital wallets, the feedback was overwhelming. Today, transactions over trillions of dollars take place using digital platforms. The attractive thing about digital payment systems is the unparalleled functionality and user-friendly interface. According to studies, users are demanding faster and cheaper online services from the respective banks which can be accessed anytime and anywhere.
The next payment model is the Micro Credit plan offered by financial institutions which offer loans to entrepreneurs and businessmen in growing their businesses in the market. This idea has allowed major brands to become registered lenders providing microloans at attractive rates and plans surpassing that of traditional banks. Currently, the model is not interfering with the commercial side of banks, but it is projected that they will be affected in the future. Micro Credit system offers an efficient solution for small businesses by providing low limit short-term loans based on rigorous data analytics and sophisticated algorithms implemented on huge sets of data.
There exist four major factors which affect modern digital payment models directly. Let us discuss them in brief.
First comes the online Cloud infrastructure, which is to be perfectly incorporated in existing banking systems to ensure smooth and efficient operation of IT services ensuring security and flexibility. A cloud-based infrastructure gives an edge over competitors in the current era.
Integration is a crucial step for major infrastructure transition from traditional systems to modern systems. Proper integration shuts down and isolates the obsolete system, but keep it perfectly linked with the new system.
A new digital banking system includes solid infrastructure and intricate coding which has to be completely correct. Minor errors, redundant coding, and patchy fixes can bring out vulnerabilities in the system, creating long-term problems and affecting revenues, reputation, and infrastructure.
Lastly, services and products offered by banks should be accessible by customers through different mediums at all times. It is important to understand that customer satisfaction is the key to growth and expansions. To achieve this, banks should bid adieu to their traditional methods and collaborate with major technology platforms.