Why digital banking has become so significant

By Anthony Oduu, Co-founder and Chief Technology and Product Officer, Verto

The technological landscape has evolved rapidly in recent decades, driving substantial changes in how industries operate and how we perform various tasks on an individual level.

In the financial sector, digital banking and fintech have had a particularly transformative impact.  They have introduced a new level of convenience for customers and businesses, while also necessitating the implementation of robust security measures to counter cyberthreats. Additionally, the wider adoption of open banking and AI is further transforming the industry, allowing fintechs to develop more personalised offerings, and further reshaping the way we bank.

It’s an exciting time and understanding the developments in digital banking is crucial for both consumers and, importantly, those of us working in the industry. Whether you’re a fintech company like the business I co-founded, Verto, or any other financial service provider, you need to keep your mobile apps, websites, and other digital platforms up to date to meet your customers’ evolving needs.

Here, we delve deeper into digital banking to explore why it has had such an impact, and what the future holds.

Anthony Oduu

Unparalleled convenience and accessibility

One of the biggest advantages of digital banking is the seamless experience it gives customers through their laptops or mobile devices. The development of this technology in recent years has redefined the concept of banking, with customers now enjoying 24/7 access to banking services from anywhere at any time. Individual customers can check balances, transfer money, pay bills and choose new financial products, among other financial admin tasks. Fintech companies have played a pivotal role in this transformation by introducing innovative products like digital wallets, disrupting the traditional banking models.

Considering that up to 10 or 15 years ago, most transactions were carried out at the bank, this represents a substantial and relatively rapid change.

At Verto, we’ve seen how increased banking access has also been especially valuable for businesses. It has enabled them to operate in different countries – with different currencies and time zones – without the same restrictions they would have faced previously.

Robust security is vital

Of course, with any technological breakthrough, there will always be the counterweight, and the digital banking revolution is no exception. A new form of banking has led to a new form of cybersecurity threat, and one that continues to evolve.

In 2023 alone, the industry witnessed a 72% increase in data breaches compared to 2021, which held the previous record. To protect customers’ sensitive information and financial data, banks have had to implement robust security measures, such as multi-factor authentication, encryption, and advanced fraud-detection systems.

Financial institutions are now also adopting a multi-layered security approach that incorporates encryption, secure authentication methods and real-time transaction monitoring, to firm up security while increasing convenience for customers.

These measures fall in line with the various banking regulations and data privacy laws that have been introduced to protect customer information and maintain transparency within digital banking. As a financial services provider, it’s essential to be familiar with these regulations.

Driving innovation and future growth

Most recently, digital banking has proved to be fertile ground for new innovations. As an example, we’re now seeing open banking starting to reshape the digital payments landscape, helping to introduce greater efficiency, and allowing fintechs, like ours, to provide more tailored services. Through open banking and the use of APIs, customers can now securely share their banking data with authorised third-party providers, unlocking new opportunities for personalised financial-management tools and services.

Traditional banks are gradually embracing open banking models; however, the pace of adoption is not keeping up with the rapid speed of technological advancement.   For banks with legacy technology infrastructure, it will be challenging to seamlessly adapt to the tech advancements, so we hope to see more cross-industry collaborations with banks embracing open bank models.

And then there’s AI, which is being increasingly integrated into a wide range of   operations by financial companies. From fraud detection to personalised products and customer service, this is set to be a massive growth area across the industry in the coming years.

Digital banking matters

As technology continues to advance, digital banking is poised to play an even more significant role in shaping the future of finance. It has already redefined how individuals and businesses manage money and interact with financial institutions.

New innovations, such as AI tools and open banking, are set to bring about further transformations in the way offer digital banking services. Staying ahead of these developments will be crucial for companies looking to gain a competitive edge.


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