07.06.2023 Articles

As the digital banking space continues to evolve, there are many challenges that banks need to address, if they want to remain competitive and maintain their market share, over fierce competition by fintechs, digital banks and other traditional organisations. Below we will analyse five Digital Banking challenges for 2023, that will play a significant role.

It’s evident that the traditional banks follow a rather slow pace towards the adaptation of meaningful digital transformation, based on their short, mid and long-term investment plans. According to The Financial Brand [1], half of the firms are either in the beginning or in the implementation phase regarding digital transformation projects. However, by failing to set the correct priorities according to market demand, banks tend to lose their market share.

What are the biggest challenges for the Digital Banking industry in 2023?

Regardless of the organisations’ adaptation stage, the Digital Banking Challenges for the next years involve client trust, data privacy, interoperability, and stricter regulations.

Cybersecurity and fraud prevention in Digital Banking

Cybersecurity and fraud prevention remain a major challenge for banks. With the increasing number of digital transactions, the threat of cyberattacks and fraud attempts continues to grow. According to EY [2], Cybersecurity is the number one risk for the global banking industry. Banks will have to invest in bullet-proof digital banking platforms, utilising technologies such as encryption, multi-factor authentication, and real-time monitoring, to prevent cyber threats and protect their customers’ personal and financial data. They will also need to educate their customers on how to protect their information and avoid becoming fraud victims.

In addition, Customer privacy is a critical issue in the digital banking industry, as customers are increasingly concerned about the protection of their personal and financial data. Banking institutions need to ensure that they are protecting their customers’ privacy in accordance with regulations such as the GDPR and the CCPA. Thus, they will need to take a multipronged approach to manage consumer privacy [3], increase transparency on the ways data is collected and stored and utilise cutting-edge technology, front-to-back.

Interoperability with banking systems

Interoperability is becoming increasingly important in the digital banking industry as customers demand more flexible and convenient banking services. Moreover, from a cross-selling point of view, the launch and promotion of additional banking offerings like loans, investment services etc. on a single platform could differentiate the overall banking experience. With a wide array of digital banking platforms available, it is important for banks to ensure that their systems can seamlessly interact with other internal or 3rd party platforms, in the means of a banking ecosystem [4]. This could be achieved with the use of open banking APIs and standard protocols, according to regional regulations [5].


Digital Banking Challenges +250 APIs out of the box


Customer Trust

Customer trust is a crucial factor for digital banks, as customers cannot visit a brick-and-mortar branch and thus they rely on easy and seamless customer support structures. Digital banking is still relatively new, and mostly older customers may be skeptical of using digital banking services in general, especially if they require technology savviness or non-intuitive UI/UX. Therefore, Digital Banking institutions will need to build reliable, intuitive platforms, developed with best practice in mind, while being supported by excellent customer support and straight-forward ways of communication.

Competition in the digital banking space

Competition in digital banking industry is fierce, as more fintech companies enter the market and traditional banks investigate how to enrich their digital offerings. The increased competition can result in lower profits and a loss of market share for the traditional banks that fail to adapt fast and offer innovative and user-friendly digital banking services.

Uniform mobile-first, omnichannel banking experience, integrating with third-party apps and services, and providing financial management tools to help customers better manage their day-to-day financial tasks, are some of the functionalities that need to be integrated to a holistic digital banking strategy. Moreover, traditional banks will need to continuously monitor the market and respond quickly to changing customer needs and preferences.


Regulation is an important factor for the sustainability of digital banking, as regulators aim to ensure that digital banks operate in a safe and secure manner. With the increasing number of digital transactions, regulators are developing new rules and standards. Digital banks will need to find the right balance between supporting innovation and protecting consumers [6], by investing in a robust digital banking system while staying proactive on the latest market requirements.


Learn how you can overcome all key challenges

The Digital Banking landscape is becoming increasingly competitive for traditional banks and digital banking institutions, constantly pushing the boundaries of technology and innovation. By utilizing an intuitive digital banking platform that addresses today’s challenges, while keeping abreast of future technology trends, modern banking institutions will achieve their goals for true digital transformation and adopt a meaningful client-centric approach.



  1. Banks’ Digital Transformation Pace Is Too Slow for Consumers [The Financial Brand]
  2. Cybersecurity is number one risk for global banks, but geopolitical risk tops European banks’ concerns [EY]
  3. Increase In Digital Banking Raises Consumer Data Privacy Concerns: How To Protect Yourself [Forbes]
  4. Interoperability and the future of global banking [Chartered Banker]
  5. The European Interoperability Framework in detail [European Commission]
  6. Lessons from the rapidly evolving regulation of digital banking [McKinsey & Company]