Digital Banking Solutions – How Safe and Secure Are They for Small and Medium Businesses?

For many businesses, digitization is the way forward. Digital technology has been adopted with particular enthusiasm by the finance sector. The rise of online transactions has necessitated the use of digital banking. In order to enhance the customer experience, digital banking makes it possible to automate all banking processes. There is no manual intervention in this case. Analytical tools, an API (Application Programming Interface), and AI are used in digital banking.

Businesses and individuals alike are concerned about the safety of money and data. The rise in cybercrime is the issue here. However, digital banking is now safer than ever. The technology that safeguards your financial data from cyberattacks has been developed by experts. 

Since the beginning of the coronavirus pandemic, digital banking has gained popularity. People are now using digital banks rather than cash withdrawals and payments in physical establishments as the new normal. Singapore implemented digital banking with the primary objective of expanding financial inclusion throughout the nation. Singaporeans are encouraged to take advantage of the ease with which digital platforms now allow for the opening of bank accounts. After all, who doesn’t want to know how to manage their money and be financially secure?

What is a digital bank?

A digital bank, or what some may refer to as “neobank,”  online bank, mobile bank, challenger bank, or virtual bank, offers only online banking that can be accessed through mobile applications or websites.

Digital banks operate solely  in the virtual world, thus, they don’t have any physical branches. Nonetheless, they do provide loans, mortgages, cashback, debit or credit cards, and other financial products. The overwhelming development of digital banking is due to the benefits and advantages it offers as compared to the traditional form of banking.

  • Safe and secure. The Monetary Authority of Singapore (MAS) oversees all banks in Singapore – both traditional and digital banks e.g. Grab and Singtel’s GXS Bank and Sea’s MariBank, so you can be confident with the security-aspect of your bank accounts. MAS also protects account holders’ deposits. Digital banks are constructed to withstand cyberattacks. One-time PINs (OTP), fingerprint scans,  passwords, and regular password changes are features put in place to prevent theft. Digital banks give customers the ability to manage card limits, block online transactions, and lock their cards for extra control and safety. Furthermore, banks are able to keep a record of your entire history and retrieve it whenever necessary, so all transactions are also closely monitored.
  • Full authority over the user. There are many ways that customers can benefit from digital banking, such as by making their lives easier and becoming better stewards of their money. In contrast to in-person banking, mobile banking apps and websites typically do not restrict when you can carry out banking activities like depositing a check or transferring funds between accounts. Additionally, digital banks enable you to spread the cost of occasional purchases by creating pots of cash to stash away each month. You won’t have to use credit cards because you will have money set aside to cover these kinds of costs when they come up. You can even lock your pot with some digital banks to prevent unauthorized access. 
  • Ease of Signing Up. You can register and apply for an account as long as you have a smartphone and a reliable internet connection. A digital bank account requires fewer steps and is easier to set up. To begin, opening an account does not necessitate a physical visit to a bank. The app or website handles everything. Customers of some digital banks do not have to make a first deposit, and some even have no balance requirements. 
  • Convenience. With Digital Banking, the user can bank whenever and wherever they want- a game-changer benefit offered by the new approach to banking. We can access our accounts on  our smartphones and computers at any time, so we can quickly complete a variety of banking tasks. Checks can be deposited from any location using mobile banking apps, for instance. You don’t have to go to a branch to check your balance, transfer money, or set up a notification to be notified if your account goes overdrawn. Because everything can be done within the app or on the website, there is no need to stand in long lines. You can schedule bill payments or deposits whenever you want without having to rush through cutoffs.
  • Higher rates and rewards. Online banks are great for earning high yields, making it simple to access your funds, at no  minimum or monthly fees. However, keep in mind that an online-only bank may not be right for you if you prefer the convenience of going to a bank branch or even depositing cash or checks in person.

Traditional Banks vs Fintechs vs Digital Banks 

Digital banks are able to offer their services at lower interest rates because they have lower operating costs. Digital banks can offer up to 3% in comparison to traditional banks, which only offer 1% to 2% on deposit accounts. Compared to other local banks, this enables  you to passively grow your savings faster.

Traditional Banks. are banks that operate and offer banking services in a physical bank branch such as OCBC, UOB, and DBS.

Fintechs. Companies that provide a micropayment service that turns one’s mobile phone into what we now refer to as a “virtual wallet” or “e-wallet” are known as fintechs. The objective is to provide quick and easy money transfers.

Digital Banks. In contrast, digital-only banks are those without physical offices or branches. From opening an account to withdrawing funds, everything is done online.

What makes Digital Banking Safe and Secure? 

Digital banking platforms provide cyber protection, however users are still responsible to stay vigilant against scams.

End-to-end encryption and firewall protection are provided by digital banks.

Through an end-to-end encryption program, Digital Banking ensures that no other person has access to your bank credentials. The communication between you and the bank is transformed into code by the software. Only you or your bank can use this code to access that data.

2-Step Verification Measures

Multi-phase or two-step verification requires you to verify your identity in multiple ways. This is very similar to Google’s standard two-step verification. The website may, for instance, ask you a security question when you log in. The website will then require your password. In some cases, a different prompt may ask you to enter a secure code that has been sent to your phone via SMS or email.

System for Automatic Logout

Most online banking systems will close your account after a certain amount of inactivity. It is a safety precaution to prevent unauthorized access.

Secure Socket Layer Encryption (SSL)

To either sign up for services or submit an application, you can log in online. Since you are providing personal information, this is a concern. As a result, SSL encryption ensures a safe connection with your browser.

SMS Notifications of All Account Activity

All bank transactions are accompanied by an SMS notification. It’s a great way to keep track of your account’s activities and identify and report suspicious ones.

How to stay safe when banking 

Before making an online purchase or transferring funds to another individual or business,  ensure you have verified their credibility. Are they reliable? Due to credential confidentiality, your bank cannot share your personal information with anyone. To ensure the safety of your data, avoid the following.

  1. Be wary of scams known as phishing

Phishing is a form of deception that aims to steal your identity. In a phishing scam, a malicious individual attempts to obtain personal information from you by convincing you to give it to them under false pretenses, such as credit card numbers, passwords, account information, or other information. Phishing schemes typically appear in the form of pop-up windows, email, or spam phone calls. Phishing scams can be avoided in the following ways:

  • Never respond to requests for personal information via email; 
  • Visit websites by typing the URL into your browser’s address bar; 
  • Check to see if the website uses encryption; 
  • Review your credit card and bank statements on a regular basis; 
  • Report suspected abuses of your personal information to the appropriate authorities; and 
  • Use anti-virus software and keep your computer’s security settings up to date.
  1. Avoid using public WiFi at all costs.

While some public wi-fi hotspots are encrypted, most aren’t – and if the network isn’t secure, there’s a greater chance a hacker could eavesdrop on the data your device transmits and receives, potentially recording login details or other sensitive information.

  1. Use Strong and Unique Passwords.

Choosing a unique password for your sensitive online accounts, such as your main email account and financial accounts, is critical because a security breach on  one site may result in breaches on other sites. It’s also important to remember that creating strong, unique passwords is the first step in protecting your sensitive personal information. Consider using multi factor authentication (two-step security) for your online accounts when it is available, and keep your computer and device software up to date by installing the most recent operating systems and security updates.

Here are some more banking safety tips:

  • Keep track of your accounts on a regular basis.
  • Change passwords on a regular basis.
  • Never click on links in emails purportedly from your bank.
  • Log in with two-factor authentication (2FA).
  • Only send money to people you know, and always double-check their username.
  • Check the bank’s website address twice.
  • Do not store login/card information in your phone/on any browser
  • Never give strangers access to your phone. 
  • Verify the authenticity of  sweepstakes and giveaways before participating.

Digital Banks will be the future of Businesses. Digital banks will undoubtedly be a part of our progressive future as they continue to reshape global banking.

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