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National Banking Association for Tech

How online banking is changing the banking industry

From analogic to digital

Communication technology is reshaping all aspects of our daily lives. From shopping to the weather forecast, from finding love and friendship to learning foreign languages. The difference between today and thirty years in the past is abismal, and chances are it will keep changing as new technologies develop and offer us new options for our daily activities.

Banking and finances use digital resources to power many of their services, if not all, and to provide new ones to their clients in an effort to be more competitive in the market. Terms like "online banking" and "online payment" are now commonplace. Just a few years ago, ATMs were the technology of the future, the latest trend in bank services. And now, they are almost outdated, replaced by mobile phones and other connectivity devices.

These developments bring both new opportunities and new concerns to the picture. Bank transactions can be performed in a matter of seconds, without any cash, and from any point of the world to any other. And at the same time, codes can be broken, systems can fail and the whole digital structure of online banking could collapse because of a bug.

New technicians and software experts step into frame and offer their work as developers and testers for the banks and financial institutions, which request solutions aimed to satisfy their clients according to their own corporate values and set goals. The most common requests involve safety, a friendly user interface and processing velocity.

Online transactions

Most transactions can be performed online. From the basics like payments and account checkouts to signing up for new services and building up whole businesses that spread to all the corners of the world. Even if some actions must be taking personally, such as major changes in the service terms, signing up for a bank package and some compliance requisites, online banking seems to be here to stay.

Many usual activities regarding banks, like paying bills and transferring payments, are now quick and simple with mobile banking and home-based online banking. From the point of view of domestic activities, this saves people money and effort, releases them from the boundaries of business hours, and makes it more likely for them to conduct transactions and payments through banks or cards instead of paying cash. 

However, for sure the biggest impact of online banking is how it reshapes businesses. Companies and startups can move large amounts of money, even from one country to another. Active businesses many process thousands of payments a day, so an online platform that conducts all these operations quickly and conveniently has allowed businesses to offer quicker and better services to their clients. International expansion is made much easier and now people can buy products or hire services while walking down the street, as long as they have their mobile phone in their hand.

Online merchant processing

The large network of digital platforms and online services dedicated to providing solutions for businesses to accept and process payments is called merchant bank processing. Usually, one or more banks are involved in this network, including the acquiring bank and the bank that processes credit card payments. Banks often associate with each other in order to offer a complete merchant processing package to their corporate and business clients.

Merchant processing is quite tricky for banks because it has less margins and more risks compared to personal accounts and other basic bank services. For that reason, these entities need to be more cautious when accepting a new corporate client. There is a longer application process which involves studying the background of the applicant and evaluating risk associated with it. Different banks have their own risk policies, and some business sectors are considered to be of higher risk than others, so they might have less chances of being accepted, or at least be entitled to higher premiums. 

Safety is also a major concern with online merchant processing. Fraud protection is fundamental for keeping your corporate clients, and software reliability might very well come a close second. The solutions banks provide to their corporate clients are the ones those clients will be offering to their own customers, so they will want the safest and most practical system for collecting payments and running their own accountancy. 

Corporate clients can access information and features online, which is a huge advantage for running any business. Speed, practicity, reliability and accessibility will turn any merchant service package into a fundamental resource for a business, and that's good for any bank as a provider.

Useful links:

Credicorp Bank applications

merchant processing 101

Definition of Money Transmitter 

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