Gone are the days when you had to physically visit a bank’s branch and stand for hours to ensure you completed a small task. Now, the banking system has majorly transitioned from physical to digital, allowing you to do every banking activity, such as sending money or looking at an account summary, right from your mobile phone or laptop. However, based on the increase in the demand for digital banking, numerous digital banks have started operating, making it important to choose the most suitable and successful one.
 

This blog will help you understand the top five characteristics of a successful digital bank so that you can compare and choose an ideal one that caters to all your digital banking needs.

• A digital bank is an online financial institution that provides banking services exclusively through digital platforms.
• They rely heavily on advanced technologies such as AI and big data to offer personalised banking solutions.
• Digital banks implement advanced security features such as encryption, multi-factor authentication, and biometric verification.

Digital banks are fully online financial institutions that provide banking services without physical branches. They offer a wide range of services, such as opening accounts, transferring funds, making payments, and applying for loans through digital platforms like mobile apps or websites. By leveraging technology, these banks aim to provide a more convenient, faster, and cost-effective banking experience, often with lower fees and better interest rates compared to traditional banks.

Now that you know what are digital banks, the next step is to understand what makes them successful. Here are the top five characteristics of a successful digital bank:

24/7 operations

One of the most beneficial characteristics of a successful digital bank is its 24/7 operations. Most successful digital banks offer their services 24 hours a day and 365 days a year. Unlike traditional banks, which are closed on 2nd and 4th Saturdays, all Sundays and national holidays, digital banks do not see any closure of their apps and websites. Hence, customers can execute banking activities such as transferring money at any time of the day without any restrictions.

Data aggregation

Data aggregation is the process of collecting and consolidating financial data from multiple sources, such as bank accounts, credit cards, loans, investments, and other financial platforms, into a single, unified view. Successful digital banks leverage advanced technologies such as AI and big data to identify financial patterns and utilise data aggregation to offer personalised financial products and processes to customers for ease of operations.

Open banking

Open banking is a system that allows banks and financial institutions to share customer financial data with third-party service providers through secure Application Programming Interfaces (APIs). To ideally execute data aggregation and offer personalised financial products to customers, successful digital banks utilise open banking to share the data with third-party vendors. These third-party vendors help customers access personalised services and products.

Security

One of the most distinctive characteristics of a successful digital bank is its security features. Digital banks rely on advanced algorithms to offer their services and store customers' financial data. Successful digital banks ensure that they have robust data security features to protect customers’ data at all times, avoiding any financial fraud or leaks. Hence, they have high-end encryption, multi-factor authentication, and other advanced cybersecurity measures to protect customer data and transactions.

Invisible banking

Invisible banking is a feature of a digital bank where set banking activities happen automatically without the manual execution of customers. Successful digital banks use AI and automation to automatically categorise expenses, transfer funds into savings accounts, or pay bills based on predefined rules set by the user. Similarly, customers can make payments without traditional banking steps through voice assistants or smart devices. This helps customers make routine banking transactions without taking any traditional banking steps.

Digital banks have become customers' go-to platforms, offering convenient, efficient, and user-friendly financial services through digital platforms like mobile apps and websites. Successful digital banks have some distinctive characteristics as they use advanced technologies to offer personalised banking solutions to customers and ensure that their financial data is protected at all times. Furthermore, they operate 24/7 and allow customers to access banking activities anytime and from anywhere. However, as there are numerous digital banks, it is important to compare all of them and choose the most suitable one based on their characteristics and features.

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