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Banking Technology

Benefits & Trends of Technology in the Banking Industry

Technology in banking means a lot of things. From making a deposit, to writing a check, there is some form of technology being used. Whether you see it as a user of the technology or it’s behind the scenes in back offices making sure that business goes on as usual, technology has helped streamline the way we bank. In the past things like passbooks and check ledgers were used to keep track of personal finances. Check writing dates all the way back to the mid 1600’s. They didn’t have smartphones or mobile apps that keep track of spending for you and give you alerts when your balance is low. Now the use of debit cards and mobile wallets have become prevalent in today’s ever-changing technology landscape. Today there are financial technology (FinTech) startups and agencies either working on their own or in conjunction with banks and financial institutions to make accessing your money even more effortless. It is crucial that all businesses, including financial institutions, grow with the demands of instant gratification that technology has created. We will review what banking technology is currently available; online and mobile banking, text alerts, Chat Bots, and the demand for financial institutions to keep up with the way consumers use and access their money. We will also discuss how crucial it is for all consumers to adopt new technologies in an ever developing landscape .

Online & Mobile Banking

Online banking has become the personal banking standard for banking technology. Most, if not all, financial institutions have an online banking platform for their members or customers to use. So what is online banking? Online banking is a method through which transactions are conducted electronically and in real time, via the internet.

Online banking is a method through which transactions are conducted electronically and in real time, via the internet.

Signing up typically requires a registration process in which you create a username and password and agree to the financial institution’s terms and conditions for using the service. Once that has been accomplished the user can now view their accounts. This was a huge step in technology for financial institutions. This allowed members to make transfers between their accounts at home without having to call or go into a branch. Members can also keep an eye on their account balance without the need of a check register or waiting for their monthly statement to arrive in the mail. This was great but with the continual progression of technology, it was soon not enough. Enter mobile banking. Members can access their accounts on any mobile device through a mobile app. This technology allows you to have your account information at the tip of your fingers 24/7 from anywhere. Make instant transfers between your accounts. Setup a bill pay item to pay a utility provider. Deposit checks simply by taking a picture of the front and back of the check. The list goes on.

The benefit to the user is that they can keep track of their accounts on their schedule. There are even integrated programs that track your spending for you each month so that you can evaluate how you are spending your money. With most transactions becoming instantaneous it allows more time for people to focus on what matters in their life and not spending it on the phone speaking with a bank representative or having to make sure they get to a location before it closes. Banking technology has given people access to their accounts where ever they are and the freedom to use it safely via the internet.

Some financial institutions are completely digital. That’s right. No physical locations or branches. Everything is done via the web. This creates lower operating costs since there aren’t multiple buildings to maintain with heat, electricity, water, rent, landscaping, etc. The result can mean lower fees, lower rates, higher interest on deposits and so forth. However, there is a loss of human touch–the face-to-face encounter that helps build trust and security. A good mixture of technology and human interaction can create a mutually beneficial environment for both consumer and financial institution.

A good mixture of technology and human interaction can create a mutually beneficial environment for both consumer and financial institution.

Security & Alerts

Banking technology opens up a lot of concern over the security of personal information. The internet can be a scary place for sharing your personal information or Non-Public Information (NPI). Financial institutions are held to a higher standard and are heavily regulated when it comes to banking online. Using the highest level of encryption on their websites, online banking platforms, and mobile banking apps is mandatory. That means that any time information is shared it is converted into a code that only the financial institution can read in order to prevent unauthorized access. Not only is your personal identification encrypted, so is your income, credit score, financial history, and family member information. This type of encryption is also found on merchant websites where your payment information is shared in order to purchase goods and services.

How do I know a website is encrypted?

  • The web address starts with “https:” instead of just “http:”. The ‘s’ denotes that the website is secure and data will be encrypted.
  • The web address will have a padlock icon in your browser’s address bar. This also denotes that the website is safe for you to use and enter your information.

As a basic rule of thumb, only use websites that you know are trustworthy. If you’re unsure, Google the web address to see if there are any articles about it being fraud. Double check to make sure that the financial institution’s address is correct. Call the institution using a trustworthy phone number (such as one from a bill or statement) to verify the web address.
Online banking isn’t the only concern. It used to really only be check fraud that you had to worry about. Now you also have to worry about your debit card number being used. The invention of debit cards freed consumers from the hassle of having to carry a checkbook and the expense of purchasing new checks. By requiring a Personal Identification Number (PIN) or a signature transactions are more secure than checks, not to mention it’s a lot more difficult for criminals to obtain your card number, PIN, expiration date and three-digit security code located on the back of the card.

Data protection concept: Man in a suit tapping the lock icon on a screen that says Data Protection

What can I do to prevent fraud?

While banking technology has created concerns, it has also allowed consumers to have easier access to their accounts. There continues to be advances in technology like the EMV chip added to debit and credit cards. The chip creates a unique transaction code for that transaction only so that any criminals that may intercept the information cannot recreate it to be used in a different transaction of their own implementation. Sure, the process time takes a little bit longer at the register but don’t you think it’s worth it not to have your information stolen?

It’s also important that you stay up-to-date with your account transactions to thwart any fraud attempts and with online banking or mobile banking you are able to view your account transactions from the comfort of your home or on the way to work as you ride the train. If you see transactions that you don’t recognize you can immediately put a freeze on your debit card to prevent any further transactions. New banking technology also allows you to setup alerts on your account via text message to inform you when your balance goes below a set amount, a purchase has been made, you’re account has been overdrawn and so much more.

Artificial Intelligence (AI) & Chat Bots

“Alexa, what’s my balance?”

Smart speakers and smart speaker technology introduced by Amazon’s Alexa are showing up in people’s homes at an astounding rate. Is this the future? It sure seems like it. People can use the virtual assistant for loads of things like playing music, making a shopping list, turning the lights on and off in your home, update on the weather and news and so many other skills, as they are called in the app. Alexa has integrated into the daily lives of people so seamlessly. Amazon’s Alexa is a perfect example of how banking technology needs to keep up with the now and anticipate the future. Financial institutions are scrambling to make their apps Alexa compatible.

Woman on a laptop talk to Alexa which is on her desk

What does voice banking have to offer? Since it is still in the infant stages there are some limitations to voice banking. That being said it can still do a lot considering the platform. Voice banking allows you to obtain your checking and savings account balances, transfer between your accounts, make an auto loan payment from your account, cancel a lost or stolen debit card, and check the balance of your loans and next payment date. All of this just by asking “Alexa, what’s my balance?” This new technology is popping up at more and more financial institutions across the country. Not all of them have all of the Alexa Skills yet as the technology is still being developed for each unique core system. It is an exciting time for banking technology. Who knows what the future will bring as banking technology continues to innovate.

Another useful tool in banking, as with many other industries, are chatbots, a computer program integrated into a website designed to simulate conversation with its user. This gives the ability to answer frequently asked questions within seconds. Chatbots allow the user to still have a conversation without actually speaking to a human. This frees up customer services for more in-depth topics and allows the chatbot to handle basic questioning. This is beneficial to the financial institution as well as the user that only needs basic information. Some bots also allow for sending attachments as well as scheduling appointments.

Member Adaptation

“If it ain’t broke, don’t fix it”

The problem with technology is it is the antithesis of change and change can be scary. Technology wants to be improved. It begs for innovation. Do it better. Do it faster. Do it easier.

Technology wants to be improved. It begs for innovation. Do it better. Do it faster. Do it easier.

The adoption of new technologies isn’t so much about fear of change as it is about routine. New technology requires training and adjusting to a new routine. Depending on the individual, training can potentially take a lot of time and not everyone has the time to sit down and learn something new when the way they have been doing it has worked for a majority of their lives. This is why banking technology needs to be intuitive and the benefit to the user clearly established. This will help ensure the integration needs will have as little disruption as possible.

“Why have a mobile app when I have used a check register my whole life? Now you have to check your phone and remember a password.”

Let’s break down that hypothetical statement. While a check register has become an antiquated form of account balancing, it doesn’t make it any less legitimate. Theoretically, you could continue to use a check register as you have always done. But how does technology improve this process and benefit the user? A mobile app is completely digital. There is no need to reorder checks, keep track of multiple books of checks/registers or remember to write down every transaction you make. The mobile app is encrypted with the highest level of security and protected by a username and password. And while, yes, it’s one more username and password to remember, a check register can be lost and the account number, your name and address are all right on the check for anyone to copy. Plus, if you ask anyone how many times their check register balance has been off. The answer is almost never zero. Online banking allows you to view and verify every single transaction and has a current balance. No calculators needed! The benefit of switching to the app is higher security, easier access to a longer history of transactions, and accuracy that may be lacking in a check register.

Trust is another huge factor in adopting a new technology. Different generations have different exposure to the ever-changing digital landscape. You could trust a paper document because it was a hard copy with a signature. That meant it was official. How could you not trust it? Then forgeries became a regular occurrence. In order to fight that, new technologies were created to make the ink and paper more difficult to copy. The industry constantly needs to be innovating to thwart criminals from attempting to take your money. It isn’t any different from analog to digital. Identity theft will always be a concern, so the more you keep up with technology, the safer your money will be.

Financial institutions have made it a priority to help all members and customers adopt new banking technology. Workers in particular has integrated a tech bar in its newest branches. The tech bar highlights the newest technology and allows members to come in and take them for a test run so that they can start to feel comfortable using it. A representative is available to assist as needed and answer any questions about the technology that is being used. Most importantly, explain the features that may benefit the member and improve their daily lives. On display are a tablet, mobile device and access to the mobile app as well as online banking. With these devices, you can take a quick tutorial on how to deposit a check with the mobile app or immediately transfer funds to another member of the credit union.

Banking technology is meant to make your daily life easier and more efficient.

Banking technology is meant to make your daily life easier and more efficient. It’s a supplement to being able to come into a branch for when you need that one-on-one interaction. Even branches are incorporating more banking technology like Interactive Teller Machines (ITM) where you can speak to a live representative via video chat if you need assistance instead of your standard ATM. In some cases you can also use your debit card as identification at the teller line for the teller to bring up your account .

Workers has a whole suite of digital banking products and services to help members have access to their accounts on their terms. At the end of 2018 Workers was voted as one of the top credit unions in New England with the best technology. Online banking and mobile banking are available 24 hours a day, 7 days a week. Members are able to make a check deposit using their mobile device, review their account history, make a transfer between their accounts or to another member, schedule a bill pay item, make a payment to their loan account, and so many more possibilities. Workers is in the business of improving the lives of our members on a daily business and banking technology allows us to do that on a larger scale. That’s banking that works.

Female on laptop with earbuds

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