Close

Banking in the digital age

POSTED: 8th August 2014
IN: Business news
Share:

It could be argued that the rise of the internet and digital technology has had a bigger impact on life in the 21st century than any other phenomenon.

It could be argued that the rise of the internet and digital technology has had a bigger impact on life in the 21st century than any other phenomenon.undefined

For the majority of people living in Britain today, life without access to the internet would be unimaginable, with an ever-expanding proportion of the population regularly going online via mobile phones and tablets.

The digital landscape has grown to encompass the banking industry, with so many customers now checking their balances and conducting their financial affairs online that it is not unreasonable to think physical branches could one day become obsolete.

Read on to find out more about the trends that have brought us to this exciting point in the world of personal banking, and what the future might hold.

A digital banking revolution, enabled by technology

In a recent report, the British Bankers' Association (BBA) and professional services firm Ernst & Young (EY) said Britain is in the midst of a £1 billion-a-day digital banking revolution.

The study revealed that internet and mobile banking is now used for transactions worth £6.4 billion a week, compared to £5.8 billion last year. Consumers typically log on to online banking platforms seven million times a day.

Other findings showed that banking apps for mobile phones and tablet devices have been downloaded more than 14.7 million times. This marks an increase of 2.3 million since the start of the year, with users downloading the applications at a rate of about 15,000 per day in 2014.

BBA chief executive Anthony Browne said: "The way we bank now has made it a lot easier for us to keep track of our finances, with far more options about how we spend our money and talk to our bank.

"This study shows that banks have, are and will continue to compete against one another to offer customers innovative technology to win your custom. It's a revolution putting more power in your hands."

These developments would not have been possible without the explosive growth in use of smartphones and tablets over recent years.

New research from Ofcom, the communications industry regulator, shows that mobile and internet services are now perceived as 'essential' by the majority of UK consumers. Fifty-seven per cent of respondents to a survey said personal internet access was a necessity for them, while 53 per cent of 16 to 24-year-olds thought internet access via a smartphone was an essential part of life. 

According to a study by research firm TNS, commissioned by Google, smartphone usage in Europe has increased from 62 per cent last year to 68 per cent in 2014. More than four out of five (83 per cent) surveyed consumers revealed they use the internet daily, up from 75 per cent last year.

A recent report from the Internet Advertising Bureau, compiled by PricewaterhouseCoopers, showed that over a quarter of British consumers now own a tablet and 36 per cent of people accessing the internet are now doing so via these devices.

So what does the future hold for banking?

If recent trends are anything to go by, digital banking will become increasingly prevalent in the years to come. 

The concept has become such a familiar part of life that a quarter (25 per cent) of UK consumers participating in a recent survey by accountancy firm Accenture said they would consider using an entirely digital bank, with no branches or call centres.

A third (33 per cent) of respondents in the 25 to 34 age bracket said they would consider using a provider that is only accessible online. This proportion fell to 22 per cent in the 18 to 24 age group.

Interviews with more than 3,600 UK current account holders also showed that 80 per cent of customers go online at least once a month to interact with their banks. Monthly use of mobile banking has gradually risen in recent years, from ten per cent of consumers in 2011, to 21 per cent in 2012 and 27 per cent this year.

With the general public becoming so comfortable with overseeing their financial affairs on the internet, many people, both inside and outside the banking sector, will be asking what this means for physical branches.

It would be easy to assume that the ongoing growth of digital banking will make traditional branches a thing of the past, but this is not likely to be the case for some time yet.

The BBA report pointed out that 2,274 bank branches have been refurbished in the past two years, which underlines the commitment to high street outlets.

In an article published in the Telegraph, BBA chief executive Anthony Browne pointed out that many people still appreciate face-to-face meetings when making big financial decisions or discussing a complaint.

He noted that online banking has given consumers unprecedented access and flexibility in how they deal with their financial affairs. In light of the rising prominence of digital banking, branch numbers will continue to fall in the near future, according to Mr Browne, but the traditional approach to banking will still be with us for many years to come.

The content published on this website is intended to provide information only. The reader should seek advice from experts on the subject matter and independently verify the accuracy and relevance of any information provided here before relying upon it or using it for any reason. You can view our terms and conditions here.

  • Personal
  • Asset Finance
  • Business
  • Invoice Finance
  • SME
  • Personal Savings
  • Business Savings
  • Commercial Mortgages
  • Property Development FInance
  • Residential Mortgages
  • Asset Finance

Published: