Banking as an Experience: The Rise of Digital Banking

July 20 , 2020


Experience can be defined as “an event or occurrence that leaves an impression on someone.” It’s what every modern consumer is looking for. It’s what every single bank, financial institution, and lender should be striving to provide. It’s with this idea in mind that generations of change-makers effectively evolved banking into an experience and brought the rise of digital banking to consumers worldwide.

What Is Digital Banking?

Digital banking is the movement of traditional banking activities to a modern digital framework supporting omnichannel functionality for consumers and banks alike. Automating manual processes, mitigating fraud and risk, and providing an exceptional customer experience are at the core of any modern digital banking platform. 

Empowering consumers to originate accounts, discover exclusive offers, and self-service their products outside of the branch environment is a necessity for any bank or financial institution to survive in a global digital market.

Empowering banks via digitization is another challenge in itself. Once banks begin to bridge the digital divide internally, they open a world of potential revenue growth opportunities. From asynchronous decisioning to AI-driven fraud and risk mitigation to internet of things (IoT) integrations that promote a seamless customer experience, the sky’s the limit when banks choose to digitize.

Let’s take a deeper look at how we arrived here.

The History of Digital Banking

Most historians consider the birth of digital banking to have occurred in the middle of the twentieth century, most significantly with the advent of the automated teller machine (ATM) in the 1960s. However, the roots of digital banking date back centuries earlier.

1953 - Stanford Research Institute creates the first known bank “mainframe” used to process checks for Bank of America customers.

1966 - Barclays launches the first known debit card product.

1967 - The first of six automated teller machines (ATM) is rolled out at a Barclays bank branch in north London, England.

1971 - Busicom introduces the first model of ATM powered by the first commercial microprocessor, Intel 4004.

1983 - Bank of Scotland offers the first “internet banking system” that connects via a television set and a telephone to transfer money and pay bills.

1993 - Microsoft Money personal finance software is rolled out, enabling approximately 100,000 households to access their account information online.  

1994 - Stanford Federal Credit Union creates the first online banking website, becoming the first financial institution to make online banking available to all customers.

2000 - Yodlee, an account aggregator, is founded, allowing users to see their credit card, bank, investment, and travel reward accounts on one screen.

2001 - Eight separate US banks have at least one million users on their online platforms. Nearly 20 million US households are now accessing online banking.

2002 - PayPal emerges after being acquired by eBay shortly after its initial public offering. 70 percent of all eBay transactions were completed through PayPal.

2005 - FFIEC releases Authentication in an Internet Banking Environment to “reflect the many significant legal and technological changes with respect to the protection of customer information, increasing incidents of identity theft and fraud, and the introduction of improved authentication technologies and other risk mitigation strategies.”

2006 - Direct banks like ING, HSBC Direct, and eTrade Bank start operating outside of the branch-model with primarily online servicing.

2006 - Personal finance management tools like provide consumers with easy-to-use online tools to manage their personal finances.

2007 - Apple releases the first iPhone, sparking a massive shift from banking on personal computers to mobile banking on a smartphone.

2007 - Vodafone launches a mobile phone money transfer and bank-telecom payments system called M-Pesa.

2008 - Satoshi Nakamoto publishes a paper under an alias that introduces Bitcoin, a new encrypted digital currency built on blockchain technology.

2009 - More than 50 million US households are accessing their bank accounts online in a digital environment.

2009 - First bitcoin software and cryptocurrency network launches.

2009 - Simple and Ally launch in the US; two of the first banks to serve customers within the marketplace model.

2010 - RBS launches the world’s first fully functional mobile banking app.

2011 - Online and mobile banking continues to advance with mobile check depositing, EMV-chip debit cards, mobile banking devices. Financial institutions that offer digital banking services begin to dominate the market as consumers continue to demand 24/7 mobile banking capabilities.

2011 - Google launches the world’s first digital wallet, enabling consumers to make payments, earn loyalty points, and redeem coupons. The initial rollout was limited to one device and just a few merchants.

2013 - Digital bank Nubank launches, paving the way for neobanks of the future to operate in digital-only environments.

2014 - Apple enters the e-wallet arena with the launch of Apple Pay.

2015 - Monzo launches as a digital, mobile-only bank in the UK.

2019 - Facebook announces a new cryptocurrency called Libra trying to build a coalition that includes Paypal, VISA, Payu, Vodafone, Uber, and more. 

2019 - Google teams up with Citigroup and Stanford Federal Credit Union to offer checking accounts as part of a program called Cache.

2020 - Shopify announces Shop Pay and enters the installment loan space, offering merchants a built-in financing option for consumers.

The Future of Digital Banking

Let’s take a little trip into the future. The year is 2040. Imagine a world where a consumer banks solely through devices – virtual assistants, smart phones, smart watches, AR/VR. Everything from deposits to loan origination to servicing will take place in a digital environment. Platforms like Amazon, Google, Facebook, Shopify, and more are all operating as full-service digital banks. Banks as we know them now are completely transformed.

What exactly does the future of digital banking look like? Banks will need to engage in a socially inclusive way with platform-driven technology that serves a global market. 

Omnichannel banking

Banks will need to integrate their products and services to meet target consumers where they are while engaging them in an omnichannel environment. Omnichannel banking aims to eliminate barriers between people and banks, no matter the physical distance. It empowers consumers to access banking services through any channel they choose – physical branches, ATMs, call centers, online, and smart devices. The need for digital engagement will only increase as internet of things (IoT), virtual assistants, AR/VR, and other smart devices continue to carve out markets with modern consumers.

Platform banking

Platform banking is being addressed by banks and vendors already. Risk and fraud mitigation coupled with on-the-fly decisioning is here and growing quickly. If banks aren’t building these platforms themselves, they are seeking technology providers to layer their systems via API to automate these manual processes further. Some platforms do it all.

Technology banking

The adoption of artificial intelligence in banking is not new, but it might be the fastest growing technology that banks are using to mitigate fraud and risk. Banks can now tap into a myriad of inputs to verify consumer information instantly. Image recognition, natural language processing, and others have a strong foothold in the industry already.

Inclusive banking

In 2019, CNBC asserted that nearly 25% of the US population was either unbanked or underbanked. Most of these people live a fully cash-based existence, which can lead to increased crime in their communities and limited resources for financial growth and stability. It’s up to banks and financial institutions to change this. The future of digital banking must be an inclusive one. Banks must find ways to include every global citizen not only as an opportunity to grow, but as a moral prerogative. 

Going Forward

Digital banking is here to stay. The branch banking model is shifting rapidly. But what will the future hold? The answer lies in macroeconomic trends, consumer demand, and the ever-increasing innovation of banks, financial institutions, and fintechs. 

Fujitsu surveyed banks and found that the primary drivers for growth were efficiency (31%), growth (30%), and threat (23%). The range between the three shows a continued shift towards fraud and risk mitigation to eliminate the new threats that are increasing in a digital environment. Banks are getting much better at improving efficiency with front-end interfaces that enable a positive user experience. Where they fall short right now is using their back-end technology to mitigate threats and catapult growth. 

How will your bank keep up? More importantly, how will your bank face the risk and fraud challenges that will rise from this digital innovation? 

Amount is a multi-purpose lending platform designed for financial institutions. Our solution layers on top of your existing infrastructure to provide the best user experience to your customers. Our end-to-end solution enables personal loans, point-of-sale financing, credit card, and deposit accounts. Modern banks require modern digitization. True modern digitization successfully orchestrates front-end technology with back-end functionality to optimize the funnel and catapult growth. 



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Banking as an Experience: The Rise of Digital Banking

Posted by Amount on July 20 , 2020
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Generations of digital natives are finding new ways to buy-now, pay-later. Consumers have no shortage of financing options at their fingertips as e-commerce continues to evolve. Are banks responding?


There are few spaces that empower consumers more than the online shopping cart. Tailoring a shopping experience to your desires, purchasing the products you need with a click of a button, and quickly financing items has become a must-have for digital shoppers. As these new generations of consumers rely on new channels of unsecured lending, point-of-sale financing has become a boon for merchants, fintechs, and lenders alike.


So why is point-of-sale-financing garnering so much attention right now? Let’s take a look.

What is point-of-sale financing?

Point-of-sale financing enables consumers to break up payments for certain items over a period of time. Merchants provide a way to purchase a product now while the consumer pays for the product over a period of time determined by the lender. Lending at the point-of-sale is also known as open-loop brand credit cards, closed-loop store credit cards, and retail installment loans.


Growing demand for this type of unsecured lending coupled with the growth in e-commerce purchasing over the last two decades has created an opportunity for financial institutions. Filene Research Institute estimates the total point-of-sale financing market at $391 billion, equating to approximately 3.5% of annual consumer spending.

How Point-of-Sale Financing Works

Point-of-sale financing holds unique value for consumers, lenders, and merchants alike. Cloud-based solutions empower merchants to offer customized financing options for purchases both online and in-store.

How it works

  1. The consumer selects financing options while finalizing the purchase.
  2. The consumer’s information is securely passed from the merchant to the lender for loan decisioning.
  3. A decision is made by the lender and the consumer is presented with options for point-of-sale financing on their purchase.
  4. The consumer chooses the financing terms that are right for them and purchases the item.

Pretty simple, isn’t it? Now that we’ve uncovered how point-of-sale financing works, let’s dive deeper into why it makes sense for lenders and merchants to implement a solution for their customers now.

Data Drives Demand

The most compelling reason to implement a point-of-sale financing solution lies in its promise to deliver for future generations of borrowers. As the technology continues to adapt to better purchasing processes, application user experiences, and evolving e-commerce business models, the demand for this type of lending is clear already.

According to McKinsey Consumer Finance pools, outstanding balances on point-of-sale financing nearly doubled from $49 billion in 2015 to $94 billion in 2018 and is expected to reach upwards of $160 billion in 2021. The channel currently accounts for nearly 10% of all unsecured lending and is growing at an unprecedented rate.

Market Factors

2020 has seen a number of point-of-sale financing related partnerships and entries into the market. From AliPay announcing its minority stake in Klarna to Shopify announcing its foray into installment payments, the market has decided: point-of-sale financing is here to stay and will continue to shape unsecured lending for years to come.

Source: McKinsey

Consumer behavior tells the most important market factor driving point-of-sale financing’s rise. Filene Research Institute asserts that nearly 20% of millennials expect to draw or increase unsecured lines of credit for renovation/repair products and 13% of millennials will take on additional debt for electronics over the next few years. Consequently, there is increasing interest in unsecured lending options, whereas more common lending types like auto and home loans rank far lower on the priority list for younger generations.

Generations Y and Z are emerging as a major market consumer for point-of-sale financing, further proving the future-proof opportunity here. These cohorts are familiar with credit from an early age due to the subscription economy they have grown up in. The need is there too. The annual salary of millennials is approximately 20% lower than that of the baby boomer generation when they were the same age, after adjusting for inflation. Net worth of Americans ages 18 to 35 has decreased by 34% since 1996. These consumer factors make point-of-sale financing a must-have for banks in their unsecured lending playbook.

Point-of-sale financing for banks, credit unions, and financial institutions

“Fintech is eating the world,” opined Forbes contributor Alex Lazarow in mid-2019. This sentiment is true now more than ever as we head into the second half of 2020. E-commerce giants like Alibaba and Shopify are growing their offerings and proving to be a viable challenger to banks, credit unions, and financial institutions across the globe.

In November 2019, McKinsey asserted that “traditional players exploring a play in POS financing have a limited period to enter the market and grow. In 18 to 24 months, laggards either will be unable to compete, because most merchants will already have POS financing partners, or will need to pay a heavy premium to get into the market.”

So how can your financial institution thrive in this growing market? Let’s identify the four business models that financial institutions are employing today:

Build: The end-to-end solution model

Financial institutions can opt to build their own end-to-end solution for point-of-sale financing. This involves a large investment in building the product offering themselves and usually lengthens the go-to-market timeline, which could prove even more costly in such a burgeoning segment of unsecured lending.

Buy: The platform-partnership solution

Financial institutions can partner with technology platforms to enable merchant clients to drive sales by offering an end-to-end solution that could include decisioning, verification, origination, and servicing. This solution lets the partner do the heavy lifting while allowing financial institutions to focus on growing their active or prospective merchant relationships.

The marketplace model

This model enables banks to compete in a marketplace of lenders and merchants. Financial institutions can tailor their terms and conditions to remain competitive in the market while gaining easier access to the consumer with little-to-no upfront investment.

What is the right solution for my financial institution?

The growing demand for point-of-sale financing is clear and present. While the long-term trajectory of the unsecured lending product remains somewhat unknown, the same principles that have guided banks for decades apply. Tailoring your point-of-sale solution to your risk profile has never been easier with multitudes of options in-market. Mitigating the fraud that continuously impacts banks remains a challenge for those entering the point-of-sale arena.

In order to understand which type of solution is right, every bank and financial institution should start by asking the following questions:

  • Is your bank or financial institution more focused on customer experience or growing the balance sheet?
  • What type of investment is your bank or financial institution willing to make? Building a program in-house could cost upwards of $20 million as an up-front investment.
  • When does your bank or financial institution want to go-to-market? Some builds can take longer than two years, whereas most partnerships can go-to-market in a matter of months.

Consumers demand more than just a slick interface. Financial institutions require an enterprise-grade solution that combines an orchestrated front-end with back-end intelligent decisioning tools, enabling on-the-fly fraud verification and servicing tools to provide a seamless user experience. These broader demands coupled with a need for limited up-front investment and speed-to-market make Amount Pay the enterprise solution for leading banks and financial institutions.

Amount Pay is an end-to-end, cloud-based solution that empowers financial institutions and merchants to offer customized financing options to consumers. Backed by the power of Amount 360, the omnichannel solution provides the freedom to apply from the web, mobile app, in-store, or over the phone. Leverage a powerful originations engine with quick approvals for fixed-rate loans with 12 to 72 month term lengths. Improve merchant client relationships, e-commerce user experiences, and boost sales.

BUTTON: Start Financing Today

Topics: Insight, Product