As our access to the Internet continues to increase around the world, it becomes easier than ever before to use online services. Banks, credit unions, and similar financial institutions are taking advantage of this structure to provide digital-only services to their consumers.
Most households with a checking or savings account can enroll in online services that allow them to manage money easily. You can transfer funds, deposit checks, or schedule recurring payments with a few clicks.
Debit cards, mobile banking, and ATM services are becoming part of the digital-only footprint.
The one area that holds the traditional institution back from its full potential in this area is the need for account holders to visit a physical location. This process is a necessary component of setting up and managing an account. It costs consumers and the business time and money.
Why Are Digital-Only Banks Becoming Popular?
If a consumer chooses a digital-only bank, then there are no lines that force you to wait for an available teller. You’re not trying to manage a high volume of cash or stuck filling out a mountain of paperwork.
All it takes to open an account at a digital-only bank is a handful of verification documents and an application. Individuals and businesses may need to supply government-issued identification, copies of bills that verify an address, and a license to operate in the community.
Additional benefits include photo-bill payments, app access to the account, and more efficient expense management. You can also receive real-time data analytics that let you understand more about your spending habits.
Digital-Only Banks Provide More Agility to the Marketplace
This new era of digital-only banks gives a company of any size better access to cutting-edge networks and transparent interactions. Most of the financial institutions that embrace this approach to business are 100% based in the cloud. This structure allows them to stop relying on the obsolete on-premise tech that managed accounts before Internet access became widespread.
According to Deltec Bank, “The leading banks in the digital arena are partnering with blockchain leaders to create more transparency in each transaction.” This approach is leading to partnerships with Bitcoin, Ethereum, and other payment services that can lead to lower operating costs on multiple budget lines.
When banks use the digital-only approach, they can charge lower fees to attract more customers. Then the institution can make more money per client because the operating costs are minimal. It is an excellent option for consumers who need a simple savings or checking account when there are no brick-and-mortar services available in their community.
There are still some risks to manage with the digital-only approach to banking. Customer satisfaction can be challenging to manage, there are data security issues to supervise, and client scalability can be problematic. Hacking, malpractice, and fraud could cause financial distress in ways that a cash-in-a-vault approach would never even consider.
Digital-only banking can make it challenging to connect with clients. It can also create faster services that are easier to manage. It may be a niche market today, but the possible cost-savings with this approach make it an ongoing tempting proposition.
Disclaimer: The author of this text, Robin Trehan, has an Undergraduate degree in economics, Masters in international business and finance and MBA in electronic business. Trehan is Senior VP at Deltec International www.deltecbank.com. The views, thoughts, and opinions expressed in this text are solely the views of the author, and not necessarily reflecting the views of Deltec International Group, its subsidiaries and/or employees.
About Deltec Bank
Headquartered in The Bahamas, Deltec is an independent financial services group that delivers bespoke solutions to meet clients’ unique needs. The Deltec group of companies includes Deltec Bank & Trust Limited, Deltec Fund Services Limited, and Deltec Investment Advisers Limited, Deltec Securities Ltd. and Long Cay Captive Management.