Every sector is important for the economic growth of the country. But few sectors are so important that they can either make or break the economy. One such sector is banking, which is why it is the talk of the town. Today we will see how technology is impacting the banking sector, and what we can expect in the future. Let’s begin our discussion with the institutions that keep an eye on the banking sector in their respective country. In India, we have the Reserve Bank of India, and in the US, we have the Federal Deposit Insurance Corporation. These institutions make sure that the banking sector in their country is making the most use of technology to become efficient and provide excellent services.
Technology impacts banking by revolutionizing traditional practices and introducing an era of seamless online transactions. In the past, these banking operations were laboriously carried out in-person at banks. Now, customers are provided unprecedented convenience and speed due to the profound influence of technology on the banking sector. Everything is quicker.
Role of Technology in the Banking Sector
We will start from the very basics. The banking sector uses the money deposited in the banks to earn money. For this, people need to trust the bank. Here’s where technology supports the banking sector. When people face concerns, they directly get in touch with the bank using features offered by technology such as chatbots.
Technology allows banks to provide secure and quick service to their customers. Customers are more likely to continue depositing money and use the services offered by the bank if their queries are resolved on time.
The bank needs to maintain its reputation in the banking sector so that it can acquire more customers. They use technology to up-sell and cross-sell their products and services to the customers. With modern banking technologies, the time taken to deliver the message is almost the time in which the customer gets the first response. So, you see how technology is eliminating human errors, increasing security, and helping the banking sector reach out to more customers.
How Technology is the Backbone of the Banking Sector?
By now, we are so used to technology in the banking sector that without it, we wouldn’t know how to function. Technology has made our banking experience very convenient. The impact of technology in the banking sector is so significant that without it, the services will come to a halt. What would happen to the banking sector without technology?
It will collapse and since this possibility is almost impossible, let’s not think about it. With time, we will keep developing new technologies and both the banking service providers and their customers will benefit from it.
Impact of Technology on the Banking Sector
We have seen how technology has changed the way the banking sector operates. Now we will see what exactly are the impacts.
Back in the days, when technology was still in a very developing phase in the banking sector, people used to stand in the queue to get basic services. Do you remember standing in the ATM and Passbook printing queue for hours to get work done that should only take a couple of minutes? The tragedy at the time was standing in the ATM queue for hours to withdraw cash, and by the time it was your turn, the ATM ran out of cash.
Thanks to technology, you don’t have to face such situations anymore. Technology brought Digitization to the banking sector that changed our perception of banking. Now with a few clicks, you can do net banking and check your balance easily. What more could we ask for? Isn’t getting timely and reliable service all we need? Even banking service providers can easily maintain documents now more than ever with technology.
The advantage of online banking service is that it is more transparent than traditional banking. Even if you are someone who doesn’t understand the banking services well. You can always consult the ones that do by showing them the services online. The major positive impact of technology without which we can’t continue our discussion is security.
Now with technology, we have two-factor authentication, the use of passwords, and many more security processes. This has minimized the scope of fraud in the banking sector.
Easy Access To Your Banking Details
As we mentioned, one of the best things about online banking is the ease of accessing your banking details from anywhere you want. You do not have to wait in line anymore to check your balance, verify your documents, etc. All you need is a stable internet connection that allows you to log in to your bank account portal.
Apart from savings, banking is mostly used for transacting money. When there was no option for online banking, we used to go to banks and fill those complicated forms. It used to take a lot of time, and even then it was not sure if they had been filled correctly. But with online banking, this major problem has been sorted.
Now, there are multiple applications available that allow you to keep track of your bank details and help you send or receive money to anyone you want with just a click. Some of the applications are PhonePe, Google Pay, etc. Another great thing about transacting money online is the instant result. You do not have to wait for the money to be credited to the next person’s account. Everything happens instantly.
We very well know that technology is not just all positive, it comes with downsides. But again, it depends on how we use it. If you are careless about your data just because you have the technology, then you’ll have to bear the costs of it. You can surely rely on technology to safeguard your personal data, but you can’t afford to be careless about it. Who would you blame if your bank data is compromised? Such fraudulent activities are carried out online in very little time.
Even though technology safeguards your personal data, keep in mind that the same technology is used by hackers to steal the data and make money out of it. There is no need for robbers to go all the way to banks to steal money and assets, the hackers can simply use technology and in no time they can hack without leaving traces. None of this is meant to create fear among you, but you should be careful about the service providers that you select and ensure that they prioritize security more than profits.
Now let’s look at how technology in the banking sector can directly impact you. We have seen how automation has replaced jobs in different sectors, the banking sector is no exception. Automation has given commendable outputs and this is why the banking sector is focusing on it. But if this continues, we will have fewer job vacancies in this sector.
Dependence Upon Technology
A major drawback of online banking is how dependent we are on technology to carry out even basic tasks. Imagine you have to transact money to your brother’s account urgently. And when you try to send him the money, it shows the bank server is down. What would you do at that time? It is not in our hands to control the network, bank server, battery, etc., which can lead to problems sometimes.
There should be a balance between technology and physical responsibilities in banking so that even if one thing is not working, the tasks can still be carried out smoothly using the other method.
Can you think of the most important thing when it comes to online banking? What are your thoughts on One-Time-Password? An OTP is what you receive before logging into your account, making a transaction, and checking your balance. It happens due to security reasons and confirms that the person logging in or making the transaction is the one who owns the account.
Now, even if someone else uses the correct OTP to enter your account, there is no way for the bank to know it was not you at that moment. Getting an account hacked, making wrong transactions, and other wrong activities are still being carried out by hackers and wrongdoers.
Although the security is consistently improving, it is still not 100% security-proof. Make sure you follow all the security guidelines provided by your bank, so you do not be a part of such an unfortunate event in the future.
Technology is helping the banking sector to create awareness about its presence among the general public and increase its customer base. Now they can easily reach out to as many people as possible using technology and attract them with its products and services.
There are risks with technology in the banking sector, we can still prevent them, but functioning without technology is like reaching a dead end. We don’t know what we will do without technology in the banking sector, but we do know that if we use it cautiously, we can improve our banking experience.