As we continue to understand what this digital age has in store, many audiences are starting to question whether a digital bank is one they can trust, or whether they should stick with a traditional one.
Debunking some of the biggest myths surrounding new banks Serge Beck, CEO and Founder Averium, a global financial technology company that is developing blockchain solutions to fix flawed functionality within the financial and security infrastructure. Beck is a serial entrepreneur, venture capitalist, IT specialist, and blockchain ambassador, with over a decade of experience on Wall Street and over a decade of experience as a venture capitalist.
Much has been said and written about the many security concerns associated with new banks due to the potential for cybercriminal activity, given their entirely digital nature. This does not mean that these concerns have been expressed, such as the possibility of malware, spoofing and phishing. Established banks still have an advantage over traditional banks in terms of digital trust and data security It was mentioned in some surveys Why not many turned to the new banks.
The need for digital banking continues to grow, with 82 percent of consumers relying on digital means to conduct financial transactions. in addition to, More than 60 percent of consumers Only digital financial institutions prefer to provide debit card services. However, misconceptions about the security of the new bank must be addressed so that consumers fully trust digital banking only. Conventional banks raise concerns about their strict financial regulations and government oversight. In addition, they rely on large-scale legacy systems. By contrast, new banks do not rely on legacy systems and have tight security measures in place to house all financial products in one place. Here are some notable misconceptions about new bank security and an attempt to clear these misconceptions.
Funds deposited in a Neobank account are not completely secure
Admittedly, cybercriminals are becoming more familiar with their hacking attempts, resorting to creating fake pages that mirror real URLs or banks, known as spoofing. And cybercriminals use innovative technology just like banking technology to try to steal sensitive information, including credit/debit card information.
While the idea provided is that the security of traditional banks is more compact than that of new banks, new banks provide more security because they do not use traditional central banking models. Traditional banks use outdated central data models that expose consumers to security risks. By contrast, new banks are using decentralized ledger systems to secure consumers’ financial resources. New banks are using a decentralized logging system that keeps transaction records and stores user data, improving their security capabilities. Along with traditional banking systems, the new banks have used partnership models that keep consumers’ money in a primary bank account, while providing insurance as an additional safe store.
In addition, concerns have been expressed about how easy it is to access the funds. Since the new banks do not have physical branches, consumers and potential investors alike have concerns about emergency refunds. However, new banks usually provide their customers with full access to ATM withdrawals when necessary. Consumers can even transfer money from neobank accounts to traditional accounts without hassle.
New banks struggle with data privacy and security
There will always be some data privacy and security concerns with online banking, as some cybercriminals can breach even the most severe security measures. One of the main advantages that new banks have over traditional banking institutions is that they do not rely on legacy legacy systems for both functional and security purposes.
While designing their platforms, security is paramount, with new banks using two-factor authentication for all banking operations and data localization standards. Neobanks also uses advanced security measures such as single-use virtual cards, tokenized online transactions, and MCC blocks. Some new banks provide live transaction updates, detailed transaction history, PIN reset and ATM features.
Data encryption and its strength are defined within the new banks so that only you and your bank can understand the data. With the new banks cooperating side by side with the traditional banks, the finances of consumers will be completely safe even if a new bank involved in such cooperation faces a problem.
Existing technology and infrastructure is comprehensive, making banking a safe experience for users and reassuring investors and traditional banks looking to collaborate with new banks. It provides various security measures Which traditional banks should consider as well.
New banks are complicated
Another myth is that new banks are hard to use, especially if you’re not the tech-savvy type. While fully digital banking may seem intimidating to people who are not specialized in internet banking, the new banks offer simplified banking services, educating consumers on how to use their financial products and improving their financial management. By providing extensive education, first-time users have a better idea of how new bank transactions work and are demonstrated how to protect their finances while using the new banking services.
All business insights are broken down into insights that are easy for consumers to understand. Neobank accounts are very personal, and the new banks operate on the premise that consumer actions must be dynamic at all times. New banks have a strong understanding of consumer behavior, which leads to user interface upgrades whenever possible to improve consumer experiences. Due to the cloud-based blockchain technology that new banks are using, they can streamline their operations to ensure additional security for consumers and quickly address consumer concerns.
Understanding the misconceptions associated with the security of new banks and seeing the lengths they wish to protect for each person who uses their services makes them more attractive propositions for the future of digital banking.