A digital bank is one that does not have any physical infrastructure. It does not have a banking hall or a bank branch. Nonetheless, it provides services comparable to traditional banks. Neobanks, or internet-only banks, are another name for digital banks.
Digital banking refers to the type of banking provided by neobanks, nonbanks, and others. The entire banking process takes place online.
How does a digital bank work?
Digital banking entails high levels of process automation and web-based services, as well as APIs that enable cross-institutional service composition to deliver banking products and perform transactions.
Digital banking is the best thing that has ever happened to humanity. In fact, it has not only provided a convenience for today’s banking times, but it has also assisted individuals in going paperless.
Individuals can now easily make transactions, check their account balances, and even make transfers with a single click of a button on their smartphone, desktop computer, or any other digital device thanks to Digital Banking. No more requesting or inspecting paper statements or withdrawal slips.
The 10 Secrets Your Online Bank Is Withholding From You
You keep your money in a digital bank, but do you know what it’s hiding from you? This comprehensive guide will provide you with all of the information you need to fully comprehend how digital banks operate and why they do not always prioritize the customer. Here are ten things your digital bank is keeping from you.
1) Online banks prioritize insurance.
Even though they are more expensive, insurance policies provide greater protection than traditional bank accounts because you know your money is safe.
Many online banks also provide life insurance, which pays out if you pass away before repaying a loan or mortgage. Another advantage of using an online bank for insurance is that it is more portable: if you move to another country and want to continue banking there, most online banks will let you pay in your home currency and manage everything online.
Many international banks, on the other hand, will not accept customers who live abroad unless they have a local address or are willing to go through a lot of red tape.
2) Saving money is less important than data security.
What is the most common reason people do not save money? They are concerned about losing it. However, in a world where bank security is becoming increasingly important, no one should be concerned about losing their money.
As a result, digital banks have higher standards than traditional banks because they must comply with federal laws requiring them to take reasonable steps to protect their customers’ financial information.
Bottom line: Most online bank accounts provide additional layers of security and peace of mind, so there’s no reason to be wary of saving your hard-earned money with them. The same cannot be said for traditional banks, where deposits are more vulnerable to theft or loss due to employee negligence or inadequate software systems.
3) Customer Service Can Assist in Problem Avoidance
If you’re unfamiliar with your digital bank, it’s easy to become confused or lost the more time you spend there. As a result, most major digital banks provide their customers with a variety of customer service channels to choose from.
In some cases, these services are even available 24 hours a day, seven days a week via live chat or phone, which is great if you forget your PIN or find yourself in another sticky situation. Check out our comprehensive list of everything customer service related below.
4) You Do Not Require a Walk-In Branch
It is now easier than ever to bank from any location, at any time. In fact, mobile devices are used for 70% of all digital transactions. In three years, mobile banking has nearly doubled, and the trend is continuing.
Many banks have begun to offer free or low-cost checking accounts, which is great news for your company. The ability to deposit checks via smartphone or tablet means you’ll never miss out on a free cash withdrawal from your account! If you haven’t already, it’s time for your company to go digital!
5) Apps Do Not Come Cheap
When using your bank’s mobile app to deposit a check, keep in mind that fees can quickly add up. Although not all banks charge a fee for mobile deposits, it’s worth doing your homework and double-checking before pulling out your phone.
For example, at Chase, mobile depositing costs $2 per transaction or 3% of any amount deposited over $5,000. And at Wells Fargo, mobile deposits are free if they are less than $5,000; if they exceed that amount, there is a 15-cent fee per transaction.
6) Credit Checks Are Usual
Banks want to know that they can trust you with a loan. When you apply for a mortgage, a lender will run a credit check on you. Credit checks are also commonly used in other types of loans, such as business loans and auto loans.
Because information on your credit report takes time to appear, banks may not be able to perform a credit check right away; they may need to wait until enough time has passed for meaningful information to appear. As a result, depending on where you are in the mortgage process, many banks have waiting periods before approving your loan request ranging from one month to half a year or more.
7) Just Getting Started? Not a problem!
To find a digital bank that meets your needs, you don’t need to know everything about them, but you should know enough to get started. If you’re just starting your search for a new bank, prioritize internet connectivity, ATM network, and mobile support.
While these may not be at the top of your must-have list, they are important considerations because they will play a role in your future banking experience. Avoid being distracted by features that may appear cool now but will be obsolete in the future, such as biometric identification or video-chatting with customer service representatives.
8) Existing Customers, Too, Want Smooth Transitions
When you switch banking services, you expect a smooth transition. Unfortunately, this is not always the case. Achieving smooth transitions necessitates a concerted effort on the part of your new bank, and if they don’t, existing customers may suffer.
So, ask your digital bank how it plans to keep existing customers happy and in good standing during the transition; make sure you’re speaking with someone who will be in charge of that aspect of business.
Again, if you’re switching from one digital bank to another, take the time to learn how things are handled so you know what to expect before proceeding. After that, consider whether there are any ways to improve things for yourself or other customers.
9) Good credit isn’t everything.
Lenders prefer to see good bank account scores, but that doesn’t mean you can’t get a loan with bad credit. Many banks provide a variety of loan options for people with bad credit, taking into account factors such as employment history and income when determining whether or not you are eligible for financing.
Remember that all loans have interest rates, so if you don’t have a perfect credit score, you can expect to pay more money over time. Remember, no matter what your bank offers, experts advise avoiding excessive debt by borrowing only what you need and keeping your payments low.
10) Finding a New Account Isn’t Anymore Difficult Than It Used to Be
Finding a new bank account online has never been easier in today’s digital age. Simply walk around your neighborhood and ask everyone if they have a good bank that they like to use.
Use social media to poll everyone in your network for bank recommendations. If you’re on LinkedIn, post about your requirements and ask people to respond with their preferred banks. In addition to reaching out via social media, it’s worth checking out discussion boards and review sites to see if anyone has left feedback on a specific digital bank.