What is Digital Banking?
Not too long ago, making a bank transfer involved going into a physical bank branch, talking to a teller, and providing them with the instructions to process the transaction.
Today, money transfers typically involve a few clicks on a mobile app to initiate. The same goes for checking your account balance, making a payment, and putting money in a savings account – all thanks to digital banking.
Digital banking is the digitization of traditional banking services previously only carried out in bank branches.
As much of what we do on a day-to-day basis is moving online, so has banking.
Online banking and mobile banking – both forms of digital banking – allow customers to manage their money on the go and 24/7.
Moreover, digital banking services are typically cheaper because they incur lower overheads for the bank. As a result, there are even several no-fee online bank accounts.
A drawback of online-only banking is the lack of in-person contact, which can become an issue when you need to resolve urgent matters. While all online banks provide digital customer support, it often takes longer than if you were to walk into a bank and speak to a teller in person.
Additionally, cash deposits can be difficult at times as not all digital banks work with ATM networks to provide this service.
For many upwardly mobile, smartphone-savvy individuals, digital banks have become the go-to option. After all, why should banking still involve walking into a branch in 2020?
The Rise of Digital Banks
The first online banks appeared in the late nineties when the internet went mainstream. But it wasn’t until after the Global Financial Crisis in 2008 that digital banking really took its footing in the financial services landscape.
Online banks – also known as challenger banks, neo banks, or digital banks – emerged in numbers following the 2008 financial crisis when the broad population was disgruntled with large financial institutions, looking for alternatives.
Moreover, the digitization of “everything” continues at a faster pace than before, with smartphones and social media usage becoming the norm for most Americans. This has also helped to drive more people towards mobile banking.
Today, over a third of Americans use mobile banking, with 69.3% of millennials conducting their banking via their smartphones, according to data by Statista.
Top Digital Banks
Now, let’s look at each digital bank in more detail to highlight what they offer their customers.
Should You Bank Digitally?
If you are looking for basic banking services, such as a checking account, debit card, and savings products, there is really no reason to walk into a physical bank branch. Any of the online banks listed above provide the essential financial services you require on a day-to-day basis.
What’s more, if you are already glued to your smartphone and manage much of your life digitally, switching to a digital bank just makes sense.
However, if you require very specific financial services, such as remortgageing your home or applying for a car loan, you may still need to go to a large bank that provides a broader range of services than a digital-only bank.
With the broad choice of available banking options, it’s important to weigh out the pros and cons of each bank before opening an account. Check what products and services they offer to ensure that they will meet your specific banking needs.
If you are still banking in person at your nearest high street branch, but want to start banking digitally, check out banks that offer digital banking services.