COVID-19 has had many unexpected socio-economic impacts. It has come to threaten banks such as columbia bank aberdeen by promoting digital banks. Let us have a look at the impact that the pandemic had on existing banking structures.
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Social-distancing challenging people’s traditional banking habits
As the World Health Organization has advised people not to flock in public buildings such as banks, traditional banks have faced a major blow. People are also advised to ditch banknotes for electronic payments since they offer contactless payments.
In order to save the usage of banknotes, The U.S. Federal Reserve has taken the idea of note isolation from South Korea and China. As a result, all banknotes reaching a bank branch are isolated for about ten days before they go back to circulation.
The risks of in-person banking have skyrocketed in 2020. Hence, digital channels of traditional banks have been getting preference. Not only that, the advent of digital banks poses a threat to all traditional banks. This is because, in the pandemic situation, people do not require a good bank to have branches or ATMs. Physical banking has begun to look less appealing to the general public.
Moving towards digital banking
As mentioned above, digital banking is being preferred by the general public now due to the risks posed by in-person banking. The Federal Financial Institutions Examination Council has asked U.S. banks to better their online platforms to be able to cope with the digital influx.
Since customer’s liking of digital mediums is nothing new, it is expected that digital banking will take over traditional banking in the future.
Like the rest of the world and industries, the banking sector has seen a major shift due to the pandemic. The future of banking is moving towards digitalism, which poses a threat to traditional banks.