Digital banks are banks that enable their customers to carry out transactions over the internet. Also known as online banks, these alternatives to traditional banks allow users to access their bank accounts using a desktop or mobile device instead of in person.
These banks provide all the conveniences of banking without the hassle of over-the-counter transactions and all the queues associated with them. Digital banks take the paperwork and human interaction out of banking.
If you have yet to transition to a digital bank or want to learn more about the benefits of using these services, we’ve listed five reasons to consider getting an account from a digital bank.
Experience the Latest Banking Technology
Virtually every business is now online, and banks are no exception. More and more, they are embracing digital banking technology to retain their existing customers as well as gain new ones.
This technology comes with many conveniences; services like mobile check deposits, online money transfers, and e-statements, which do not need human interaction, all provide better customer experiences and increase financial performance.
Benefit from Cheaper Banking
Online banks typically offer higher interest rates on savings accounts and CDs. They also offer services that may not be available at a physical branch for free, including:
- Bills payment
- A specified number of free ATM withdrawals
- Person-to-person money transfers
- Account-to-account and external money transfers
- Free checking account services
These banking services, which are getting harder to get for free with traditional banks nowadays, are almost always free or come with lower fees with online bank accounts. Additionally, customers do not have to have a large account balance or monthly paycheck deposits to qualify for them.
Some digital banks even require a very manageable $1 minimum balance to enjoy free checking, which is especially beneficial for low-income individuals, people with irregular income, and small business owners.
To boost your banking, a digital bank will likely offer you a small interest rate on any money in your online checking account. This interest may not be as high as interest earned on savings accounts or CDs, but still, it’s more than what you would get if you had a checking account at a brick-and-mortar bank.
Also, a digital bank account will likely guarantee you higher interest rates on any saving accounts or CDs you hold with them. While the interest may again not be much, every penny counts, and it may provide additional funds when you need it.
Eliminate Time- and Energy-Wasting Trips to a Physical Branch
With a digital bank account, you no longer need to go down to the bank to open and run your checking account.
Nearly every banking process is available online, which means you’ll avoid time-wasting traffic jams, annoying lines, and taking time from core activities to do your banking.
Eventually, all these online banking processes add up to real savings in the long-term that digital banks can pass onto their customers. With traditional, physical banking, banks need to pay for:
- Utilities and operational expenses
- Office equipment and assets
- Employee salaries
- Security personnel and equipment
Digital banks do not have these extra expenses. They operate in a digital environment, giving them the capability to pass on cost savings to their customers. In a word, digital banks save you money, time, and energy.
Real-Time Money Transfers and Transaction Monitoring
If you have a low account balance and need to move money between accounts quickly, digital banking gives you the convenience of being able to do so in an instant.
This service is typically free. It doesn’t require you to be web savvy, and most wire transfers take only a couple of clicks, especially if the sender and the recipient are within the same bank.
Transferring funds quickly with online banks gives you peace of mind. Should you need to liquefy assets for payments or purchases, you can be sure that the bank will release the funds quickly and efficiently.
Digital banks also allow you to set up regular standing orders to yourself or a third party to take the hassle out of keeping up with due dates for bills. This helps you to keep your credit score high by avoiding late fees.
And finally, digital banks record every transaction, which allows you to check your past transactions quickly and easily. This way, you get to stay on top of your bank balances and can spot any fraudulent activity at a moment’s notice.
Excellent Customer Service
Since digital banks don’t pay full-time employee salaries, they can afford to invest their extra financial resources into customer service to increase profitability, user experience, and financial performance.
If you bank with a digital bank, customer service is merely a phone call, online chat, or email away. And because most of these banks offer customer support tickets which record every customer interaction, you can track how the bank resolves your problem and hold them accountable. This accountability, in turn, improves the bank’s customer service quality.
Customer service staff is also available outside of standard business hours, unlike in a traditional brick-and-mortar bank. This comes in handy for busy individuals and business owners who cannot make it to a physical branch during business hours.
Furthermore, most digital banks collect data from their customers using surveys and information from interactions they have with them online. They use this data to:
- Provide better banking products and services
- Improve the user experience
- Tailor their long-term banking strategy to their customers’ needs
The Bottom Line
The future is, without a doubt, digital. In an increasingly interconnected world, being able to do essential activities online leads to added convenience and savings in terms of time, energy, and money.
Digital banks are paving the way for a more efficient and customer-centric financial landscape across the globe. Whether you’re a digitally savvy professional or new to the world of online banking, you’ll likely benefit from having a digital bank account among your arsenal of financial vehicles.
Chris Gumapac Social media practitioner. Analyst. Amateur beer lover. Freelance entrepreneur. Tv buff. Pop culture fanatic. Incurable communicator.’