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What Is Digital Banking?

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What Is Digital Banking?

Digital banking involves the digitalization of all traditional banking products, processes, and activities to service customers using online channels. With digital banking, any bank branch services are available and accessible 24/7 on mobiles, computers, and compatible smart devices. 

From account management and applying for financial products to loan management and bill payments, digital banking software makes all traditional services more accessible, easier to understand, and quicker to manage. 

Revolut, Fidor, Simple, N26, and Monzo are some of the better-known digital banks out there today using which customers can open an account in minutes on their phone, whenever and wherever they want. But digital banking is not limited only to online banks. In the past decade, banks that created internal digital bank spin-offs optimized revenue and reduced operating costs by up to 70%

This approach allows banks to test concepts at lower risk before moving parts of the legacy business to the new system. Notable examples include Goldman Sachs’ Marcus, Bó by RBS, and State Bank of India’s YONO that acquired more than 26 million customers and broke even within 18 months. 

Digital banking transformation will be a top priority for banks in 2021

Digital banking transformation will be a top priority for banks in 2021. 

Source: Digital Banking Report, The Financial Brand

Digital banking vs. online banking

Although the two terms may seem interchangeable, there are fundamental differences between digital and online banking. 

Online banking involves only some transactional capabilities of its underlying core banking system. Typically accessible over the web, online banking offers basic banking functionality like account management and statement access. An online banking system’s capabilities are limited and cannot be quickly expanded to provide other banking services to consumers. 

Digital banking software is much more flexible and allows banks to add and expand functionality much faster than traditional systems. Digital banking relies on high-level process automation, web-based services, and APIs to deliver a high level of cost-efficiency, security, and flexibility to banks and customers. Modern banking solutions enable completely digital customer journeys that generate real-time data flows and speed up critical analytics. 

Digital banking benefits

As more digital banks enter the market, it is important to understand how modern digital banking solutions allow them to provide better and cheaper services than the traditional competition. 

Cost savings

Traditional banks spend a lot of time and resources on verification and accounting. By eliminating redundant back-office operations, digital banking significantly reduces operating costs. Digital banking software removes heavy workload for banks by automating processes associated with everyday transactions. Digitization reduces the number of steps and people involved in transactions, decreasing the chance of costly financial errors. 

Greater usability

Integrated KYC and AML protocols allow digital banks and customers to open accounts in minutes from any internet-connected device. ID verification systems and risk assessments allow banks to onboard clients quickly and easily, enabling the unbanked population to access financial services. Digital banking is available 24/7, meaning that customers can complete any transaction and access a full range of services from anywhere. 

Personalization

Digital banking software enables sophisticated personalization strategies powered by artificial intelligence (AI) and machine learning (ML). Banks can deliver the most relevant financial opportunities, interactive tools, and educational resources to customers at the right time. Automated budgeting, expenditure analytics, savings reminders, and many more tools help keep customers informed and engaged. 

Wow-features

Digital banks already have many features incumbents simply can’t provide, from buying cryptocurrencies and gold to investing in stock markets from the banking app. Customers can instantly change their security settings, transaction limits, and even whether they want NFC or magstripe payments enabled or not.

Digital banking solution providers

According to McKinsey, more than 65% of surveyed banks are exploring the potential of next-generation core banking platforms. Feature-full digital banking experiences offered by challenger banks are forcing established banks to review the legacy technology at their cores. 

Source: Capgemini and Efma

Source: Capgemini and Efma

White-label digital banking software helps banks to radically modernize and benefit from lower costs, accelerated time-to-market, quick scaling, and personalized consumer propositions. Companies aspiring to launch a digital bank can get to market in a fraction of the time by partnering with SDK.finance, a core banking software vendor, and choosing a product that suits them the best: on-premise or cloud digital banking platform. 

Companies with a dedicated on-site IT team and hardware capabilities can implement the SDK.finance white-label digital banking solution on-premise (source code with a license) and become completely independent from the technology vendor. With a banking software license, the solution can be customized with new modules, integrations, and capabilities. 

For the quickest start, companies can use the SDK.finance cloud digital banking platform (SaaS banking solution) that does not require a traditional banking software suite’s hardware infrastructure. The cloud banking platform runs on a subscription model that does not require a substantial investment into a dedicated on-site IT team and hardware capabilities. 

Contact the SDK.finance team directly to learn more about what type of banking software will be perfect for your business needs.

The list of SDK.finance solutions includes Digital Retail Bank, Voice Banking, Money Transfer, Currency exchange.

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Source: https://sdk.finance/what-is-digital-banking/

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Praemium FUA up, opens Edinburgh office

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The platform has recorded increased funds under administration (FUA) of $37.9 billion as it expands its presence in the UK with the opening of an office in Edinburgh, Scotland.

For the March quarter, Praemium recorded an 11% increase in FUA, and a 96% increase compared to March 2020.

The Australian platform FUA increased 224% on the previous corresponding period to $16.9 billion while the international platform increased 42% to $4.4 billion.

The platform recorded $801 million in net platform inflows with $448 in the Australian platform for the quarter, up 149% on the previous corresponding period.

Praemium has doubled in size over the past year. Despite the pandemic, the past 12 months have been the most transformational in our story thus far,” Praemium chief executive Michael Ohanessian said.

The results follow the opening of a Praemium office in Edinburgh.

To read more, please click on the link below…

Source: Praemium FUA up, opens Edinburgh office | Financial Standard

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Source: https://australianfintech.com.au/praemium-fua-up-opens-edinburgh-office/

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Mambu research reveals global consumers are hesitant to use Open Banking

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A study of 2,000 global consumers released by Mambu, the market-leading banking and financial services platform, revealed that a significant misunderstanding of open banking is hampering its adoption. The Censuswide survey, commissioned by Mambu, found that more than half (52%) of respondents have never heard of open banking and 61% have never used it, in spite of 80% of respondents using one or more mobile finance apps.

“The research reveals the majority of customers don’t understand what open banking is, how it works and what it means for them”, said Elliott Limb, Mambu’s Chief Customer Officer. “But it also reveals they do care about receiving better financial services that support their lifestyles – smart banking. If banks address this need and lack of understanding, it will help banks build customer loyalty and provide genuinely innovative, differentiating, revenue-generating services.”

Kristofer Rogers, General Manager ANZ for Mambu, added, “In Australia, one of the main reasons for the slow adoption of open banking so far is that open banking is built on modern technology, and the Australian banking and financial services industry is not. There’s a huge disconnect, with many established banks simply unable to deliver on the regulatory requirements of open banking with their existing technology – they need to adopt API-first, cloud banking tech to truly embrace open banking. And it’s imperative that we do make progress on this because beyond technology, open banking is ultimately an ideology of creating better financial outcomes for every Australian, and who doesn’t want that.”

Open banking sees increase post-COVID despite consumers being ‘scared’ to use it

Open banking has witnessed an increase in adoption globally as a result of the COVID-19 pandemic, and the research indicates a marked change in attitude and priorities as a result of the crisis. According to our survey, 52% said they wanted more control over their finances. At the same time, 40% said the pandemic had changed their attitudes to privacy and 24% to data sharing. Another boost came from the 41% who said they have had more time for research.

  • I have needed to take more control of my finances (52%)
  • I have had the time to do my own research and understand it better (41%)
  • My attitude to privacy has changed since the pandemic (40%)
  • I’m less worried about sharing data (24%)
  • I have had more time to set it up (40%)

However, existing concerns remain with 48% of consumers claiming they are ‘scared’ to use open banking and 53% still believing that open banking is a dangerous use of data sharing.

“Banks must accept that open banking is still a not fully comprehended phenomenon so this is the starting point,” said Dmitrii Barbasura, CEO and Co-Founder, Salt Edge, a Mambu partner. “We believe they need to invest time and effort in educating customers about the new possibilities they get access to, and also inform them about their rights and the high safety level covered by open banking.”

Change the Record

Demonstrating the opportunity for open banking, the survey revealed that 57% said they would be more likely to use it if their bank had more successfully implemented and promoted it.

When exploring further what consumers want from open banking, the survey shows that nearly half of respondents want instant digital money transfers; more than a third want aggregated bank balances at a glance; a third want tips on better money management and a quarter want money-saving suggestions for their bills.

  • Instantly transfer money between different accounts (48%)
  • See different account balances together at a glance (38%)
  • Help boost my savings automatically calculating spending patterns and moving spare money into savings or investments (36%)
  • Receive helpful hints about better money management (34%)
  • Receive one overall monthly bank statement (34%)
  • Allow access to banking data to receive automatic suggestions about money saving on bills and insurance (26%)

This is the first study of Mambu’s newly launched research series, Disruption Diaries. The series seeks to understand what customers think of the key trends driving the development of the financial services industry, in an effort to identify opportunities for banks and others. The full report on open banking can be found here: Let’s talk openly.

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Source: https://australianfintech.com.au/mambu-research-reveals-global-consumers-are-hesitant-to-use-open-banking/

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Zip Co raises $400 million for international expansion

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Zip Co (ASX: Z1P) has priced $400 million of senior convertible notes to fund expansion into new regions on the back of major growth in the US.

Co-founder and COO Peter Gray says the move will keep shareholders happy, with the notes set to mature in 2028.

“We are very pleased with the strong global demand for this offering,” says Gray.

“This transaction further diversifies Zip’s sources of capital and allows us to pursue our global growth aspirations while reducing potential dilution of existing shareholders. Another fantastic outcome for Zip and its shareholders.”

The $400 million in convertible notes mirrors the approach recently taken by buy-now pay-later (BNPL) competitor Afterpay (ASX: APT).

However, Zip’s latest raise doesn’t come close to the whopping $1.5 billion secured by Afterpay’s settlement of convertible notes due in 2026.

The offering is being marketed to eligible investors and the notes are set to be listed on the official list of the Singapore Securities Trading exchange. Settlement is expected on or about 23 April 2021.

To read more, please click on the link below…

Source: Zip Co raises $400 million for international expansion

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Source: https://australianfintech.com.au/zip-co-raises-400-million-for-international-expansion/

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FinSS and Salt Edge partner for CDR Compliance solution in Australia

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Australia is at the forefront of giving consumers greater control over their data via Customer Data Right (CDR). With phase two of the regulatory adoption quickly approaching, Australian data holders are welcoming a new CDR Compliance solution on the market. The technology solutions expert FinSS Global joined forces with Salt Edge, a leader in developing open banking compliance products, to enable local data holders to meet all the strict CDR requirements within less than 2 months.

As the Australian Government is committed to enforcing the regulatory adoption by the market, with the financial sector being the first one, institutions are now racing to become CDR compliant in 2021. That’s why FinSS Global and Salt Edge are aiming to help banks, credit unions, building societies, EMIs, neobanks, and other financial institutions follow strict regulations while protecting customers’ data and privacy under open banking.

The CDR Compliance solution has a holistic approach and is made up of components and configuration items such as an API for sharing consumer data together with a sandbox for ADRs’ testing, a Consent Management API to assure end-customers’ full visibility and control over their granted contents, a dashboard for the data holder to have full control and access to insightful statistics, an ADR Developer Portal for seamless integration and interaction with bank’s channel, a Multi-factor authentication solution for end-customers’ security, ADR verification, and much more.

The solution is based on a SaaS model which makes it easily deployable and also reduces the amount of technical implication and skills required from data holders. Salt Edge handles all the maintenance, regular updates according to new changes in the CDS requirements, and even assists with passing the Conformance Test Suite (CTS).

Open banking represents just the first phase of Australia’s strategy in making the sharing of any kind of customer data easier. That’s why the CDR Compliance solution is flexible and can be tailored so that it fits any industry or business case requirements including the addition of payment initiation possibilities.

Dallas Newton, CEO and Co-Founder at FinSS Global, said, “We partnered with Salt Edge in 2020 because we believed their experience with PSD2 in the UK and Europe and some of their solutions could be of significant benefit to the smaller Australia Financial Institutions looking for help in their CDR Compliance journey and participation in the emerging CDR Ecosystem. This resulted in us working closely with Salt Edge to adapt their SaaS-based PSD2 “Compliance in a Box” solution for the small to medium banking domain in Australia and our launch of the CDR Compliance Solution. We are excited to be working with Salt Edge and reach our target market, and we look forward to leveraging a functional, secure, cost-effective, hosted solution to rapidly have data holders join the CDR Ecosystem.

Lisa Gutu, Head of Business at Salt Edge, commented, “While helping out businesses across the globe to set their strategy in leveraging open banking, we understood that all of it might often seem like a regulatory and technological burden for institutions. That’s why together with FinSS Global, we’re committed to guiding Australian financial institutions towards a seamless CDR compliance journey.”

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Source: https://australianfintech.com.au/finss-and-salt-edge-partner-for-cdr-compliance-solution-in-australia/

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