Digital Banking in the Digital Age: Perceptions of Current Day Reality


Money is the bloodline of the modern day life and its processes, while banking is the system that keeps it all together, regulating and operating the functions and features of such life. The digital transformation that the world is going through has affected the fields of banking and finance as well, giving birth to the age of digital banking. With supercomputers, gigantic super-fast databases, tens of millions of customers and fortunately in some cases, no fee banking services, digital banking of today’s world is a blessing to those who seek to access money and other financial instruments. Carrying out numerous functions for people of all sorts of intentions and interests, the modern day figital banking system is also a rapidly changing one, providing its users with new features on a daily basis. As long as one is on track with such developments and novelties, they have a higher chance of achieving success with their operations to minimize costs and maximize utility/profit.

Millennials are youngster who were born in or after the year 2000, ‘the millennium’, and as they have grown up, they have become the most dynamic generation among all generations of modernity, having access to virtually every opportunity and service that modern life provides. Mobile banking is one of such services and it has already become a hit among millennials, enabling them to utilize their money and financial assets with speed and ease. With easily accessible investment options, digital banking provides features such as ‘Electronically-Traded Funds (ETFs)’ to such millennials to make the most out of their money and invest into reasonable options. Virtual primary banking options are also available, enabling millennials to access their bank accounts from anywhere in the world to keep track of their finances and access money at the touch of a button, mobilizing them to travel, shop and enjoy life with financial security. Budgeting and wealth management also have become easier for the youngsters as the digital banking procedures and applications make it possible for them to keep track of their finances with ease. As a result, the millennials have become simply the most dynamic, capable and mobile generation in human history regarding finance and financial matters and there is no sign of slowing down for such leadership either.

As the market grows and data begins to replace physical money, many speculate that banks will also be eliminated as institutions of mediation, regulation and authority. The recently developed ‘Atom’ project is a great example for such a reality as the system is “actually a data company that happens to have a banking license.” Plagued with crisis and shocks, the credit markets have turned millions of customers away from reasonable financial management but companies like Atom are promising more than the traditional methods to regain their trust. The company entered the market with online options such as virtual savings and checking accounts, as well as debit and credit cards at 2% interest rate, which was a significantly lower number than its competitors at the time. Since traditional banks use 55-70% of all their profits to support and sustain their physical operations, digital banks such as Atom have a higher chance of survival and success in the business. In addition, these institutions utilize and operate on data analytics, which grants them a significant element of security not applicable to traditional systems. Consequently, digital banks also have a more direct and constructive relationship with their clients and such close proximity makes it possible for them to develop more reasonable and comprehensive business strategies.

Naturally, technological developments almost directly translate into investment for digital banking with CapWay being a great example of such harmony. Tech professionals such as Sheena Allen have taken notice of the unnecessary sums of money being spent on traditional procedures such as “payday loans and check cashing services” to put their computer skills to work and help improve the situation. The CapWay system seeks to bring easy and profitable banking procedures into the lives of “the unbanked, underbanked and people living paycheck to paycheck” by providing connectivity between their existent accounts and the CapWay database. Through online transactions and prepaid cards, such users can access money easily at cheaper rates. The system also makes user based recommendations based on the customer’s spending habits to maximize efficiency in investment and educate such users about the details of digital banking. The developers of the system have their eyes currently on the millennials market, seeking to attract their attentions before they enter the traditional banking market and face the consequences. To accomplish this, the company is partnering with schools, employers, financial institutions and community organizations to target younger people in the American society and explain to them the benefits of digital banking and why they should create an account with CapWay to enjoy secure, transparent and profitable banking applications.

In many ways, the given technological paradigm signs a drastic change in the banking business: the establishment and utilization of smartphones as bank branches. Today, banks send more than 16 text messages and notifications every second to their users, showing how smartphones are already operating as personal banks for millions of people. Ranging from salary information to obligatory monthly down payments, these notifications usually work in conjunction with installed banking applications to initiate processes immediately upon reception.  The banks are helpless against the developments observed in the communications technology industry and need to play along because 59% of millennials, people of 16 to 25 years of age, are currently using smartphone based banking applications while 69% of 25 to 24 year olds and 49% of 65+ year olds are also doing the same thing. Smartphones have already replaced computers in this sense, with numerous applications enabling direct access to financial data and records for billions of people every day. As transactions and transfers become easier and trackable this way, the banking industry is spending more time, resource and capital to develop more sophisticated and utile applications to integrate new digital users and expand their customer networks existing in their secure and functional digital systems.

Naturally, as the trend of digitalization in banking become more popularized, banks and retailers are seeking for ways to optimize their businesses by tracking user interactions such as typing, swiping and tapping to create customer profiles and fight fraud as well as identity theft. Such profiles are used to categorize services for increased protection against attacks and use ‘behavioral biometrics’ to have a more professional comprehension of such customers’ identities. The process is secretive, meaning that the users are not aware of what is going on and therefore the companies obtain the most honest and utile biometric data available to construct their security and identification strategies. Considering how common it has become for cyber thieves to attack bank accounts and steal information, such a measure has become a necessity for security officials to protect their customers and their assets. As identity is moving forward on its path to becoming the new digital currency, it is also becoming a weapon of sorts to be used against people, making information security a crucial issue and justifying the mentioned biometrics operations. However, there are also opponents of such procedures who believe that this is a direct violation of personal privacy and who believe that such procedures might lead to more catastrophic consequences in the future. With so much personal data gathered from such high numbers of people all around the world, the banks are becoming more powerful than any other institution, which might enable ill-minded employees or administrators to take advantage of the situation. In addition, in the case that such data is stolen by third parties, no one is really sure what will happen and who will be held responsible. Such a possibility is deterring millions of smartphone users to even touch such banking and retailing applications in fears of losing precious personal data to hackers.

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