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hen did you last visit a bank to deposit a check or transfer funds? If you're like many business owners, it's been quite some time. Most financial institutions can handle those activities digitally without interacting with a banking representative. That's quite different from prior decades when regular bank visits were standard.
But what's changed to provide banks with the capabilities they offer now? The answer: digital banking.
Understanding digital banking
Digital banking includes both online and mobile banking services. Essentially, any bank activities performed via your computer, tablet, smartphone, or other data-connected device fall under the classification of digital banking.
Online banking occurs when you log into your company's bank website and access your account. Depending on the bank's online banking features, you might check account balances, transfer funds, or make payments. Some banks allow you to apply for credit or open new accounts using online banking tools.
Mobile banking refers to using a banking app on a smartphone or tablet to access your bank account. Many banks have proprietary banking apps that customers can download and link directly to their account details. Users can complete actions similar to online banking, such as transferring money or making payments. Some apps include features like peer-to-peer payments or mobile check deposits.
Digital banking services: Where to find them and their benefits
Virtually any U.S. bank—and most international ones—offers digital banking services. Consumers and businesses rely on digital banking services through online banking websites and dedicated apps to handle their daily financial needs.
Digital banking services extend past traditional brick-and-mortar banks in your town or city. Some online banks operate entirely through the web, with very limited or no physical access. Many credit unions offer similar services, including online and mobile banking.
If your financial institution offers digital banking services, such as a website or mobile app, you probably use them for daily transactional needs. Banking online is a tremendous time saver since there's no need to travel anywhere. You can log in and take care of business from your office, car, home, or anywhere you have an internet connection.
There are several other benefits to banking online besides the obvious time savings:
- Anytime access: When you bank digitally, you don't need to stress about completing transactions during the bank's business hours. You can take care of things on your own time—in the early morning, evenings, or weekends.
- No waiting in line: When you're pressed for time, waiting to talk to a representative is a hassle. Digital banking allows you to skip the line and take care of many basic financial transactions using technological capabilities. You can call the bank's customer service number for help if you require personal assistance.
- Features: Digital banking gives you access to lots of different features. While features vary from one financial institution to another, some common ones include bill payment options, peer-to-peer payments, mobile deposits, and easy transfers. Some banks allow businesses to apply for financing opportunities via their apps.
- Extra security: Financial institutions recognize the need for customer security. Many offer protections like multifactor authentication, which generates a code to your chosen contact method, which you enter into the app. Others use biometric authentication to confirm the user's identity.
- Integrate with other apps: Some banks offer integrations for business account holders, allowing them to connect their banking account information with accounting or tax software. Integrations simplify other business processes, making closing your books or filing taxes easier.
The digital banking evolution: From the 1980s to today
The evolution of digital banking first began in the 1980s, when several banks, including Bank One, Chemical Bank, and Chase Manhattan Bank, introduced digital platforms with basic features, including the ability to view balances and pay bills. However, the initial prohibitive cost of the services and consumer hesitancy to adopt products with limited features led to minimal adoption among banking customers.
That changed in the 1990s. By 1995, many large banks had websites, and Wells Fargo became the first major bank to allow customers access to their account details online. Users could create accounts, check their balances, and review bank statements.
By the early 2000s, over 30% of U.S. national banks offered similar transactional features on their website. In the following years, customers became accustomed to and comfortable handling their financial transactions online, and banks slowly increased the available features. Usage increased tremendously with the introduction of smartphones and better access to widespread and inexpensive broadband internet.
However, it wasn't until the COVID-19 pandemic that widespread adoption of digital banking became predominant. Banking customers who continued to conduct their banking business in person were forced to move online since physical bank branches closed. Customers became more comfortable conducting financial transactions online, and banks began offering increased features and perks useful to consumer and business clients.
Online banks also gained traction since their lower-cost model allowed them to shift the savings to their customers. Many online banks offer lower monthly fees and attractive options, like high-yield savings accounts and reduced-fee loans.
The digital banking evolution paradigm shift
Clearly, banks have come a long way in the past 40 years. Driving to your local bank or standing in line to speak with a teller to withdraw or deposit cash is no longer necessary. You don't even need to visit a bank to open an account—many financial institutions allow you to handle the process entirely online.
For businesses, the shift to digital banking is highly beneficial. Business owners can review their account balances, pay expenses, and integrate financial transactions into their accounting software. The process is automatic, minimizing laborious data entry work previously handled by accounting teams.
Many banks allow business owners to apply for financing opportunities directly through their website or mobile app. Applying online often reduces processing time, allowing financial institutions to review applications and make approval decisions quickly.
Digital banking services will continue to improve. Younger generations are growing up in a tech-driven world, where smartphones and 24/7 online access to products and services are the norm. They expect ready convenience and instantaneous access to their bank accounts, which online banking offers.
Some of the features business owners might expect in the future include:
- Faster account access: Most consumers and businesses have access to 4G internet, which is much faster than 3G or dial-up technology. Customers with access to 5G will find it even faster to access their online bank accounts and conduct business.
- Artificial intelligence: The use of artificial intelligence is growing at breakneck speed, and banks will find a way to harness it for their customer's benefit. Artificial intelligence can assist in numerous ways, including cybersecurity, customer service, and marketing.
- Automation and robotics: Banks can implement automation tools to streamline application processes and send automated notifications, such as monthly statements.
Digital banking is here to stay
Digital banking has a lot to offer business owners: convenience, extra features, integrations, and improved security. Looking back over the past few decades, it's impressive how far banks have come since the widespread public introduction of the Internet. As technology improves, we'll see even greater benefits become available through digital banking.
Novo offers business banking services for companies seeking a full suite of features, including analytics, a virtual debit card, and fast transfers. You can count on Novo to deliver a tech-forward approach to your banking needs. Sign up for your Novo business banking account today and enjoy no monthly fees or required minimum account balances.
Novo is a fintech company; not a bank. Deposit account services provided by Middlesex Federal Savings, F.A., Member FDIC. Physical debit cards issued by Middlesex Federal Savings or Patriot Bank, N.A., Member FDIC; virtual cards issued by Patriot Bank, pursuant to licenses from Mastercard® International Incorporated. Mastercard can be used everywhere Mastercard is accepted. Mastercard is a registered trademark of Mastercard International Incorporated.
Novo Platform Inc. strives to provide accurate information but cannot guarantee that this content is correct, complete, or up-to-date. This page is for informational purposes only and is not financial or legal advice nor an endorsement of any third-party products or services. All products and services are presented without warranty. Novo Platform Inc. does not provide any financial or legal advice, and you should consult your own financial, legal, or tax advisors.
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