Virtual Banking: From A Global Hype To A Norm
“The fact that two-fifths of UK consumers won’t even consider using a bank with no presence on the high street demonstrates that there is a way to go to instil confidence. Few people rave about their bank, yet so many of us are cautious about trying a new way of doing things. The hurdle for digital banks is to get consumers to experience first-hand what the next generation of banking looks like.
Countless statistics on customer journeys tell us that people find digital banking easier than the traditional high street model, but a lot of consumers aren’t tech-confident enough to give it a go in order to find that out. To really compete, digital-only banks should be considering how they collaborate as an industry to help customers feel digitally literate enough to give their services a try. The payments industry works in a far more collaborative way to bring new offerings like contactless payments to market; this could be a good example for digital-only banks to follow.”
– Anton Ruddenklau, Head of financial services digital and innovation, KPMG United Kingdom.
In the last few years, a sudden rise of direct-to-consumer banks-usually called virtual banks have grown with around 11% of users across the globe started to using it as their main account reported by a study of 2019 FIS Performance Against Client Expectations. In the survey of 1749 U.S. consumers, it was reported that the reason was the shopper satisfaction index.
If we go around and see the data in details we get the following inferences for the UK.
|Top users of virtual banking||Top users of digital payment|
|Brighton (33%)||Brighton (75%)|
|Newcastle (32%)||Cardiff (68%)|
|Plymouth (29%)||Southampton (65%)|
Source: The Fintech Times
It’s creating a market of its own
Virtual banking is convenient, it’s cheaper, and it’s gaining traction among international customers. Digital-banking is additionally fettered by a variety of things which will keep it a distinct segment market. Over time, the leading digital-banking establishments can overcome the issues of security and client satisfaction which can result in higher measurability. Until then, traders, investors, and shoppers of digital banks have to be compelled to be ready for volatility and churn because the market matures.
There are many directions in which the digital banks will want to expand their numbers of shoppers. One direction is cryptocurrency.
Digital banks are already partnering with outstanding block-chain technologies to power their performance. It’s solely natural for these establishments to list the tokens that underlie the block-chains similarly.
The fact that blockchain as a technology is maturing and a number of cross border FinTech start-ups like Transfer wise (money transfers without changing countries) are challenging the norm. It is a matter of time that USPs like availability of 24×7, on the go and lower costs are offered to the consumers, which will further help boom the market.
The outcome, for the buyer, is probably going to be a mix of digital and ancient banking. The 2 can work hand in hand to supply the monetary product, access to markets, and account services across the spectrum of decree and cryptocurrency
In fact, if we go deeper and understand the trend we identify that 9% of British adults have opened an account with a digital-only bank, equating to 4.5 million people, reports a survey conducted by Finder. The proportion is higher among younger age groups. 15% of generation Z (born after 1996) compared to just 6% of baby boomers (54–73-year-olds).
With London setting the example, being the fastest growing in digital-only bank accounts holders and next 26% of Londoners getting ready to open one. The stage is set. Start imagining a world where your ATM Card can let you have any currency of any kind and you will know that virtual banks are already here.
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