How banking has changed
Banking has been in existence for thousands of years. Over the years generational shifts, behavioural changes and the digital revolution have brought changes to the industry. Significantly altering how customers view their banking “relationship”.
The new now
Then came COVID-19 and global shutdowns, accelerating the already rapid changes that were happening in the financial services sector. Key changes were digital solutions which sought to solve immediate consumer needs in the COVID-19 environment.
In previous years we held long-distance relationships with our banks. We would visit their physical branches to make deposits or check balances. Today the picture is very different. Now, with most of us working from home, our interactions with our banks are overwhelmingly digital. Going into a physical branch has become a last resort for most banking customers.
The appetite for banking apps in South Africa and across other regions of the continent has accelerated. Many customers now show a preference for digital over physical, because of the lockdown. This comes off the back of increased smartphone penetration and demand for simplicity and convenience on the continent. We now have our banks with us everywhere we go.
We also have the tools that allow for money to travel across borders and countries – especially important because of families being separated due to international travel bans which are still in place. The ability to make offshore investments has been democratised and can be done through digital platforms. It is no longer only available to those high-net-worth individuals who are clients of international banks.
The old then
Before lockdown, banks recognised that as more millennials enter the working population, they needed to tailor services to meet the needs of these tech-savvy individuals. This has banks to meet the demands placed on banking during the COVID-19 pandemic.
Millennials are accustomed to an app being available for everyday activities, from ordering food to getting from one place to another. Banks have taken on a relentless approach to upping their technology spend to enable innovation and development of solutions that pander to this demographic. This has spurred entrepreneurial activity in the financial technology sector, where innovative digital solutions are being developed that hold a level of efficiency never seen before.
The days of always carrying cash, are long gone. We are now able to make purchases within seconds thanks to digital payment technology. All it takes is one quick tap on the screen with your physical card or mobile phone. With the time-saving benefit Tap and Pay technology offers, it makes sense that there has been a significant uptake of this new payment method.
The traditional model of banking has been turned upside down. The online bank, with its low overhead costs, can offer affordable banking services to those who have previously been excluded from formal banking services.
But what has been particularly successful in bringing transactional banking capabilities to the unbanked is mobile money. The introduction of e-money services has allowed for the cross-border transfers of money that is faster and cheaper than that of cash and bank deposits.
Until next time.
The MoneyShop Team
This article has been prepared for information purposes only and it does not constitute legal, financial, or medical advice. The publication, journalist, and companies or individuals providing commentary cannot be held liable in any way. Readers are advised to seek legal, financial, or medical advice where appropriate.