How has the pandemic changed the digital banking industry?

While the ongoing pandemic has taught us many lessons over the last two years, one of the most important ones is how to stay distant yet connected. Amongst the social distancing and ‘work from home’ culture that has taken over our world, it is no doubt that our lives are becoming more digital in many aspects. Whether it’s having a virtual get together for our friend’s birthday, joining an online work meeting, or switching to cash-less payment options, many parts of our daily routine and social interactions are gravitating away from physical interaction to a more virtual experience. In the same way, the pandemic has showed companies the value of digitalization and allowed customers to take control of their banking services and needs through fully digital channels.

The importance of digitalization

As rules and restrictions were imposed all around the world, many of us quickly retreated into the safety and comfort of our homes. Millennials are reputed for being tech-savvy, and so were already adept to using the technology available at their fingertips for day-to-day jobs. More and more banks, especially in the Gulf, started to understand the importance of offering their customers (especially those in the younger age brackets) the option to manage services related to their bank account online. Although digitalization was always a trend that was inevitable, the pandemic has sped up the process.

You can now open and close accounts, report any card problems and fill out important paperwork from the comfort and convenience of your home. Strangely enough, the pandemic has pushed for such a luxury (no more waiting in hour-long queues to get support!), and so the space of digital banking has grown exponentially.

Let’s look at the industry

In the last two years, although traditional banking has still dominated the financial services industry, digital banking platforms became far more prominent. The global market for ‘neo’ banks is set to reach around $770 million in 2028. On the flip side, there has also been a drastic increase in customer queries as people tried to navigate their way through technology for their confidential banking activities.

The pandemic has also given plenty of us more time on our hands, and so digital banks have ensured that they can now also offer round the clock customer service. Not only has this allowed customers to create a better relationship with their bank (contrary to the ‘physical interaction creates a more personal bond’ myth), but it has also changed the very nature of banking. Digital banks have helped us take charge of our finances and accounts at anytime from anywhere, catering to the millions that were kept away from their homes due to lockdown and travel restrictions.

Here’s what the future could look like

Although countries are now easing restrictions and many of us are slowly returning to normalcy, digital banking continues to become a way of life. The digital industry has the potential to become even bigger than it already is – while such rapid growth of the industry can be attributed to the pandemic, it will continue to remain important even once we no longer need to do everything virtually. The Millennial and Gen Z generation were unsurprisingly quite quick to switch to online platforms for essentials like banking and education (and of course, shopping!), creating a bigger space for the digital world to become an essential part of our lives. Digital banking is the future, and it is here to stay.