Digital banking
Digital banking is part of the broader context for the move to online banking, where banking services are delivered over the internet. The shift from traditional to digital banking has been gradual and remains ongoing, and is constituted by differing degrees of banking service digitization. Digital banking involves high levels of process automation and web-based services and may include APIs enabling cross-institutional service composition to deliver banking products and provide transactions. It provides the ability for users to access financial data through desktop, mobile and ATM services. Description. A digital bank represents a virtual process that  includes online banking and beyond. As an end-to-end platform, digital banking must encompass the front end that consumers see, back end that bankers see through their servers and admin control panels and the middleware that connects these nodes. Ultimately, a digital bank should facilitate all functional levels of banking on all service delivery platforms. In other words, it should have all the same functions as a head office, branch office, online service, bank cards, ATM and point-of-sale (POS) machines. The reason digital banking is more than just a mobile or online platform is that it includes  middleware solutions. Middleware is software that bridges operating systems or databases with other applications. Financial industry departments such as risk management, product development and marketing must also be included in the middle and back end to truly be considered a complete digital bank. Financial institutions must be at the forefront of the latest technology to ensure security and compliance with government regulations. History of Digital Banking. The earliest forms of digital banking trace back to the advent of ATMs and cards launched in the 1960s. As the internet emerged in the 1980s with early broadband, digital networks began to connect  retailers with suppliers and consumers to develop needs for early online catalogues and inventory software systems. By the 1990s the Internet became widely available and online banking started becoming the norm. The improvement of broadband and ecommerce systems in the early 2000s led to what resembled the modern digital banking world today. The proliferation of smartphones through the next decade opened the door for transactions on the go beyond ATM machines. Over 60% of consumers now use their smartphones as the preferred method for digital banking. The challenge for banks is now to facilitate demands that connect vendors with money  through channels determined by the consumer. This dynamic shapes the basis of customer satisfaction, which can be nurtured with Customer Relationship Management (CRM) software. Therefore, CRM must be integrated into a digital banking system, since it provides means for banks to directly communicate with their customers. There is a demand for end-to-end consistency and for services, optimized on convenience and user experience. The market provides cross platform front ends, enabling purchase decisions based on available technology such as mobile devices, with a desktop or Smart TV at home. In order for banks to meet consumer demands, they need  to keep focusing on improving digital technology that provides agility, scalability and efficiency. What digital banking means for banks. A study conducted in 2015 revealed that 47% of bankers see potential to improve customer relationship through digital banking, 44% see it as a means to generate competitive advantage, 32% as a channel for new customer acquisition. Only 16% emphasized the potential for cost saving. Major benefits of digital banking are: Back End Banking Architecture. A key in which digital banks can gain a significant competitive edge is developing a more robust IT architecture. By replacing manual back-office procedures with  automated software solutions, banks can reduce employee errors and speed up processes. This paradigm shift can lead to smaller operational units and allow managers to concentrate on improving tasks that require human intervention. Automation reduces the need for paper, which inevitably ends up taking up space that can be occupied with technology. By using software that accelerates productivity up to 50%, banks can improve customer service since they will be able to resolve issues at a faster pace. One way a bank can improve its back end business efficiency is to divide hundreds of processes into three categories: It still  isn't practical to automate all operations for many financial firms, especially those that conduct financial reviews or provide investment advice. But the more a bank can replace cumbersome redundant manual tasks with automation, the more it can focus on issues that involve direct communication with customers. The obstacles currently preventing banks from investing in a more digital back end environment are: Direction Toward Digital Cash. Digital cash eliminates many problems associated with physical cash, such as misplacement or the potential for money to be stolen or damaged. Additionally, digital cash can be traced and accounted for more accurately in  cases of disputes. As consumers find an increasing number of purchasing opportunities at their fingertips, there is less need to carry physical cash in their wallets. Other indications that demand for digital cash is growing are highlighted by the use of peer-to-peer payment systems such as PayPal and the rise of untraceable cryptocurrencies such as bitcoin. Almost anything imaginable that can be paid with physical cash can theoretically be paid with the swipe of a bank card, including parking meters. The problem is this technology is still not omnipresent. Cash circulation grew in the United States by 42 % between 2007 and 2012, with an average annual growth rate of 7%, according to the BBC. The concept of an all digital cash economy is no longer just a futuristic dream but it's still unlikely to outdate physical cash in the near future. All digital banks are possible as a consumer option, but people may still have a need for physical cash in certain situations. ATMs help banks cut overhead, especially if they are available at various strategic locations beyond branch offices. Emerging Digital Solutions. Emerging forms of digital banking are These solutions build on enhanced technical architectures as  well as different business models. Future of Digital Banking. The decision for banks to add more digital solutions at all operational levels will have a major impact on their financial stability. While not all banks are in a position to make quick changes to IT infrastructure or the architecture on top of it, banks aiming to be disrupters can move toward broad end-to-end automation can do so over about a six-month time frame.