Digital Banking: Best Online Banks

Digital banking is taking over traditional in-person banking. Discover a list of the best online banks today.

Digital Banking: Best Online Banks

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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 that were 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.

Aspiration: A Socially-Responsible Digital Bank

An example of a leading digital bank with a unique product offering is Aspiration

Aspiration Logo Tagline

California-based Aspiration is a sustainable, ethical, and socially conscious online-only bank that provides a range of financial services, including branchless banking, cash management, and investment products.

If you are looking for a user-friendly, digital banking experience with the added benefit of making a positive impact on the environment, the mobile-only ethical bank is probably right for you.

Aspiration commits ten cents of every dollar to charities involved in expanding economic prosperity and makes it simple for its customers to donate to charitable initiatives directly from their checking account. Additionally, the green bank provides users with the option of planting a tree every time they auto-roundup their purchases to their nearest dollar.

Top 10 Online Banks

Below you will find ten of the most reputable and longest-standing online banks that you can use to bank digitally today. 

BankDescriptionHeadquarters
AspirationAspiration is a digital-only green bank that lets individuals spend, save, and invest with a conscience.California
Ally BankAlly Bank is one of the country’s oldest online banks. It offers a checking account and a range of savings products, including CDs and money market accounts.Utah
Axos BankAxos Bank is a digital bank that offers checking and savings accounts with competitive interest rates.California
Bank5 ConnectBank5 Connect is an online-only bank that provides high yields on checking accounts, in addition to an array of savings products with competitive interest rates.Massachusetts
Capital One BankCapital One Bank is a digital bank that offers a checking account and a wide range of savings products.Virginia
ChimeChime is a mobile-only bank that provides a checking and a savings account with no hidden fees.California
MarcusGoldman Sachs-owned Marcus is an online bank that offers fixed-rate, no fee personal loans.Utah
Radius BankRadius Bank is a full-service digital bank that offers a wide range of financial products and services.Massachusetts
SimpleSimple is a BBVA-owned mobile-first bank that offers a checking and savings account, and money management tools.Oregon
VaroVaro is a digital bank that provides checking and savings accounts with zero fees.California

Now, let’s look at each digital bank in more detail to highlight what they offer their customers. 

Aspiration

Aspiration Logo Tagline

Aspiration creates an ethical banking experience for its users by providing a range of socially-responsible features that banks typically don’t offer. For example, the green bank donates ten cents of every dollar it makes to social impact initiatives and does not fund fossil fuel projects.

Products and services:

  • Cash Management Account
  • Planet-Friendly Debit Card

Ally Bank

Ally Bank

Ally Bank is one of the longest-standing and most reputable online banks in the US. It offers a checking account and an array of savings products, ranging from certificates of deposits (CDs) to money market accounts.

Products and services:

  • Checking Account
  • High-Yield Savings Account
  • CDs
  • Money Market Accounts

Axos Bank

Axos Bank logo

Axos Bank is an online-only bank that stands out for offering a wide range of financial products and services, from a zero-fee checking account and a high yield savings account to personal loans and home mortgages.

Products and services:

  • Checking Account
  • Savings Account
  • Personal Loans
  • Mortgages
  • Cashback on Debit Card Purchases
  • Money Market Account
  • CDs

Bank5 Connect

Bank5 Connect is a digital bank that offers attractive yields to savers through its array of savings products, including high-interest savings accounts and certificates of deposit.

Products and services:

  • Checking Account
  • Savings Account
  • CDs

Capital One Bank

Capital One Bank is the digital banking arm of the financial conglomerate Capital One Financial. The online bank offers checking and savings accounts, business accounts, and bank accounts for children, plus an array of savings products.

Products and services:

  • Checking Account
  • Savings Account
  • Business Account
  • Custodial Account
  • Money Market Account
  • CDs
  • Auto Loans

Chime

Chime is a user-friendly, online-only bank that provides essential banking services in the form of a checking and savings account with no hidden fees.

Products and services:

  • Checking Account
  • Savings Account

Marcus

Marcus by Goldman Sachs

Marcus by Goldman Sachs is an online bank that currently only provides fixed-rate, no fee personal loans from $3,500 to $30,000 to its customers.

Products and services:

  • Personal Loans

Radius Bank

Radius Bank Logo

Radius Bank is a one-stop-shop for all your digital banking needs, from checking accounts and credit cards to business banking and student loans.

Products and services:

  • Checking Account
  • Savings Account
  • Business Accounts
  • Credit Cards
  • Student Loans
  • Personal Loans
  • Specialty Loans

Simple

Simple

BBVA-owned Simple is a leading digital bank that provides essential banking services plus digital money management and budgeting tools.

Products and services:

  • Checking Account
  • Savings Goals Account
  • In-App Budgeting Tools

Varo

Varo is a branchless bank that provides zero-fee checking and savings accounts, and automatic savings tools.

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 the socially-responsible digital bank Aspiration.

Start Banking Digitally

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