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Navigating the Challenges of Banking Apps in a Digital Society

Hoca

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There’s been a surge of issues with banking apps over the past year. Even customers of major banks are reportedly facing unprecedented incidents, including delays, errors, and downtime. Last year, Zelle experienced its second outage in only six months, leaving thousands of its users stranded in financial darkness.

As banks continue to encounter similar issues, customers may wonder who to switch to. More importantly, the question arises: why is this happening now? Banking apps have been around for years without such issues, so what’s changed? And what can banks do about it?

Times Have Changed​


It’s important to set the stage first and examine how our surroundings have evolved. We live in an increasingly digital world, where the traditional practices of cashing checks and using ATMs for balancing inquiries are fading fast. Nearly everything now happens within mobile apps. We demand seamless access to our personal finances—from conducting transactions to transfers, checking balances, investing, and more.

It’s all accessible on our phones.

However, this new landscape also introduces fresh challenges. When it comes to app crashes, the primary culprit seems to be timing. These downtimes and outages tend to coincide with payday, suggesting that the servers become overloaded with a surge of traffic with a short period of time, leading to crashed.

Any interruption in service for such a vital tool can prove disastrous for both banks and their customers.

Problems on Payday​


Some banks might underestimate the significance of a few days offline in an otherwise online month. After all, occasional app downtime due to issues or maintenance is not uncommon. However, for banking apps, these few days of downtime coincide with massive spikes in traffic, precisely when people need access to their money the most.

As a result, banks suffer from a loss of customer confidence, declining brand ratings, and face reputational risks. According to a Ponemon Institute study, even a single minute of downtime can cost a business an average of $9,000, bringing the cost per hour to more than half a million dollars. Such losses prompt longstanding customers to terminate their contracts and transfer their accounts to competitors. The damage to the bank’s overall standing can be devastating, especially given the challenge of establishing and maintaining a customer-first image and reputation.

It’s not just banks and apps facing these challenges. According to PCR, 57% of digitally native millennials immediately form a negative impression of a company’s brand due to website downtime. What’s more, one in three consumers switches to a competitor’s website within 30 seconds if their preferred brand is experiencing downtime.

If the standard is that low for e-commerce, imagine what it’s like for personal finance.

What Banks Can Do to Reduce Downtime​


The solution to the issue of downtime occurring due to payday spikes lies in the cloud.

Cloud infrastructure offers capabilities for proactive, on-demand scalability without having to maintain large volumes of idle resources. This lets banks adjust their resources based on what they need, proactively scaling up when it gets busy and down when things are quiet.

Of course, this doesn’t mean banks should choose a cloud solution randomly. Each bank will have needs and IT necessities requiring a specific cloud solution, so it’s essential to have a comprehensive understanding of the options before beginning the process. Hybrid and private cloud solutions can provide the security and control of a single tenant environment, with the scalability and flexibility of cloud technology. Additionally, it’s important to understand that while the cloud can mitigate outages significantly, it cannot eliminate them.

Still, the choice between mitigating downtime and ignoring the problem is no choice at all. The digitalization of our society has barely begun and banks that want to keep up must adopt a dynamic cloud solution to handle the relentless advance of technology and transactions.

Conclusion​


Banking app downtime equals a significant loss of customer confidence. For banks, trust is everything. It’s not an exaggeration to say that mitigating app downtime—especially around payday—should be among the top priorities for any bank in the 21st century. Those who ignore it will fall behind, while those who take it seriously will gain an edge over their competitors.

That said, switching cloud solutions will mean a significant investment in IT, either by growing an internal team or partnering with a managed cloud provider. But, that investment is still a small price to pay, considering the alternative.

The post Navigating the Challenges of Banking Apps in a Digital Society appeared first on PaymentsJournal.
 
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