Digital banking is a process of transformation from traditional to digital in banking transactions. In other words, banking transactions are electronic. The bank’s services are provided electronically, and everything has its advantages and disadvantages. As digital banking has great advantages, it has risks and challenges that must not be denied. Its damage is greater than its benefits
Banks provide banking services electronically and access to them is limited to the participants according to the terms of membership determined by the banks through one of the outlets on the network as a means of communication with customers.
There are some experts who say that electronic banking means banks are going to expand their online headquarters instead of building new ones.
Digital Banking Challenges
Digital Banking Challenges- Technical Risks
These risks arise from the possibility of loss resulting from an imbalance in the system’s overall or from customer errors, or from an electronic program that is not suitable for electronic banking. • Fraud risk: the imitation of computer software or the falsification of information matching electronic programs, or the modification of some information regarding electronic funds. • Risks arising from the malfunction of the electronic system: which may arise from misuse of the system or poor monitoring of programs.
Which occur when the Bank does not respect the legal rules and legislations provided or where there are no clear and precise legal systems for new banking operations. The most important legal challenges are: determining the acceptance of the law for electronic contracts, proof of proof, means of payment, tax challenges, Electronic signatures, cash payment systems, digital or electronic money, information confidentiality, information security from high-tech crime risks, customer privacy, liability for errors and risks, authoritative electronic communications, And faith, and intellectual property issues for software and databases used or bank information from the site of the bank or associated with them, and the relationships and bank contracts with providers of technology or services supplied to or with allied sites or merger, participation and cooperation informational projects.
Another team of researchers has redrafted the risks surrounding the work of the e-bank as follows:
Interest rate risk
It relates to inappropriate movements in the interest rate that may reduce the value of electronic cash and thus affect the financial position of the bank. • Liquidity risk The source of this risk is the sudden increase in the import of electronic money. Reputation risk is an attempt to destroy the security system by introducing a virus into an e-banking system that disrupts the information system.
• Market risk comes from foreign exchange and foreign currency acceptance in electronic payments • Credit risk is the extension of credit to customers outside the normal market
• The risk of external transfer is that liabilities to external operations can not be met due to economic, political and social factors. And its source is the ambiguity in the applicability of laws, particularly with regard to electronic signature
The result is a potential loss, customer error, or an inappropriate electronic program. • Fraud risk: the imitation of software or the falsification of information identical to electronic programs. • Risks arising from the malfunction of the electronic system. • Legal risk: It occurs when the bank does not respect legal rules and legislation.
Which leads to liquidity problems and bank loan policy. The failure of participants in the electronic money transfer system or the stock market in general in the implementation of their obligations often leads to the tension of the ability of the participant or other participants to do their part in the implementation of their obligations on time, Tension of relations and financial instability in the market.
They are linked to rapid technological changes. The lack of knowledge of the banks’ employees of the optimal use of modern technology leads to the inadequacy of electronic operations.