Finextra’s report summarises the certain future of digital banking for North America which the banking sector is hurtling towards due to growing customer demands.
In the report, young generations and millennials are described as the native consumers of digitalisation and active customers in today’s global market transferring in-store based experiences and consumer purchasing behaviour into the online space.
As such, traditional banks are in a pressured environment to adapt to the pace of innovation and pursue new emerging revenue streams.
The influence of young digital natives has pushed for change in the way we pay for goods and services more efficiently and quickly and expect personalised digital customer experience with chatbots.
Open banking could become such a phenomenon that Finextra’s report predicts that it could transform 8% of U.S. e-commerce. The Financial services are having to evolve to the chime of consumer needs and demands dictating in Central America that they must explore alternative virtual pay options within digital wallet, crypto usage, and QR-based transactions.
Open banking solves banks and customers’ desire to simplify a common method of onboarding which anticipates what users need to be authenticated quickly.
It is very well fuelling the arrival and integration of open banking into the financial sector, however, the regulation environment in the United States requires reform for fraud mitigation and banks on the defensive to engage in industry-led collaboration to make open banking mainstream.
As it stands the U.S landscape lags behind Europe in establishing a regulatory framework that governs how data is collected and protected while bolstering innovation and driving openness.
Innovation will not only be fast-tracked by meeting customers’ satisfaction and encircling the right frameworks around open banking but spiking fraud and vulnerabilities with new technology will naturally spark resistance to huge losses. As the US Federal Trade Commission (FTC) reported, $547 million loses were accumulated as a result of customers grappling with new technologies.
The pandemic stoked customers to migrate to digital payment methods leaving some new the technology vulnerable to sophisticated fraud attacks.
Wells Fargo mentioned, “as the pandemic has proven, we have reached the tipping point for the way customers want to manage their money, with digital adoption growing at an unprecedented rate”.
They added: “The investments we are making build on the digital foundation for the company and reduce risk, while also creating digital-first experiences and embracing technology to evolve ahead of customer expectations…we believe new digital experiences will ultimately improve customer satisfaction, and allow our bankers to focus on more complex needs for customers.”
