Written by A digital bank is a bank with no physical infrastructure. It neither has a banking hall nor a bank branch. Yet, it offers similar services to brick-and-mortar banks. Digital banks are also known as neobanks or internet-only banks.
The kind of banking provided by the neobanks, nonbank etc is called digital banking. The entire banking process is online.
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How Digital Bank work.
Digital banking involves high levels of process automation and web-based services and may include APIs enabling cross-institutional service composition to deliver banking products and provide transactions.
Benefits
Digital banking is the new best thing that could have happened to mankind. In fact, not only has it provided a means of convenience for today’s banking times, it has also helped individuals to go paperless.
Through Digital Banking, individuals can now easily make transactions, check their account balance or even make transfers just with a single click of a button on their smartphone, desk top or any other digital device. No more requesting or looking over paper statements or withdrawal slips, any longer.
The 10 Secrets Your Digital Bank is Hiding From You
You use your digital bank to store your money, but do you know everything that it’s hiding from you? This comprehensive guide will give you the information you need to fully understand how digital banks work and why they don’t always put the customer first. Here are 10 secrets your digital bank is hiding from you.
1) Online Banks Put Insurance First
Even though they’re more expensive, insurance policies offer greater protection than traditional bank accounts, as you can be certain that your money will be safe.
Many online banks even offer life insurance, which pays out if you die before paying off a loan or mortgage. The other benefit of insurance with an online bank is that it’s more portable: If you move to another country and want to continue banking there, most online banks will allow you to pay in your home currency and manage everything online.
In contrast, many international banks won’t accept customers who live overseas unless they have a local address or are willing to go through a lot of red tape.
2) Saving Money Is Less Important Than Protecting Data
The number one reason people don’t save money? They worry about losing it. But in a world where bank security has become increasingly important, no one should be afraid to lose their money.
That’s why digital banks have higher standards than traditional ones—they’re required to comply with federal laws that require them to take reasonable steps to safeguard their customers’ financial information.
Bottom line: Most online bank accounts offer extra layers of protection for your security and peace of mind, so there’s no need to be wary of saving your hard-earned money with them. The same can’t be said for old-fashioned banks where deposits are more vulnerable to being stolen or lost due to employee negligence or shoddy software systems.
3) Customer Service Can Help Avoid Problems
The more time you spend at your digital bank, if you’re not familiar with it, it can be easy to get confused or lost. That’s why most major digital banks offer a variety of customer service channels for their customers to use.
In some cases, these services are even available 24/7 via live chat or phone—which is good news if you forget your PIN or find yourself in another sticky situation. Check out our complete list of all things related to customer service below
4) You Don’t Need a Walk-In Branch
It’s easier than ever to bank from anywhere, anytime. In fact, 70% of all digital transactions are performed using a mobile device. Mobile banking has increased almost 20x in three years and that number continues to grow.
Many banks have started offering free or low-cost checking accounts—and that’s great news for your business. The ability to deposit checks via smartphone or tablet means you never have to miss an opportunity to take cash out of your account at no cost! If you haven’t already, it’s time for your business to become a digital bank too!
5) Apps Aren’t Free
When you use your bank’s mobile app to deposit a check, be aware that fees can add up quickly. Not all banks charge a fee for mobile deposits but it’s worth doing some research and double-checking before you take out your phone.
For example, mobile depositing at Chase will cost you $2 per transaction or 3 percent of any amount deposited over $5,000. And at Wells Fargo, where mobile deposits are free if they’re under $5,000—if they exceed that threshold there will be a charge of 15 cents per transaction.
6) Credit Checks Are Commonplace
Banks want to make sure you can be trusted with a loan. A lender will run a credit check on you as soon as you apply for a mortgage. Credit checks are also common in other types of loans, such as business loans or car loans.
Because it takes time for information to show up on your credit report, banks may not be able to do a credit check right away; they may need to wait until enough time has passed that they can get meaningful information from it. That’s why many banks have waiting periods before approving your loan request—from one month up to half a year or more, depending on where you are in the mortgage process.
7) Just Starting Out? No Problem!
You don’t have to know everything about digital banks to find one that suits your needs, but you should know enough to get started. If you’re just starting out on your search for a new bank, focus on a few key areas like: internet connectivity, ATM network and mobile support.
While these areas may not be at the top of your list of must-haves, they are important considerations because they’ll play a role in your daily banking experience going forward. Avoid being distracted by features that might seem cool right now but won’t be necessary down the road—like biometric identification or video-chatting with customer service representatives.
8) Existing Customers Want Seamless Transitions Too
When you move your banking services, you expect a seamless transition. Unfortunately, that’s not always what happens. Achieving seamless transitions requires a deliberate effort on behalf of your new bank—and if they don’t, existing customers may suffer.
So ask how your digital bank will keep existing customers happy and in good standing during your migration; make sure you’re talking to someone who will be responsible for that aspect of business.
Again, if you’re moving from one digital bank to another, take time to understand how things are handled so that you know what to expect before going through with it. And once it’s all done, evaluate if there are ways to improve things for yourself or other customers.
9) Good Credit Scores Aren’t Everything
When it comes to your bank account, lenders want to see good scores—but that doesn’t mean you can’t get a loan with bad credit. Many banks offer a range of loan options for people who have bad credit and will consider factors like employment history and income in determining whether or not you’re eligible for financing.
Keep in mind that all loans come with interest rates, so if you don’t have a stellar credit score, expect to pay more money over time. And remember: No matter what kind of deal your bank offers, experts recommend avoiding excessive debt by only borrowing as much as you need and keeping your payments low.
10) Finding a New Account Isn’t Harder Than it Used to Be
In today’s digital age, finding a new bank account online has never been easier. Simply walk through your neighborhood and ask all of your neighbors if they have a good bank that they enjoy using.
Use social media to survey everyone in your network, looking for a bank recommendation. If you’re on LinkedIn, post about what you are looking for and ask people to respond with their favorite banks. In addition to reaching out through social networks, it’s also worthwhile to check out discussion boards and review sites to see if anyone has left reviews on a given digital bank.