Can you remember the last time you paid for something with cash? Had a handful of coins jangling around in your pocket? Visited an ATM to withdraw cash? Visited a brick-and-mortar bank to make a deposit?
If you’ve noticed that dependence on cash is dwindling, your observations are right on target.
Physical distancing and sanitization measures during the pandemic have made cashless and mobile payment the norm for all kinds of financial transactions. COVID-19 accelerated the adoption of online banking and digital payments to such an extent that many observers predicted the “end of cash” and forecasted doom for traditional financial institutions.
However, the growing digitalization of the global financial system does not necessarily mean a cashless society is on the immediate horizon. Nor does it mean that banks are on the brink of extinction. Rather, the uptake of digital offerings signals people’s desire for the enhanced services they provide.
Technological advances improve customer experiences, transform business models and enrich financial products and services. A recent survey found 85% of American saying they would continue to use digital banking tools after the pandemic. With banking procedures seemingly so fixed and long-established, the speed at which people have taken to digital has taken some observers by surprise. At the same time, it’s a clear signal that financial institutions that embrace digital transformation stand to outlast those that cling too firmly to tradition.
Banks are Here to Stay
Banks and physical currency play a critical role in society and the global economy. They are here to stay. In other words, the number of currency and banking transactions people engage in daily is not declining, but the methods of exchange are evolving. As consumers reduce their dependence on paper instruments, cash and checks, they have less need for traditional banking services associated with those payment methods, and their desire for digital options increases, as does their frustration when those options aren’t available.
We’ve seen it happen with bank debit cards. Paying for that latté or those new trainers directly from your bank account without needing to take all the steps in between saves time and effort for individuals and business clients. Banks are now seeing the opportunity for digital transformation across a wider range of services and products. From this perspective, digital transformation of the banking industry is long overdue.
A Blend of Digital and Physical
When it comes to banking, physical presence is still paramount. While some financial institutions have responded to the digital trend by shutting down branch outlets or opening fewer of them, banking clients maintain a strong demand for in-person services alongside digital offerings. This is true even of the younger set, the millennials and GenZs, who visit physical branches on a regular basis. Plus, many banking services demand that personal touch, from wealth management, to business accounts, complex transactions and safety deposit boxes.
In response to this blend of needs, the near future of banking promises a mix of human and digital interactions. Innovative banks are combining advanced self-service technology with smaller, more efficient branches to create a well-rounded, omnichannel banking journey. They’ve giving customers the freedom to transition seamlessly between mobile apps, ATMs, virtual bank tellers and traditional in-person experiences, according to the situation and individual preference.
The view that digital banking is an impersonal add-on or a lesser, “robo” version of what’s available in-branch seems increasingly old-fashioned. Banks that partner with fintech companies and software platforms are finding innovative new ways to build and strengthen the brand trust that’s so key to the client-bank relationship in the digital sphere. Digital tools are also helping financial organizations personalize and tailor client exchanges to enhance the banking experience in new ways, and to attract and retain new clients.
Pillars of the Community
To put the digital transformation of the financial system into sharper focus, it helps to recall the core purpose of banking. There was a time when every town had its own, often family-run, bank. They were there to provide access to vital capital that helped individuals, businesses and communities thrive. Banks are and always have been pillars of their communities – even as they’ve grown in scope and services to become the large financial institutions we know today. Technology enables banks to re-embrace that core purpose and serve their communities even better.
Digital transformation does not herald the death of banks or the demise of currency. Rather, technology is revitalizing financial services, making them more customer-centric and innovation-minded, and equipping them for long-term viability.