Excellent online service from bigtechs means consumers now expect retail banking to provide a free personalised and convenient digital service. But unlike fintechs, banks must offer digital services to everyone not just some customers. That means offering online convenience as well as account security. Ouida Taaffe looks at the digital challenges facing banks.
What does a good online bank look like? A great online bank has a site that is:
- intuitive and easy for everyone to access
- is fully private and secure
- works well whatever the device or the broadband speed
- can display all of a customer’s financial data in one place.
And when automated services aren’t enough, customers have easy access to trained staff.
Online banking must be harder than online shopping
Though banks already have great banking apps, banking can’t be as easy as online shopping. Banks have to be secure and they have to protect customers from scammers.
That could mean making it hard to send money sometimes, and it always means looking after money and data.
The data might not sound as important as the money, but financial data is a very rich source of sensitive information. If, for example, you donate to a faith group by standing order, your religious affiliation can be known.
There are strict regulations about the way that financial services firms deal with clients. These are much tougher than the rules for most online services.
Rules, regulations, bank business conduct and ‘strong customer authentication’
The basic principles for bank business conduct in the UK include:
- conducting business with integrity
- conducting business with due skill, care and diligence, and
- treating customers fairly.
The rules the Financial Conduct Authority (FCA) sets are there to protect clients, but they can be frustrating.
In particular, ‘strong customer authentication’ (SCA), which comes into full force in December 2020, will mean some users struggle to access their online accounts.
SCA will require online bank customers to present two out of three of the following:
- something they know eg, a password or a PIN
- something they are, eg, a fingerpint or retinal scan, or
- something they have such as a particular device.
Using biometric identification should be easy for most people, but many will not have a device that accepts it. Equally, others will struggle with passwords and PINs.
Lockdown has highlighted the potential problems that online banking faces.
Some elderly people, for example, have not had a suitable online device. Or they have disabilities such as arthritis or poor eyesight that make online banking hard.
How will banks overcome the digital challenges they face?
Banks already regularly update their online sites. And they are already using so-called ‘alternative data’ to help them serve customers better.
The next phase will be when banks update all their IT architecture to automate all routine services.
But even the best technology will not make online banking like online shopping.
Banking is different. Much more is at stake and, whatever the online help, customers will continue to have questions about their account that digital tools cannot answer.