The case for switching to a digital bank

Several new digital banks have disrupted the South African banking sector in recent years.

These digital banks have focused on streamlining banking for South Africans and have forced traditional banks to up their game accordingly.

However, even with traditional banks taking big steps to compete, digital banks still claim superiority in several areas and use this to differentiate themselves from the industry’s legacy players.

We asked Bank Zero about the benefits of using a digital bank versus a traditional one in South Africa.

“Digital banks have the advantage that they use the latest technology, and can then apply it to the customer experience, having learnt from what went wrong with the traditional banks,” said Bank Zero.

It stressed that this is an opportunity rather than a guarantee — as many digital banks do not maximise the opportunity to improve on the flaws of legacy banking infrastructure.

“[For example,] Bank Zero customers cannot be phished, due to how we use biometrics and the power of the smartphone,” said Bank Zero.

It explained that traditional banks began delivering online banking through websites, allowing malicious parties to send users to fake web pages.

Traditional banks continue to offer browser-based banking because it is what many of their customers demand — as it is what they are used to.

In contrast, Bank Zero — and many other digital banks — exclusively offer app-based banking, meaning users will never need to visit any websites.

This removes the risk of a user visiting a fake banking website.

The flexibility of digital banks also allows them to offer more intuitive customer experiences, as they do not have to contend with legacy infrastructure.

For example, Bank Zero said it provides detailed notifications when anything happens to a client’s card, including:

  • Entered wrong pin — Bank Zero reminds you of your pin’s length.
  • Merchant has suspicious encryption on machine — Bank Zero warns you.
  • Merchant tries to run transaction without checking your pin — Bank Zero warns you.
  • Merchant tries to access your magstripe — Bank Zero warns you.

By offering better customer experiences, digital banks believe they can improve the traditional banking experience — which has historically been complicated and unintuitive.

Bank Zero also emphasised that digital banks are, by definition, digital-native, and boast infrastructure designed to maximise the latest technologies — like the cloud.

This allows these banking systems to scale organically — even over the most intense periods like Black Friday, Cyber Monday, and the festive season.

Bank Zero also noted that while its own systems maximise the latest digital technologies, the degree to which other digital banks do the same depends on the quality of their internal systems.

Now read: How to avoid becoming a Black Friday fraud victim

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The case for switching to a digital bank