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The bank in your pocket: Meeting consumer demand for secure, on-the-go financial services

As more banking executives strive to accommodate consumers across all channels, shadow IT practices create major cybersecurity risks. A proprietary solution is critical to maintaining deep client relationships while ensuring information security — and meeting the demands for the future of digital banking.

Not surprisingly, digital banking is on the rise as many Americans stay home and make fewer trips to crowded public spaces. As of April, 35% of consumers reported they were using online banking more than they were pre-coronavirus.

Understandably, many financial institutions, especially smaller organizations with more limited resources, weren’t digitally prepared for the pandemic.

Although they rapidly implemented new tools, tech issues led many to turn to familiar alternatives. These IT workarounds are often unsanctioned and lack proper oversight, exposing the entire financial institution — and its customers — to a greater risk of a data breach.

Banks must adopt intuitive, owned applications to meet employee and consumer demands securely.

The Rise of Shadow IT in Banking

Shadow IT — the use of unofficial technology systems, applications and devices across an organization — has become more common in recent years as frustrated employees seek modern solutions not yet vetted or approved by IT departments. Research from the Everest Group found that 67% of end-users or teams have introduced their own collaboration tools into their organizations.

The majority of shadow IT is driven by employees’ desire to be more productive and engaged on the job. For example, a financial advisor might use iMessage or WhatsApp to answer a quick client question, foregoing the need to coordinate schedules for an in-person appointment or phone call. While the intention is to serve the customer’s needs better, the advisor’s use of unauthorized technology opens the door for hacks, leaks and malware attacks. A 2019 study by Oracle and KPMG found that 93% of IT professionals deal with shadow IT issues, with half citing a lack of security controls and misconfigurations as common sources of fraud and data exposures.

These threats are especially concerning in the banking industry due to the highly sensitive nature of financial data. And COVID-19 has only compounded the threat landscape. According to FBI Deputy Assistant Director Tonya Ugoretz, daily internet crime complaints have quadrupled during the pandemic. Cybercriminals have developed new phishing scams and extortion schemes designed to take advantage of consumers in the midst of a crisis.

For financial institutions dealing with shadow IT, that means if even one employee clicks on a spam link, the entire organization could be exposed. Likewise, if a banker shares a customer’s personal information and financial records over insecure channels, the bank — not the banker — will be held liable should that data be breached.

Regaining Visibility

Shadow IT is usually a symptom that existing systems aren’t meeting users’ needs. But forbidding shadow IT practices without providing an alternative will simply cause employees to become more stealthy in their use of unsanctioned tech. After all, they’re simply trying to do their jobs better. Instead, financial institutions should look for an inclusive solution that provides the communication and collaboration tools employees need to keep up with client demand.

If, for example, your associates are resorting to messaging clients via WhatsApp, it should be a warning sign your solution needs an upgrade. A proprietary digital solution — one that’s purpose-built under your brand — can provide the same communication features as WhatsApp, but with the proper visibility and oversight needed to manage client interactions securely. Even better, you get the brand recognition for your services, not a third-party provider.

When you look at most “online banking” solutions on the market right now, you’ll notice they don’t actually provide the full banking experience. Most are simply used to process bill payments, transfer funds and deposit mobile checks. While these features are fundamental to the digital banking experience, they’re just one component.

Many current digital banking solutions are missing the human aspect. That’s why so many bankers and clients turn to shadow IT in the first place: to engage with each other. So when selecting a new platform, look for one with comprehensive capabilities, like secure messaging, video meetings, digital signature and workflow integrations.

The Digital Branch

Beyond the security benefits, full-scale digital branches are the future of digital banking. These on-the-go solutions enable customers to access the full banking experience from anywhere, simply by pulling a smart device from their pocket and making a few taps in an app.

Even before Americans were under stay-at-home orders, digital banking was on the rise. According to industry data, active digital customers were up 3% year-over-year in February 2020— just before the pandemic hit.

And now, consumers who weren’t avid digital banking users before have adopted new technology to complete transactions, no matter where they are physically located.

Mobile check deposits surged 40% between February and March, which will likely have a permanent effect on consumer behavior.

Many customers may see the changes they’ve made out of necessity as convenient perks moving forward, which could slow down the number of people commuting to a branch for every transaction.

While brick-and-mortar branches will always serve a specific purpose and continue to be an important channel for many customers, others will no longer see the value in traveling to a retail bank for every transaction, instead preferring the ease of the same banking experience via a web or mobile app.

The digital branch represents a more flexible, customer-centric future of finance, one that ushers in new technology to meet the growing demand for secure, convenient, multichannel digital banking experiences.

This article was written by Karrtik Rao from ReadWrite and was legally licensed through the Industry Dive publisher network. Please direct all licensing questions to legal@industrydive.com.