The emergence of online banking has made offering banking services that much more comfortable. It has provided speed and convenience to the customers. Long gone are those days where customers had to drive to the banks and stay in the queue just to check their account balance or make deposits. Today, the same work can be done in the comfort of their home with just a few clicks. It comes as no surprise that 51% of US adults participate in online banking. Although online banking simplifies trading and provides convenience to both banks and consumers, there are some distinct challenges and issues in the online banking sector. The problems can range from technical factors to habitual factors. Banks aspiring to drive the adoption rates of online banking should be well aware of such issues.
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Challenges in the online banking sector
Traditional banking habits
As mentioned earlier, 51% of US adults participate in online banking, however, in the hindsight, 49% of them still don’t. A majority of such people are susceptible to change and are well versed in traditional banking. Such aversion to change is usually due to a lack of trust in the online system or the inability to operate online portals. As a result, banks are struggling to convince people to adopt online banking. In this case, banks can simply demonstrate the benefits of online banking and the drawbacks of traditional banking to their customers.
Security and fraud instances
Security and protection against fraud and hacking are some of the most significant challenges for banks promoting online banking. In traditional banking, robbers would have to break into the bank to steal money from customers. However, skilled hackers can crack bank security measures to get customers detail and illicitly transfer money. For instance, almost 130 million British pounds were stolen from online bank accounts in 2015 through fraud. Additionally, the expansion of e-commerce provides an opportunity for fraudsters to misuse payment networks and steal sensitive information.
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One of the critical success factors of online banking is the implementation of the cross-border transaction as they play a vital role in global trade. However, historically, cross-border payments have been slow, inefficient, and expensive. This is because most of the banks still use traditional infrastructure including national banking infrastructure which results in non-uniform development and software platforms that complicate the cross-border transaction. New technologies including blockchain have been promising in overcoming such drawbacks to facilitate smooth cross-border transactions.
Banks are heavily reliant on online platforms to perform operational tasks including cash transfers, transaction recording, and information storing. A single system crash or a bug in their code can cause millions of dollars in losses or can even cause the bank to shut down its operations temporarily. Similarly, customers can lose trust in online banking when it’s not functional for that time. So banks face challenges in not only running their online platforms smoothly but also look towards their mobile apps.
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Multi-currency and payment methods
The rise of global e-commerce has posed new problems in the online banking sector, that of using multiple currencies and payment methods. Consumers around the world use various payment methods including credit card, debit card, Paypal, bank transfers, e-wallets, and mobile payments. Merchants accept payments through such means and in different currencies. However, they face difficulty dealing with multi-currency, cross-border transactions, bank accounts, business entities, and regulatory hurdles. Such problems can usually be solved by selecting a payment service provider who can provide effective and immediate solutions to these problems.