Technology Trends Affecting the Banking Industry
Technology advances in the financial industry are changing the way consumers bank. As consumers, corporations, and governments continue to demand more efficiency, the payment system will continue to become more complex. These advances occur quickly, so it's important that consumers, including students, keep up with what's available. Students should learn how to manage their finances by using the technology that is out there.
Five new tools recently made an appearance, all developed in response to consumer demand. One is the mobile deposit app. While check usage in general has been on the decline since 1999, most consumers still regularly encounter checks. With a mobile deposit app, a consumer can use a mobile device to scan the front and back of a check and then electronically submit the images to the bank as a deposit. The bank then processes the images electronically without having to collect any paper (the check or a deposit slip). This technology has greatly reduced the number of transactions conducted at brick-and-mortar banks, so banks are rethinking the size, locations, and numbers of their branches.
Following in the path of mobile deposit apps, photo bill payment apps have started to enter the market. Like mobile deposit, the consumer uses the mobile device to capture information—in this case, the payment amount, due date, and company issuing the bill—from the paper bill or invoice. The app then sends this information to the bank, which automatically generates an electronic payment from the user's account.
Despite the transaction fees that vendors have to pay for processing credit cards, they have long used processing machines to accept card payments because they know from studies that consumers spend more when they use cards versus cash. Another recent entry—credit card scanners—has made accepting cards even easier. Vendors can attach a card scanner to their mobile device. The vendor swipes the consumer's card, which the scanner reads. The device then transmits payment from the card to the vendor. This technology is changing consumer behavior. By allowing vendors to ring up customers on the spot, consumers are less likely to walk around with unpaid-for merchandise—and less likely to have a change of heart. These smartphone credit card scanners also benefit small businesses because they allow businesses to conduct the occasional credit card transaction at a lower cost than traditional card processing methods.
Teleconferencing with a bank teller or loan officer is also contributing to the way banking is changing. While the trend toward teleconferencing is itself not new, replacing personal meetings with virtual ones is new to the financial industry.
Finally, mobile payment apps are impacting the financial industry. These allow individuals to store their credit or debit card information so they can use their mobile device to pay for items rather than having to fumble through their purses or wallets to find their cards. At the point of sale, the individual chooses the card to pay with from the app menu and then touch the mobile device to the in-store reader.
For consumers, these technological advances will redefine the way banking is conducted. It is important to note that even though technology provides efficiency for the consumer, it remains the consumer's—and the student's—responsibility to manage account activity.
Marycela Diaz-Unzalu, economic and financial education specialist, Miami Branch
March 28, 2014