Whether you’re looking to open a checking account, apply for a credit card, or report a change of address, an online financial service can help you. Most banks offer these basic services, but some also go beyond the basics. For example, some offer mobile apps that allow you to make deposits and stop payments on checks right from your phone. Enter the amount you want to deposit and snap a check photo.
Convenience
Convenience is a key feature that attracts consumers to online financial services. It reduces physical effort and time spent on financial services. Internet banking also gives customers direct access to their financial information and transactions. Furthermore, customers can use internet banking anytime and anywhere, without regard to time or geographic constraints. In addition to convenience, perceived ease of use is an important feature that encourages customer adoption.
Early Detection Of Fraudulent Activity
Early detection of fraudulent activity when using online financial service platforms is vital for preventing the losses that result from fraudulent activity. Fortunately, there are many effective solutions to the problem. For example, fraud risk management strategies that use anomaly detection are more effective and faster than rules-based systems. In addition, by using machine learning, fraud risk is better managed by reducing the need for human review and intervention.
Fraudsters use many different techniques to avoid detection. One way is by using contactless payment methods. This way, the cardholder does not need to sign up for a service and does not need a PIN or signature. This method allows the fraudster to complete small transactions without revealing their identity.
Cross-selling Of Financial Products And Services
Cross-selling financial products and services online have two objectives: customer retention and growth. In the United States, half of the consumers maintain more than one account with different financial institutions. Their top reasons for having multiple accounts are convenience and flexibility. They also prefer to use different products and services. Younger consumers are especially likely to shop around if their financial institution doesn’t offer the necessary tools to meet their needs.
One way to improve cross-selling is to provide customers with value by leveraging analytics and data to suggest products and services they might be interested in. This practice is low-pressure, transparent, and requires the customer’s permission. The best cross-sell programs will include at least two or three different types of products or services.
Risks Of Scaling Up Digital Financial Services In A Crisis
The rapid expansion of digital financial services has increased the risk of cyber attacks, which pose a significant risk to customer data. Increased awareness of these risks prompts regulators to rethink trade-offs in financial services. In some cases, the cost of securing customer data could exceed the costs of offering digital financial services, which can severely impact the efficiency and profitability of for-profit digital finance providers.
Digital financial services are typically supplied by for-profit banks or emerging Fintech companies. These companies often have economies of scale and scope, which can result in enormous cost externalities for the government. A recent example is the problem of credit derivatives, which was intended to be a form of risk-sharing and ended up crashing the global financial system.
Resources:
https://www.investopedia.com/articles/pf/11/benefits-and-drawbacks-of-internet-banks.asp
https://www.forbes.com/advisor/banking/things-to-look-for-from-your-online-bank/
