Why Latest Online Banking Trends Are Important?
If you’ve ever been wondering what are the latest online banking trends, then please keep on reading.
Online banking is the new norm nowadays. People bank online with increasing user experience and decreasing number of clicks till the end goal. As the rapid innovation is creating value for investors and users. It is not only digital banks challenge traditional banks with price of services, but also ultimate user experience via technology interface.
7 Latest Trends To Watch
Let’s have a look at what are the hottest new trends in online banking and how these might shape the near future of online banking.
As a part of finch development, Open Banking is here to innovate digital banking. It is enabling third parties to access shared data and developers to create systems and services around financial institutions.
It is a secure way to have more control over what matters to users – private financial data. For businesses it is a great opportunity to offer different and innovative services such as money management, price comparison services, money transfers, etc.
Fintech players can use the data from open source to improve customer experience and analyse more and more data about individuals. For example, Open Banking technologies enables customers to track and manage their budgets, receive personalised recommendations towards financial products and more.
However, not everyone can access your data and The PSD2 determined that such data can be obtained by AISPs (Account information service providers) and PISPs (Payment initiation service providers).
AISPs use customers account data to aggregate financial information to one place, for example like tracking their spending. PISPs are initiating payments on the behalf of customers on their bank account as an alternative use of cards. A common example is e-commerce payments (like GoCardless). Both are changing customer relations with financial data and providing additional financial services that used to be aggregated with traditional banking units such as commercial banks.
More and more financial or technology players partner to bring to market new and innovative products or features. And we are not talking about things like Reg-Tech or Insure-Tech partnerships as these trends are here for several years now. And those features can be found in e-wallets today.
Recently Revolut launched its stock trading feature in white-label collaboration with institutional partner in brokerage business. E-wallets now are on the path to introduce features of having Gold or Silver as part of your currencies holding. Next step could be ETF’s or Mutual Funds easily accessible via your e-wallet like Revolut.
Another theme that is hot – micro hedging. Payment platforms are introducing slowly a micro hedging features for SMEs. On top of that, it is a matter of time when legal persons will be able to hedge their currency exposures via e-wallet as well.
Important thing to understand is that in order to offer these features e-wallets and NeoBanks will have to partner with liquidity providers and brokerage companies to introduce such features. Even more, it is visible in the market that top tier banks and brokerages are actively exploring such partnership possibilities.
This was partly covered in Open Banking section. What we are looking at today in terms of banking data and user data is strong analytics. Your e-wallet is able to track and categorise your spending activities and habits and soon it will be predicting and helping you to budget.
For businesses, there are products that not only allow them to bank easily via automated or mass payments but also do taxes and reconciliation.
Fee transparency is improving every year in digital banking. Especially NeoBanks are among those to eliminate fees for non-business clients.
What we are missing is full transparency towards currency exchange rates. You can often see pricing up to two decimals while anyone with FX experience can tell you that FX quotes are longer than that. This room is used by e-wallets to hide their fees.
In some cases people still have trouble with SHA (shared) payments when not only the sender is paying fee but also the receiver. E-wallets and NeoBanks are still not highly transparent on this.
While almost every e-wallet is able to send and receive fiat currencies. But some even allow trading in crypto currencies. But still, there is no-one that allow payments in both fiat and crypto.
This is still highly controversial but we believe that in the nearest future both fiat and crypto will be a part of our daily banking.
Some attempts where done by Facebook with Libra but the project is losing partners and stalling.
Anti-money Laundering and Regulation
Biggest risk in today’s online banking is money laundering. The regulators are imposing stricter rules every year and punishing those who are not up-taking their KYC or AML duties as they should.
Anyone who have had a payment or bunch of payments diverting from the usual average get some additional questions from the e-bank. Or even got their accounts temporarily restricted. This is due to the reason of regulators asking providers to perform AML checks. And if they don’t do so they get fines or might be losing their licenses.
We believe these AML and KYC rules will get tougher every year. Especially for users that have income from private businesses. And if those businesses are unregistered or are getting payments from illegal activities – will be facing more questions and eventually will have their accounts closed.
Due to such controls, the shadow economy should start significantly decreasing in the next 10 years.
AI & Machine Learning
Next payments innovation will be looking and relying on the data which will provide insights to users.
Currently we have few examples of Stripe learning when a particular card holder is getting his salary and charging him for his monthly Spotify premium on the exact date of funds hitting the account. An algorithm is trying to charge the user in new month and learns on which day card is not declined and charge is successful.
Moreover, some e-wallets are looking to integrate e-commerce offerings and make product suggestions that rely on users past purchases.
In addition to this, customer support is a big cost to many financial service providers and AI is coming to make it more simple and intuitive for the user. We are now used to the chatbots but those are still in early stages given their efficiency.
How To Open An Account With Online Bank?
You might be wondering how to get a an online bank account in Europe or UK. The online registration process with a digital bank is fairly simple and straight forward. It can be done without leaving the comfort of one’s bedroom.
Finding a good one, might be a bit more difficult. That’s why we recommend to check out our tips on choosing the best digital bank or payments provider out there. We also recommend to check our article on one digital bank here.
All in all, we see these online banking trends progressing the most in the next 10 years. If you have different insights, please share with us and we will update this article if see fit!