Sheldon Anthony IO

The digital world is forcing financial institutions to change their approaches to traditional physical,  mobile, and even online channels. Digital players are taking over and disrupting the financial industry with their zero or low-cost economy. The traditional space in which customers interact with financial institutions has changed over the past 20 years or so. We are now witnessing a rapid rate of changes to the way customers interact with financial institutions' systems and products. To succeed in this digital era, financial institutions need to have a clear vision and strategy for digital transformation, invest in the right technologies and capabilities, and foster a culture of innovation and agility.

Gone are the days when you had to carry a physical bank card everywhere you went. Now, you can access your money and pay for goods and services with just a tap of your smartphone or smartwatch. This is the digital banking revolution, and it is changing the way we interact with our finances. Digital banking is not just about convenience, it is also about innovation. By moving from the physical to the digital realm, new players are entering the market and offering exciting features and benefits to customers. From personalized rewards and discounts to biometric security and instant transfers, digital banking is creating a whole new ecosystem of possibilities.

Capital One is one of the largest banks in the United States, with over 70 million customers and $400 billion in assets. The bank has been at the forefront of digital banking innovation, offering a range of products and services that leverage technology to enhance customer experience and convenience. One of the key innovations that Capital One has introduced is the digital bank card, which allows customers to access their accounts and make payments without a physical card. The digital bank card is available through the Capital One app, which can be downloaded on any smartphone or smartwatch. Customers can use the app to generate a unique virtual card number that can be used for online or in-app purchases, or to add their card to a digital wallet such as Apple Pay or Google Pay for contactless payments at stores.The digital bank card reduces the risk of fraud and identity theft, as customers do not have to share their actual card number or personal information with merchants. The virtual card number is encrypted and changes with every transaction, making it useless to hackers or thieves. Customers can also lock or unlock their card instantly through the app if they lose their device or suspect unauthorized activity. The digital bank card eliminates the need to carry a physical card or cash, making payments faster and easier. Customers can also access their account balance, transaction history, rewards, and other features through the app, without having to log in to a website or call customer service. The digital bank card allows customers to choose how they want to pay, depending on their preference and situation. They can use their phone or watch for contactless payments, their virtual card number for online or in-app purchases, or their physical card for ATM withdrawals or other transactions that require a chip or magnetic stripe. The digital bank card is part of Capital One’s broader strategy to become a digital-first bank that offers personalized and seamless experiences to customers across channels and devices. The bank has invested heavily in data analytics, artificial intelligence, cloud computing, and other technologies to enable innovation and differentiation in the market. Capital One’s digital transformation has resulted in significant improvements in customer satisfaction, loyalty, retention, and acquisition. The bank has also achieved operational efficiencies, cost savings, and revenue growth by leveraging technology to optimize processes, reduce errors, and cross-sell products. Capital One’s digital bank card is a prime example of how the bank is using digital innovation to create value for customers and stakeholders.^[2] 

Digital bank cards are virtual cards that can be accessed by personal digital devices we own such as mobile phones, tablets, wearable devices, computers, laptops, etc. Some digital bank cards are a copy of your traditional physical bank card. They provide the same information such as customer name, card number, expiry date, and CVC to make purchases. All digital banking cards should be encrypted on the systems or devices they reside on. These digital bank cards provide customers with conveniences like instant creation and access, spend control initiatives, and easy lock or destroy options. These virtual bank cards are being touted as by-products or ad-hoc solutions to traditional bank cards at the moment but that should not be the case. It can be easily created, used, and destroyed by a customer without any physical interaction with a financial institution. These virtual cards provide an extra layer of security in the online purchasing space by keeping the customer's traditional bank card information safe. The digital payment systems are waiting for them to take their digital form. You can now start seeing the vision of early digital payment system pioneers like PayPal, Apple Pay, and Google Pay being fully realized with these digital bank cards. These virtual cards have a tremendous impact on cost reduction of business operations, the environment, and customer conveniences by bringing them into the digital world.

The current traditional payment systems are constantly under threat by new innovations, digital currency, and digital payment platforms. As threatening as it is, we should also realize the wealth of opportunities that are opening and presenting themselves each day. The by-products and Adhoc digital solutions we are used to running alongside the traditional payment systems will soon be phased out as the digital payment ecosystem matures. Some cool players to look at in the digital bank card space are Privacy and N26. It is definitely an interesting space to keep an eye on as innovations are rampant.