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?
Online Banks
Below you will find ten of the most reputable and longest-standing online banks that you can use to bank digitally today.
Discover Current mobile banking app offering transparent banking on the go, convenient access and high yield savings.
Read this MoneyLion review about the financial app's key features, from investing and direct deposits to rebuilding your credit score.
Aspiration offers socially-conscious and sustainable cash management services and investment products, so you can make money while making the world a better place.
Is PenFed Credit Union right for you? Read this review to find out. Learn about their membership requirements, fees, and customer service.
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.
Current
Discover Current mobile banking app offering transparent banking on the go, convenient access and high yield savings.
Products and services:
- Spend Account
- High-Interest Savings Account
- Mobile App
MoneyLion
Read this MoneyLion review about the financial app's key features, from investing and direct deposits to rebuilding your credit score.
Products and services:
- Spend Account
- High-Interest Savings Account
- Mobile App
Chime
Traditional banks aren't for everyone. Chime offers simple money management, no monthly fees, secure credit building and online banking.
Products and services:
- Checking Account
- Savings Account
Aspiration
Aspiration offers socially-conscious and sustainable cash management services and investment products, so you can make money while making the world a better place.
Products and services:
- Cash Management Account
- Planet-Friendly Debit Card
Axos Bank
Axos Bank offers online personal and business banking solutions like checking and savings accounts and lending services like personal loans.
Products and services:
- Checking Account
- High-Yield Savings Account
- CDs
- Money Market Accounts
Ally Bank
Ally Bank is an online bank offering personal banking services, like interest checking and savings accounts, and other financial products.
Products and services:
- Checking Account
- Savings Account
- Personal Loans
- Mortgages
- Cashback on Debit Card Purchases
- Money Market Account
- CDs
Bank5 Connect
Bannk5 Connect offers checking, savings, and CD accounts with competitive interest rates, 100% deposit insurance, and great customer service.
Products and services:
- Checking Account
- Savings Account
- CDs
Capital One Bank
Learn about Capital One bank's credit cards, loans, checking accounts, and savings products and financial services for your business here.
Products and services:
- Checking Account
- Savings Account
- Business Account
- Custodial Account
- Money Market Account
- CDs
- Auto Loans
Marcus
Marcus by Goldman Sachs offers high-yield savings accounts, personal loans, and managed portfolios for investment and retirement.
Products and services:
- Personal Loans
Radius Banks
Radius is a digital bank offering online banking and lending services for consumers and businesses with personalized customer service.
Products and services:
- Checking Account
- Savings Account
- Business Accounts
- Credit Cards
- Student Loans
- Personal Loans
- Specialty Loans
Simple
Simple is an online bank offering fee-free accounts with tools to help you budget and save through a mobile app.
Products and services:
- Checking Account
- Savings Goals Account
- In-App Budgeting Tools
Varo Bank
Varo Bank is an online bank with a free checking account. Start banking online and pay no fees. Read our review to learn more.
Products and services:
- Checking Account
- Savings Account
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 remortgaging 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.
What’s Next?
If you are still banking in person at your nearest high street branch but you want to start banking digitally, check out banks that offer digital banking services.
