Safeguarding Assets: Comparing Security in Digital and Classical Banking
In the realm of banking, ensuring the safety of our hard-earned assets has become a top priority.
Traditional banks have long been the go-to for financial services, but recent data breaches, identity theft cases, and fraudulent activities have raised significant concerns. However, a notable shift in consumer behavior is underway, with an increasing number of individuals embracing digital banking.
According to research conducted by Amdocs, a remarkable 64% of respondents anticipate a rise in their usage of digital banks over the next five years. So, what are the reasons behind this growing preference for digital banking? How do these platforms address the safety concerns associated with traditional banks?
Let’s delve into the world of digital banking to uncover the security advantages that make it a compelling alternative for safeguarding our assets.
Classical/Digital Banking in the World
The global banking landscape is undergoing a monumental transformation as classical banks are pushing against digital banking platforms for a piece of the mobile market.
According to a report by BCG, the COVID-19 pandemic has accelerated the shift toward digital banking, with mobile banking usage surging by 34% between February and June 2020, while branch banking declined by 12%. This trend is not exclusive to younger generations; even older customers are embracing all-digital banking. Moreover, customers are more open to switching providers and sharing personal data across multiple platforms.
Accenture’s 2020 Global Banking Consumer Study reveals that 23% of global banking and insurance customers already hold accounts with digital banks, a figure projected to potentially triple and reach nearly 70% worldwide. It is clear that the banking sector has embraced digital transformation for fear of being left behind.
The Security Advantage of Online Banking
Security Measures in Digital Banking
Digital banking features unparalleled security measures that prioritize the protection of customer data and transactions. With multi-factor authentication, users must provide multiple forms of identification to access their accounts, creating layers of security. Robust encryption techniques ensure that sensitive information is transformed into an indecipherable code during transmission, safeguarding against unauthorized access.
Enhanced Control and Transparency for the User
Digital banking empowers users with unprecedented control and transparency, placing the reins of their financial affairs firmly in their own hands. With round-the-clock access to accounts and transactions, users can stay informed and manage their finances at any time, from anywhere in the world. Instant notifications and alerts provide real-time updates on account activities, enabling users to closely monitor transactions and quickly address any concerns. Additionally, digital banking offers the ability to freeze or block cards instantly, providing an added layer of security and control in case of loss or suspected unauthorized usage.
Reduced Physical Vulnerabilities
Digital banking brings with it a significant reduction in physical vulnerabilities, eliminating the need for customers to visit bank branches. This eradicates the risks associated with carrying cash, shielding individuals from potential theft or loss. With digital banking, the threat of physical theft becomes virtually non-existent, as transactions occur electronically and funds are securely stored within virtual accounts.
Data Protection and Privacy
Data protection and privacy are paramount in digital banking. Stringent regulations ensure secure storage and handling of personal and financial information. Robust encryption and limited access to customer data provide added layers of security. Confidentiality measures for online transactions inspire trust and protect sensitive information. In the realm of digital banking, utmost care is taken to safeguard customer data, fostering a secure and private banking experience.
Mitigation of Human Errors
Digital banking significantly mitigates the risk of human errors through the automation of transactions. By removing the manual processes involved, the likelihood of errors is significantly reduced. Automation ensures accuracy and minimizes the risk of misplacing or losing physical documents, which can lead to financial discrepancies. With digital banking, all transactions are recorded electronically, reducing the reliance on human intervention and paper-based documentation.
Adaptability to Changing Technology
Digital banking exhibits remarkable adaptability to changing technology, ensuring the latest security measures are always in place. Continuous updates and security patches are regularly implemented to address emerging threats and vulnerabilities. New security features are seamlessly integrated to provide enhanced protection for customer data and transactions. Furthermore, digital banking platforms actively embrace emerging technologies, such as blockchain, to enhance security, transparency, and efficiency in financial transactions.
Addressing Concerns and Risks
In the ever-evolving world of digital banking, safeguarding against phishing, scams, and cybersecurity threats is a top priority. A PYMNTS survey revealed that many customers, particularly baby boomers and seniors, express hesitations about digital-only banking due to security uncertainties involved.
Addressing these concerns head-on, banks are not just sitting back – they’re actively fighting against these risks. Rigorous security protocols and education programs are in place to educate customers about recognizing and avoiding phishing attempts. Banks implement robust cybersecurity measures to protect customer data from unauthorized access and continuously monitor for any potential threats.
The Future is Digital
Digital banking not only offers momentous security advantages but also introduces new possibilities for innovation. It transcends the limitations of traditional banks, ushering in a new era of financial empowerment.
One of the most compelling aspects of digital banking is its ability to democratize access to financial services. This transformative platform has the potential to bridge the gap between the financially underserved and traditional banking institutions. Furthermore, digital banking paves the way for a more sustainable future. Through paperless transactions, it significantly reduces our reliance on physical resources, contributing to environmental conservation.
As we navigate the evolving landscape of finance, embracing the transformative power of digital banking ignites a future where security, innovation, and empowerment merge, strengthening our financial well-being and shaping a brighter world.
By Arslan Ibrahim
An expert in product development Arslan Ibrahim has worked across fintech, adtech, marketing tech, logistics tech, and crypto.
Having entered the fintech space in 2018, he has 5+ years of experience as a Product Lead and CPO for fintech projects. Now Arslan acts as the Chief Product Officer for the Brighty App, and the CEO & Co-Founder of Yoosr.
Arslan’s firsthand experience with Islamic banking products across different countries drove him to realize the need for a genuinely Shariah-compliant financial solution that brings peace of mind to Muslims.