What Challenges Does the Banking Sector Face in Digitalization?

Anytime money is mentioned, security is the first thing that comes to mind. Hackers continue to give financial institutions a run for their money

Fremont, CA: Industries of all kinds are undergoing digitalization, and the banking sector is not far behind. Despite electronic banking services being around for a long time now, the industry is still facing some challenges in adopting digital banking methods. While the problems may seem like drawbacks, there are also significant advantages to digital banking. The challenges faced by digital banking refer to those factors that prevent digital banking from stabilizing and becoming a universal banking method. Here are a few challenges faced by digital banking.

Security

Anytime money is mentioned, security is the first thing that comes to mind. Hackers continue to give financial institutions a run for their money. This makes customers reluctant to adopt digital banking. Security for digital banking is not as easy as downloading and installing an antivirus.

Fully Digitalized Banks

Although many people embrace digital banking, there is still a good portion of people who don't trust it. Also, some people are not convinced about digital banking unless they have proof that a bank exists in brick and mortar form. This makes it hard for digital banking to become completely digitized.

The Evolution from Ancient Banking Systems

Most people are unaware that most banking systems use COBOL programming language, which has been around for nearly 60 years and is not meant for the technology in use today. Upgrading these banking systems and installing new ones can be time-consuming, making it not such a feasible idea when the demand for digital banking continues to rise.

Non-financial Institutions

Several non-financial institutions offer services very similar to what digital banking is expected today. Social media platforms like Facebook and Whatsapp have made it possible to transfer money to a person's account using the app directly. The lack of restrictions and rules for these apps makes it hard for financial institutions to cope up. The large fan base of social media platforms makes the task even more difficult.

Internal Barriers

To make banking completely digitalized, the banking system and its employees will have to undergo a cultural shift. However, unlike other businesses, banks have a unique way of departmentalization, and this greatly influences the level of technology to be used. While some departments will benefit from a digital banking system, some departments will have to lay off some employees. Also, employee training may be required.

See also: Top Mobile Banking Technology Solution Companies