Digital Bank, Banking Service Innovation In Hand. Let's see!

Digital bank, banking service innovation in hand

Digital bank, banking service innovation in hand - The era of digitalization has penetrated almost all human activities, digital banking is one proof. By using electronic means, banks are now able to provide financial services and services to their customers without having to go through a physical office.

Around the world, the presence of digital banks is mushrooming every day. In this article, will discuss more about what a digital bank is. Let's see!

What is Digital Bank?

As the name implies, digital banking is banking activities carried out digitally or via the internet. Starting from the initial opening of a savings account to closing it can be done online without going to the relevant bank office.

Digital banking is an electronic banking service aimed at maximizing the utilization of customer data as an effort to provide services that are faster, easier, as needed and can be done. customers independently while still paying attention to security.

History of Digital Bank

Maybe you are already familiar with the term SMS banking or mobile banking, right? Well, digital banking is the result of both developments simultaneously with the current development of fintech.

Initially, the use of the internet in the banking world could only be used for some facilities, such as making transfers or checking accounts. However, in its administration, such as opening a new account or closing an account, it is still carried out at the relevant bank office.

As time goes by and the development of the digital world, now more and more banks are improving online services and even completely migrating to internet services.

What are Digital Bank Services

Now, more and more digital banks are popping up, whether it's a new product from conventional banks or fully digital banks. Digital bank enthusiasts around the world are also increasing because they feel that the services provided are more complete and practical than conventional banks.

Therefore, Gramedia News has summarized several digital banking services, namely as follows.

1. Internet banking

The first service from digital banks is internet banking, where all customers can perform various banking transactions using various devices such as smartphones or laptops that are connected to the internet.

2. Mobile banking

Similar to the previous service, digital banks also support their customers to transact via mobile phones and a special program has been installed on the customer's SIM card as a result of the bank's collaboration with the cellular operator.

3. SMS banking

If mobile banking uses a special program on your SIM card, then this SMS banking service uses the SMS feature in its transaction activities. You only need to send an SMS to the relevant bank number and enter an order or request to be able to make a transaction.

4. Phone banking

Finally, the bank's digital service is phone banking, which is a service that allows customers to contact the bank or official contact center by telephone. This service can be handled by automated programs or direct human labor to perform the transaction requests you want.

Digital Bank Terms

The main requirement for a digital bank is to have at least one physical office, either a full digital bank or the result of a transformation from a conventional bank.

Some of the other requirements to operate as a digital bank are as follows:

1. Business digitization model

I am sure that a bank that wants to operate a digital bank must have a business model that is equipped with innovative technology but is still safe in its services.

2. Able to manage digital banking business model

In addition to digitizing its business model, digital banks must also be able to manage the digital banking business model that launches and manages its business.

3. Have a qualified risk management

The third thing to operate as a digital bank is that the bank has adequate risk management in dealing with various problems or other possibilities in the future.

4. Fulfilling governance aspects

Digital banks are also required to fulfill their governance aspects, including meeting the competency requirements in the technology or other fields according to OJK standards and regulations.

5. Ensure the security of customer data

Although digital-based, digital banks in The whole world must also be responsible for the security of customer data. Moreover, there are other risks that are identical to the digital world, such as cyber crime in the form of data theft.

6. Digital financial ecosystem

Lastly, the requirement for a digital bank is to be able to contribute to the development of the digital financial ecosystem, including finance, and to fulfill people's needs for banking access.

Digital Banking Service Approval Application Process

Now, after fulfilling the various requirements, banks that want to expand and create digital banking must first apply for approval to the Financial Services Authority (OJK).

Some of the processes for obtaining approval for digital banking services are as follows:

1. Documents

The first process is to provide various documents needed, including:

  • Evidence of readiness in providing digital banking services
  • The results of the business analysis are related to the review of digital banking services and will be published within the next year.
  • Other supporting documents

2. Declare the results of the examination from an independent party

Apart from the results of internal analysis, it is also necessary to have the results of examinations carried out by independent parties.

This is done to be able to provide opinions or other points of view related to product characteristics and information system security regarding products, compliance, and applicable standards.

3. Submitting to the Financial Services Authority (OJK)

The next process for approving bank digital services is that the relevant bank needs to submit it to the Financial Services Authority (OJK) no later than 2 months before implementing the plan.

4. Comply with the provisions and regulations of the Financial Services Authority (OJK)

In addition to submitting directly to the OJK, the relevant bank must also comply with all provisions regulated by the OJK regarding the implementation of risk management in the use of information by commercial banks.

5. Implementation

Finally, the relevant bank must implement the bank's digital service plan a maximum of 6 months after it has been approved by the Financial Services Authority (OJK). If it is more than the specified time period, the approval will be forfeited and revoked by the Financial Services Authority (OJK).

Advantages and Disadvantages of Digital Bank

In this digital era, the existence of a digital bank is a technological advancement that can facilitate various activities, especially for the banking world. One of the main advantages of digital banks is the ease of accessing their services.

As long as customers have internet-connected devices, they can carry out various activities or transactions anytime and anywhere. The transaction process can be done faster through online services or the internet network without having to queue.

From the organizer's point of view, the operational process of digital banks is also beneficial because there is no need to buy or rent many offices along with other costs such as electricity, salaries, and so on.

Although it has various advantages, of course digital banks also have disadvantages. From how to access services that depend on the internet, whether or not the use of the digital bank is smooth depends on your internet connection.

In addition, there are many risks or crimes that need to be watched out for. However, this can be circumvented by choosing a trusted digital bank and dividing your savings, partly in digital banks, partly in conventional banks.

So that's an explanation about a complete digital bank to its advantages and disadvantages. Hopefully this article about getting to know digital banks can be useful for all of you.