The Internet's Role In The Banking Industry

It is hard to imagine the world we live in without the internet. If the internet goes away, many industries will collapse in minutes, including the most important one - the financial industry, with all the banks and financial platforms that use the internet to power their servers and process transactions.

Over the last couple of decades, the financial industry has undergone a massive overhaul, and nowadays, the financial sector relies more on the internet than ever before. Banks and financial institutions use the internet to prevent fraud, money laundering, verify transactions, maintain liquidity, send money, and many other things.

So, the internet is quite a big deal for the banking industry, but let’s dive deeper and find out the internet’s role in this entire process.

More Accessible Banking Features

First and foremost, we have mobile banking, which has become a trend nowadays. It seems like more people now have banking apps on their smartphones and rarely go to a physical bank.
 
In other words, the Internet brought banking closer to us, and we can access our accounts and make transactions whenever we like. We now have financial apps on our phones where we can check our balance, pay bills, or move money, even in a different country, in seconds.

According to Statista, there are more than 2.7 billion digital banking users, which is half the planet’s adults. So, it seems like a big deal for the entire banking sector, right?

Plus, this is a rising trend with all the financial platforms, making the entire process more convenient for everyone. If we take the internet away, this means that there will no longer be any banking apps on our phone, since they cannot communicate with the banking servers.

Increased Money Circulation

Next, we have money transfers and liquidity. Transactions that once took days to happen now happen instantly just because of the web. We are talking about SEPA instant transfers that settle in Europe in 10 seconds.

None of this is possible without the internet. Additionally, since we are now used to fast transactions, if we take away the internet, we have to wait for a couple of days, if not weeks for payments to settle, especially for cross-border transactions.

The internet powers all of the international wire transfer systems like SEPA and SWIFT, and we are talking about billions of dollars moved every year, and these systems have become the lifeline of many industries.

Smarter Banking

It is hard to talk about technology without mentioning AI, right? After all, this is the hottest trend that is going on at the moment, as many companies are pushing the AI race.

But what does this mean for the financial sector? Well, online banks and financial platforms are becoming smarter. These platforms are now capable of giving you financial advice, helping you with budgeting strategies, and most importantly, some banks already use the power of AI to spot fraud and illegal activities.

So, thanks to AI, which of course is powered by the internet, we now have safer and more convenient banking at our fingertips.

 Internet Banks

Ever hear of neobanks? They’re internet-only banks, no branches, just apps. 

Nowadays, the neobank trend is rising, and there are millions of people that already opened their accounts. Why? Well, most of these neobanks or internet banks come with benefits like low-fee international transfers, better currency exchange rates, and etc., which is very important in today’s Gig economy where many people receive money from different countries.

Even businesses now use platforms like Genome to send and receive money in different countries. If you want to learn more, check out their website.

These neobanks wouldn’t be possible to operate without the internet, and they can solve some big issues like the billions of unbanked adults globally, who now can have access to their own bank account no matter their location on the map.

The Security Issue

Now, although the internet sounds like the backbone of modern banking, it has also opened a few negative doors, like cybercrime. Banks nowadays are constantly fighting cybercrime, and they have to invest a lot more money to make sure their systems are bulletproof, and customer data is always safe.

After all, allowing internet access can lead to devastating issues, where hackers could exploit data and tons of other things, but fortunately, the sector is improving, and online banks are becoming safer.

Changing the Game for Banks

Like it or not, banks cannot operate without the internet. Yes, it might be a double-edged sword, but it is the way that the industry is headed, and there is no going back now.

If we balance all the good stuff that came with internet technology and all the bad stuff that surrounds the financial sector at the moment, it still looks like a big upgrade to what we were used to in the past.

The financial industry cannot work without the internet, and things will only become more digitalized in the future. Let’s just hope that financial institutions can solve all the drawbacks that come with this transition.