4 Online Banking Trends You Should Know About In 2023

The rising demand for online banking has exploded in recent years. As the latest Markets N Research report shares, the global market value for digital banking was worth nearly £700 billion in 2021 alone. Given this continued demand, this market value is estimated to grow by another 8.7% by 2028.

Consequently, in many countries, including the UK, many financial institutions are partnering with financial businesses to offer better online banking experiences to their customers.

From embedded finance to digital banking compliance, here are the four online banking trends you need to know about this year.

1. Major banks providing BaaS products

In 2023, major UK banks are anticipated to invest in Banking as a Service (BaaS) products to meet customers’ shifting needs.

BaaS is a process that digital banks or third parties utilise to connect their business infrastructure to a bank’s system.

In doing so, they can offer full-banking services through their own non-bank business offerings. Specifically, you can receive credit cards, loans, and product financing through a business’ website.

As it stands, one effort that truly drove this transformation forward happened in October 2022. The NatWest Group announced its partnership with European BaaS provider Vodeno Group to provide embedded banking to corporate customers.

Alison Rose, NatWest Group’s Chief Executive, said “We are committed to investing in digital transformation to provide a simpler and better banking experience for our customers.”

By investing £120 million, NatWest will be able to connect customers with a comprehensive suite of BaaS products.

Whether you have a business or are just a regular bank account holder, this means that you can seamlessly make online payments, deposits, and point-of-sale credit and merchant cash advances.

2. Adoption of widespread digital banking compliance

There’s been a re-energised demand for UK banks to meet evolving regulations in 2023.

One of the new regulations is the Payment Services Directive 2 (PSD2). This simply means that banks should allow competitors access to their customer data so you can switch to a bank offering a better deal.

The PSD2 can help customers enjoy more tailored ways to make online banking transactions.

Now, UK banks are likewise urged to follow stricter rules on detecting and reporting financial crimes, highlighting the need to comply with Basel IV.

Set to be rolled out this year, the Basel IV regulatory framework will prompt banks to examine risks through different lenses.

Through comprehensive reporting software, banks can reevaluate existing business models and strategies to circumvent credit risks, and, consequently, offer better services to customers.

By equipping banks with the ability to automate reports to regulators and public disclosures and gather client data under a single source, Basel IV ensures that your online transactions will remain reliable and secure.

3. Enhanced cybersecurity regulations

Cyberattacks are far too common in the UK financial system. In The Bank’s 2022 risk survey, 74% of Brits cited cyberattacks as the highest risk to the financial sector, with some of the biggest targets being savings and stocks. 

Our post on ‘How to Invest in a Stocks and Shares ISA’ explains that stocks are typically managed by online platforms and banks. But while investing in stocks is a great opportunity to gain profit, said platforms don’t always guarantee secure transactions.

Thankfully, enhanced cybersecurity regulations are being prioritised in 2023. For example, The Bank of England’s (BOE) Prudential Regulation Authority drives banks to test the resilience of their operations against all kinds of cyberattacks.

This is done by identifying business services that, if interrupted, will impact customers’ online transactions.

Abiding by BOE’s Prudential Regulation Authority ultimately helps banks minimise cyberattack disruptions and impede cyber threats for their online banking transactions.

4. Increased shift to cloud computing systems

The data that banks will handle is set to grow in 2023. 

Findings from a 2022 UK Finance report illustrate that, for that reason, a quarter of UK banks are planning to move 50% of their business to the cloud. This is because cloud computing systems present a slew of advantages to banks.

First off, hosting information remotely allows banks to gather unique customer data, enabling them to give you more personalised offerings.

Apart from that, with the cloud’s advanced analytics, banks can access key insights through client profiles and identify what customers are looking for in real-time.

The report highlighted that “the cloud streamlines the financial service pipeline: it empowers banks to scale processing capabilities according to market changes and customer demands on a global platform.”

By employing cloud technology, banks will be able to provide a much more efficient customer service.

For those interested in money management and investing, these are the four top online trends you must be aware of to help you stay on top of your money.