Digital-only banking is a growing new innovative consumer-oriented banking, where financial institutions focused on serving their customers entirely online.
For the busy ways we live our lives, a bank you never have to visit, a lunchtime line that you aren’t required to stand in and none of the laborious and lengthy paperwork and the antiquated way of dealing with real physical cash is a really attractive proposition to many.
How easy it is to join a digital bank?
In many cases, all it takes to open an account with a digital-only bank is an application and few verification documents. Documents include simple items like scans of ID cards, social security no, and copies of bills whose account holder and address match the one on the account. A few of the benefits can include
- Easy sign-up
- Photo-bill payments
- Quick balance check features through mobile platforms
- Useful apps which pay bills from your account
- Access accounts exclusively through app to allow customers to reset pins, order cards, etc.
- Easy expense management
- Real-time data analytics
What exactly is a digital bank?
Mobile banks are essentially digital banks where all transactions and monitoring take place via apps on mobile devices with no high street branches.
Customers will still have a bank card and access to cash through the ATM network, but all their banking will be done through the app.
Different mobile banks offer different features but aim to replicate the functions of a traditional bank by offering cash withdrawals, overdrafts, savings accounts, and direct debits capabilities.
They also offer improved digital functions such as real-time spending notifications, the ability to freeze and unfreeze cards, monthly spending reports and budgeting assistance.
It is worth remembering that not all digital banks offer the same functionality as customers might have come to expect from a traditional bank, so be sure to check carefully before signing up.
Digital banks are a form of ‘Challenger Bank’. Historically this term used to refer to any smaller banks that were looking to attract customers away from the big four banking groups.
Why people are switching to digital-only banks
According to a survey by U.K. consumer agency finder.com, an estimated 8.5 million new digital-only bank accounts will be opened in the U.K. by 2024.
Of those surveyed, who have joined digital-only banks, or intend to in the next five years, we take a look below at their top five reasons for doing so:
- 33 percent said that doing their banking online was more convenient
- 31 percent said that better rates attracted them
- 28 percent cited the ease of transferring money
- 22 percent wanted free transactions overseas
- 22 percent of states receiving real-time notification on their spending was their chief reason for joining a digital-only bank.
Mobile-only banking is not for everyone, and it is likely that those who struggle with technology or do not want to rely on it, may stay within the old banking systems at least for the short term.
According to Deltec Bank, “However, given the impact of branch closures on customers across the globe, some may find that switching to a mobile-only bank is not that different from dealing with a traditional bank after the local branch has closed.”
The additional features offered by mobile-only challenger banks are revolutionizing the way users manage their money and, while some do not have the same functionality as high street banks just yet, this might be considered a worthwhile trade.
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