Over the past twenty years, banks have been going through significant changes. Technology has played a major role in the acceleration of the pace at which banks have grown. It has also accelerated the number and pace of transactions in banks. The paper looks at three common features that are available to the financial services customers that were not available in the past twenty years. In this discussion, the economic and social impacts of the new technological changes will be discussed.
The first innovation is the development of a crowd-sourced and social-media based system of identification. In todays financial systems, regulation suggests that banks ought to conduct Know Your Consumer activities with the aim of getting confirmation of peoples identity. The identification process is to those who open accounts and also the customers who conduct transactions. In most times, KYC has proved to be tiresome since it implies manual checks on several documents (Quinn, 2017). An example is while a new-comer is opening a bank account in the United States of America, it can be very hard if one has no document to prove that one lives at a certain address, and living in a particular place requires that one has a bank account to pay mortgage and rent. Nevertheless, there is the OIX and the Respect Network that have given a crowd-sourced reputation system available on the internet where individuals can trust on another based on the digital reputation shown in the reputation system.
Another innovation is the online banking. Online banking is a major example of how technology is helping to make banking technological. In the banking industry, a scale is important as it allows fixed costs that are spread over many customers and locations. For most large banks, they have managed to keep their ATM and other transaction costs low. Online banking means that customers can make their banking online. In this, customers are allowed to make deposits by use of the mail and can also withdraw using ATMs belonging to the competing bank ATMs (Quinn, 2017). With the surety of not having many physical branches, thus minimizing the employees, online banking keeps their costs low and thus passing savings on to their customers.
The final innovation is the removal of banking hours. Due to increased competitiveness, the banking industry has been forced to change for the better. Bank hours today are just an abbreviation that describes working days unlike how it was before. Additionally, banks remain open for half-day during the weekend (Saturday), (Frame, & White, 2014). The bank hours were 9 am to 5 am, and it was not inclusive of the weekends. Nowadays, banks operate half-day on Saturdays, and there are days some banks can stay up to 8 pm to meet the needs of their time-strapped customers. The internet transactions as seen earlier have enabled the entering of transactions at any time of the day. However, the actual fund movement is mostly kept for weekly business hours.
Today, banks are a far cry as compared to the existing banks in the past twenty years. Most bank branches are operated and owned by titans who are money-centers. Banks are now offering various benefits, and they sell their services far from the older loan services they used to provide. By the help of the recent innovations, many banks have qualified to become financial service firms that are allowed to make any financial transaction that their customers need.
Frame, W. S., & White, L. J. (2014). Technological change, financial innovation, and diffusion in banking.
Quinn, S. (2017). British Banking: Continuity and Change from 1694 to the Present.
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