It didn’t take long for the internet to lend itself to be a viable avenue for businesses to conduct shopping and commerce. The widespread consumer adoption of the internet began in the early 1990s, and electronic commerce was right on its tail. It’s not a stretch to say that the internet revolutionized the shopping experience in nearly every way and has been continuing to grow and change over the last 30 years.
So how have banks and finance organizations adapted? Banks are responsible for processing payment for e-commerce goods and services, which means that banks have gone from brick and mortar institutions to digital financial landscapes. Here are the biggest ways that the banking sector has been impacted by e-commerce.
Changes from e-commerce in banking
1. Online only banks
Banks were once institutions that helped manage customer money, exchange checks for cash, and provide other financial services. E-commerce led to the rise of electronic banking in a big way. Customers very quickly wanted the convenience that online shopping offered in all of their affairs and digital banking, with options like online accounts, account money transfers, and eventually online bill pay and mobile check deposits became a normal part of most consumer interactions with banks. This led to many banks providing the same services – checking, savings, loans, credit cards, and bill pay – without having physical locations. Banks like Ally are leaders in the online-only banking revolution.
2. PayPal and other 3rd party intermediaries
PayPal was developed as a safer way to pay merchants, vendors, and individuals – instead of giving a company or person your credit card information or banking information, you could use PayPal as the go-between. PayPal was touting itself as a secure and encrypted platform for handling payment long before most other financial organizations had thought to elevate the security. PayPal also quickly became a viable payment option in e-commerce settings, replacing the need for entering credit card numbers or bank account numbers by substituting it with one account login.
3. Online loan and mortgage vendors
Banks aren’t the only financial organizations that are growing their online presence or streamline the process to be completed online. Companies like Rocket Mortgage offer customers a way to apply for a mortgage or refinance loan completely online, while companies like LendingTree help both individuals and businesses apply for and secure personal loans without ever needing to meet in person with a loan advisor.
4. Investment companies
Investing has moved to online sites and mobile apps. Banks aren’t the only places that can help you save money, and financial advisors offices aren’t the only places to create investment plans. Online only brokers now exist as a way to meet the online and e-commerce niche of customers looking to simplify and modernize their investment and savings experiences.
5. Data mining for better products and marketing
One way that online shopping has changed banking is through banks and finance organizations now having more access to customer behavior and transaction information. This has led to data analytics being used to discover customer interests and to develop the kinds of products that help customers have a better financial experience.
6. Changing in-store payment options
Banks and mobile companies alike have taken to developing technology that makes it easier to use digital options, like a mobile device, to safely transmit payment data to facilitate payment for in-person transactions at places like the grocery store and coffee shop. Apple Pay and Google Wallet have made consumer payment options safer and easier in a digital age.
The future of e-commerce in banking
Overall, the banking and e-commerce experience has been largely dependent on each other. E-commerce necessitated banking and finance changes and these changes helped to further the capabilities of e-commerce, eventually leading to the success in mobile driving more of the success of e-commerce and online shopping.
Changing technology has created customer experiences that have gone on to change customer expectations. Businesses can’t afford to not pay attention to the relationships between commerce, consumers, and technology. Finance organizations have had to adapt quickly and significantly to be able to keep pace with the way that technology creates changing customer landscapes, and in some cases have had to not only change their business model but they’re product offering.
Understanding the role of e-commerce in banking is one way to better understand how all businesses can meet the future. Are you taking new and upcoming technology into consideration? Are you working to be innovative or are you having a hard time keeping up with customer interests and expectations? Can you develop a product or service that helps to enhance other experiences that customers value? Finding ways to add value and convenience to your customer’s lives is one of the most important ways to stay competitive in any industry in the age of e-commerce and digital banking.