What can Traditional Banks do to stand up to the challenges of Digital Banks?

Introduction:

Online banking, or digital banking, has taken the world by storm. In fact, very soon, the number of Retail users of Digital Banks would exceed the number of users of traditional banks. So, what can traditional banks do to keep up?

While some changes may be difficult to make, there are a few key areas where traditional banks can improve to remain competitive.

1. What are digital banks?

In the era of digital everything, it's no surprise that there are digital banks. These are banks that exist only online and don't have any physical branches.

Digital banks have a few key advantages over traditional banks. For starters, they're much more convenient because you can do all your banking from your computer or smartphone. They're also typically much cheaper to use, since they don't have the same overhead costs as traditional banks.

Finally, they're much more innovative, offering features like chatbots, which allow you to communicate with your bank via messaging apps, and machine learning, which uses artificial intelligence to predict customer behavior and recommend products.

Traditional banks are starting to feel the pressure from digital banks and need to find ways to stay competitive.

2. ?How have digital banks impacted traditional banks?

Digital banks, or challenger banks as they're often called, are a relatively new phenomenon. And while they may seem like a threat to traditional banks, the reality is that the two can coexist quite peacefully.

With Covid, most of the transactions moved online, and the Bank Customers have gotten a taste of doing Banking without visiting the Branch.

Digital banks have already had a significant impact on the traditional banking landscape. For starters,

• Digital Banks are typically much easier to use than traditional banks. They often have user-friendly apps and websites, which makes it easy for customers to manage their finances on the go.
• Digital banks are also typically much more affordable than traditional banks. Many of them don't charge monthly fees or minimum balance requirements, and they offer competitive interest rates on deposit accounts.
• Finally, digital banks are typically much more innovative than traditional banks. They're constantly introducing new products and services that make banking easier and more convenient for customers.

?3. What can traditional banks do to keep up with digital banks?

• There are several things traditional banks can do to keep up with their digital counterparts. For starters,
• They can make it a priority to be more agile and faster in their decision-making processes.
• In addition, they can focus on becoming lean and cost-effective without sacrificing quality.
• Overhaul the Customer Journey on their Online and Mobile Platform.
• Migrate from their legacy Core Banking Platforms which specialized in Branch Banking, as opposed to the digital eco-system
• Lastly, they need to create an environment that is more customer-centric and innovative.

By following these guidelines, traditional banks can stay competitive in the digital age and continue providing valuable services to their customers.

4. Advantages of traditional banks over digital banks

Despite the advantages of digital banks, there are still some clear benefits of traditional banks.

• The most obvious advantage of a Traditional Bank over Digital Bank is that customers are able to talk and be guided by Human Beings whether on Bank Branches or Call Centres
• Digital divide, which is gradually narrowing down
• Trust Factor:?Traditional banks have a long history and are more established in the market. Further people have the confidence of entrusting their savings with a Bank with Branches
• While the older generation is coming to terms with using a Mobile or an Online channel for Banking, but their confidence in doing transactions on Non-Branch channels beyond a branch transfer, or bill-payment is very limited.
• They also have a wider geographical reach, with branches in many more locations than digital banks.
• Another major advantage is that traditional banks currently offer more products and services than digital banks. This includes a wide range of loans and mortgages, as well as investment and insurance products.

?5. Disadvantages of traditional banks in the digital age

?In the digital age, banks are experiencing a number of challenges.

• One of the biggest is the impact of digital banks, which are often faster, leaner, and more cost-effective.
• They're also more customer-friendly, with features like mobile banking and 24/7 customer service.
• Traditional banks are at a disadvantage because they're not as nimble as their digital counterparts.
• They're also less accessible and less interactive, which can lead to customer dissatisfaction.

?In order to stay competitive, traditional banks need to make some big changes—and fast. They need to revamp their technology infrastructure, update their customer service policies, and make themselves more accessible. Only then will they be able to compete in the digital age.

?Conclusion:

Digital banks have become incredibly popular in recent years, and they have had a significant impact on traditional banks. While digital banks have several advantages, traditional banks still have some advantages over digital banks. In order to stay competitive, traditional banks need to focus on their strengths and find ways to appeal to customers who may be interested in digital banks.