Learning Objectives:

  • Define digital banking and explain its evolution from traditional banking.

  • Understand the FinTech ecosystem and its key sectors.

  • Identify the key trends and innovations driving digital banking.

1.1 Defining Digital Banking
Digital banking is the application of technology to banking services, enabling customers to access banking services through digital channels such as mobile apps and internet banking . Unlike traditional branch-based banking, digital banking operates 24/7 and is characterised by convenience, speed, and personalisation . The evolution from electronic banking (ATMs, card services) to full digital banking represents a fundamental shift in how banking services are designed and delivered .

1.2 Differences Between Traditional and Digital Banking
Key differences include:

  • Service Delivery: Traditional banking relies on physical branches, while digital banking is available anytime, anywhere .

  • Customer Experience: Digital banking is data-driven and personalised, whereas traditional banking is often a one-size-fits-all model .

  • Operational Model: Digital banks have lower cost structures, while traditional banks maintain large branch networks and legacy systems .

  • Customer Interaction: Digital banking is primarily self-service with AI support, while traditional banking is relationship-driven through branch staff .

1.3 FinTech and Its Impact on Banking
Financial Technology (FinTech) refers to technology-driven innovation in financial services . Key FinTech sectors include:

  • Payments and Transfers: Digital payment systems, mobile wallets, and real-time payments .

  • Digital Lending: Peer-to-peer lending, Buy-Now-Pay-Later (BNPL), and instant loan apps .

  • WealthTech: Robo-advisors and automated investment platforms .

  • InsurTech: Technology-driven insurance solutions .

  • RegTech: Regulatory and compliance technologies 

 
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