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Mobile applications, online ordering, and more have made our day-to-day tasks easier and more convenient. Many activities we do on a daily basis can now be done completely online – and personal banking is no exception. Nowadays, many people handle their personal banking activities from home through online and mobile channels.
Digital banking is banking done online with no in-person services required. Through this type of banking, you can carry out banking activities on your phone or computer: open new accounts, make deposits, and manage your finances from the comfort of home.
As more and more institutions have begun to offer online services, digital banking has risen in popularity as a viable banking solution. By now, most popular banks offer some services online for their customers to provide convenient solutions. Some institutions have gone beyond this and operate completely digitally, such as Chime, Digibank, and Axos have no physical branches or locations and instead manage all their customers online.
Digital banks and digital banking are two different concepts. Not every bank that offers online and mobile banking solutions qualifies as a digital bank. Though many traditional banks now offer some of their services completely online, they still require you to visit a local branch for more detailed or sensitive transactions. Common digital banking transactions include direct depositing, setting up automatic payments, and checking your balance. Actions such as applying for a personal loan or a mortgage, however, typically require some level of in-person banking.
Digital banks, or neobanks, takes place completely online. Rather than relying on associates at local branches, these banks operate using artificial technology that manages the data and processing of individual customers’ accounts. Neobanks offer some the same capabilities as traditional banks – but everything takes place online.
You can complete all your typical banking activities from anywhere, at any time. Here are 3 major benefits of digital banks:
Making time to visit your bank for even simple transactions requires scheduling ahead of time. It goes without saying digital banking provides the ultimate convenience. Because you are able to access your accounts at any time, you are not required to plan your banking activities around a branch’s bank hours.
Instead, you can log into your accounts whenever is most convenient for you. This provides you with the tools to carry out even more detailed financial transactions fully on your own time without having to leave your home. This autonomy in personal banking brings more opportunities to closely manage your finances on your own schedule.
Because of the overhead costs associated with managing a traditional bank branch, digital banks operate at a much lower cost. When operations are completely online, there are no costs to keep branches open and running throughout the day. This reduction in cost trickles down to banks’ customers – there are far fewer fees typically associated with these banks as opposed to traditional ones.
You are less likely to have to pay monthly dues on your accounts, or any other costs traditional banks may charge to maintain their services. With little to no operations costs, banks have more money to offer benefits to their customers. Paying fewer fees can help you save more of the money you invest, adding significantly to your savings over time.
In addition to saving you time and money, digital banks on average offer higher interest rates. This can significantly increase the return on your investments from your savings accounts, and help you reach your savings goals much faster. Some institutions offer between 0.50% to 1% interest on their savings accounts – 10 or 20 times more than interest rates offered by brick and mortar banks.
Digital banks offer a lot of perks to customers. The ability to access and manage your accounts at any time proves to be a major characteristic that’s attractive to so many customers. Additionally, the lack of fees and promise of higher interest rates offers more return on your account investments, leading to more growth in your accounts than you may see with traditional banks.
A major drawback to these types of banks is the lack of in-person customer service available. Because services are conducted completely online, there is no way to meet with an associate face-to-face to work through any issues you may experience. Though online customer service is available and varies by your bank, you still may find yourself waiting a significant amount of time before you can reach someone to help you with your issues. This lack of personalization may be a setback if you value close personal relationships with your local branch.
If you are planning on opening an account at a digital bank, you will want to ensure the specific institutions you’re considering offer the capabilities you are looking for. These banks vary significantly when it comes to which services they offer to their customers. Some neobanks are better choices than others when it comes to mortgage provisions, personal loans, and other services.
Additionally, these banks offer varied promotions to customers. Some digital banks do not charge overdraft fees, offer extremely high interest rates or other perks you may not receive at your traditional banking institution. Research the banks you are looking at in-depth to figure out which is the best choice for you.
» See your options: Here’s a list of WalletBrain’s best checking accounts
Digital banking is the future of banking as we know it. As more technology develops over time, we will see more banks optimized for ultimate customer convenience and benefit. If you are looking to open an account, consider the capabilities available and decide what works best for you and your personal financial goals.
