6 digital trends to know in 2021 that are changing banking
- A necessity rather than an option
Digital banking has gone from an option to a necessity during the Covid-19 pandemic, producing a dramatic shift in consumer behaviour and banking operations as they both move towards the digital space. Banks have adapted their products and services to reach their customer base predominantly via digital means. Customers have likewise through lockdown-caused branch closures, been pushed towards educating themselves and adopting digital banking.
According to a survey by Finder.com, over a quarter (27%) of UK adults have opened an account with a digital-only bank, equating to 14 million people. Over one in ten have fully switched to a digital-only bank, and two-thirds of banking customers say they plan to convert fully to a digital bank in the future.
- Digital banking increases human touch, rather than diminishing it
It used to be the case booking an appointment and visiting a bank branch was the only way to interact with an financial adviser, now this can be done via zoom, email, instant messenger and phone, alongside engaging with banks through social media and their website. There are more ways to get financial advice than ever before in a way convenient to you.
This surge, accelerated by lockdowns, in digital banking means your bank can move quicker in its support and guidance than ever before, which is great for businesses needing advice from brokers and lenders quickly as markets and consumer demands change rapidly.
Digital banking is not without perils as the pandemic has triggered an increase in fraudulent activity, phishing attacks, and call centre fraud as scammers seek to take advantage of uncertainty. UK Finance reports that in the first half of 2020, losses due to unauthorised financial fraud using payment cards, remote banking and cheques totalled £374.3 million.
It has never been a more important time to be vigilant and cautious. Aldermore lists common scams to help educate people. More information here: Fraud scams - Aldermore bank
- Businesses are buying umbrellas for rainy days
The Business Savings market was £372bn in December 2020, a 23% increase on December 2019, as businesses look more than ever before towards building financial buffers in case of economic shocks and growing future investment funds. Buoyed by the rise of digital banks offering high street bank-beating rates and the ease of finding the best products to suit saving goals through comparison websites, the business savings market has seen large growth in 2020, and this is likely to continue into 2021.
The market has also shown a clear trend towards easy access products, over longer term fixed rate products, showing businesses are looking for returns but choice to withdraw their funds if required.
- Digital banking not just changing current accounts
Buying a home is one of the biggest investments someone will make in their life, but digital banking promises to revolutionise the somewhat clunky, slow and confusing process of buying a home.
When lockdown hit, banks were faced with the difficulty of not being able to do physical valuations of properties, but within mere weeks, many lenders introduced remote valuations allowing them to continue lending. Remote valuations take half a day to do, compared to 4-5 days for a physical valuation, and alongside investment in things like digital signatures, the whole process is likely to speed up for many beyond 2020.
This innovation due to need has been happening with practices across the financial industry and promises to quicken up business and consumer banking for both small transactions and large.
- The rise of the savvy investor
When NS&I announced large cuts to their savings rates in December, there was a withdrawal of over £2.7bn within the month. A group of small retail investors created billions in losses for large hedge fund Melvin Capital when they decided to pool together and call its bluff on the shorting of GameStop stock.
These two seemingly unrelated things point to a growing trend; People are more engaged in finances than ever before.
This period of uncertainty has meant many have reflected deeply on their personal finances, but it has also been a period of education. Consumers are investing time in learning more about how the financial industry works, have a lot more information available to them on what to do with their money, and more likely to take action when they feel they can get better value elsewhere.
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