Digital or online banks are starting to become more popular than regular ones because they are usually easier to access and offer new and innovative services. All over the world, people are choosing to have an online savings account or checking account, instead of going into their local branches for services.
In this post, we will talk about the exciting world of e-banking, exploring what these institutions are, how they work, and the advantages they offer over traditional banks.
Online-only banks work digitally, offering savings accounts, banking services, and transactions through digital platforms and mobile apps, without any "in-store" branches. They are also sometimes referred to as e-banks, online banks or digital banks.
By choosing a virtual option over a traditional bank account, you can sign up, make transactions, and get access to customer support online, without the need for in-person visits. Through secure digital channels, e-banks offer more people the chance to open a bank account quickly and easily.
You can still get checking and savings accounts at a digital bank, exactly as you would a traditional one. Most of the time, they also come with a high yield savings account, so you can earn interest as you save.
The difference is that you sign up for your account, verify your identity and make your transactions online but you might not have the monthly fees, a minimum deposit amount and a minimum monthly balance. You also won't have to go into a store to get service or hand in documents and you get a more convenient experience at a time that suits you, that is, anytime.
This would also mean using an app to make transactions, track your money and savings and make a direct deposit from your phone. You won't be able to deposit a check from your app but you can use more modern ways to move your money, instantly. And, you still have options for cashing checks or depositing cash at stores or partner banks to get it into your account.
Some people are still warming up to the idea of banking virtually but some of the best online banks offer more services and better security than ever before. Let us take a look into the advantages online banks offer over the traditional ones:
Convenience and accessibility: When you go virtual, you get 24/7 access to checking and savings services as you are making payments online. You can manage your savings accounts, move your money between sub-accounts, and access financial services from anywhere, without having to visit a branch.
Lower costs and fees: Banks that operate entirely online usually have lower overhead costs compared to traditional banks because they don't have physical branches to pay for. As a result, they sometimes offer better interest rates on savings, smaller fees and even free or low-cost transactions and account maintenance.
Enhanced technology: E-banks offer advanced technology and digital infrastructure to help make your user experience better. They often have intuitive apps and innovative features like mobile check deposit and real-time transaction tracking for your savings accounts.
Faster and easier account opening: Opening an account with a virtual bank is usually quick and straightforward. With online applications, ID verification on your phone and digital document submission, you can open savings accounts remotely and start banking within minutes. This means avoiding tons of paperwork and in-person visits with traditional banks.
Personalised digital experience: Virtual banking institutions use data analytics and customer insights to help you enjoy a more personal banking experience. You can then choose services depending on your needs, spending patterns, and money goals.
Money tools: E-banks often offer features like budgeting help, spending categories, and goal tracking. These tools help you make smarter choices about how and where you spend your money.
Money market accounts: A checking account and a money market account are both deposit accounts used by banks. However, a checking account is more for everyday transactions whereas a digital money market account makes it harder to access funds but can have higher yields.
It is designed for savers who want to earn a good interest rate on their money. But it also allows you to spend it when they need to, you might just have to wait a bit. It's a place to store savings and possibly earn higher interest compared to a regular savings account.
Most digital banks offering these accounts are FDIC-insured. This means that the Federal Deposit Insurance Corp. will cover an account up to a certain limit. FDIC insurance helps protect your funds in case the bank fails.
Your online bank account comes with a range of services that can help you as an individual or when you represent a business:
Opening your account online: When you are banking in the digital space, you have the option to choose from different types of accounts, like checking accounts and savings accounts, through their online platforms. Finally, you do not have to wait for an appointment or stand in line!
Digital transactions: Online banks help you make transactions from your phone, including moving funds between your accounts, paying bills, and setting up repeating payments for costs you have every month.
Mobile banking: E-banking comes with mobile banking apps that let you access your accounts, check balances, review your transaction history, and make payments from your smartphones or tablets. A bank's mobile app is often a good tool for managing savings and payments and are created to be easy to use.
Debit card purchases: When you have a bank account online you will still get a card and be able to buy things with your debit card. You can use these to make ATM withdrawals and pay reasonable ATM costs.
Customer support: Many digital banks now offer the option to connect with customer service representatives via chat, email, or phone, providing a personal touch when you need it.
The kind of services you get depend on your bank and what they offer but these are general benefits you can expect from most digital banks.
Most online banks do not charge you monthly fees in the same way as traditional banks. They will typically take a small commission off payments and specific services (not a monthly fee but a per-transaction fee).
Because digital banks do not have stores and cashiers as extra costs, the fees tend to be smaller. That being said, there are a few banks with physical locations that are doing away with these monthly fees too.
Online banks typically offer extra protection to help keep your money safe online. An online bank can help you prioritize the security of your information and transactions.
While the safety measures can be different depending on the bank, they generally have good structures in place to protect your data and saving or checking account. Some of these include:
Encryption helps make sure that your private information, like log-ins and transactions, is transmitted securely and that it does not get into the wrong hands.
Online banks encourage customers to set strong, unique passwords for their accounts. They may also implement measures to prevent cyber-attacks and require regular password updates.
An online bank typically employs sophisticated fraud detection systems to monitor customer accounts for any suspicious activity. They may send real-time alerts to customers when a transaction looks strange or there might be a security breach.
It is important to be careful by keeping your log-in details confidential, regularly updating passwords and avoiding sharing sensitive information through insecure channels.
You should never share your password or log-in details with friends, family or strangers, no matter what kind of banking you do.
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You can still make cash deposits online. Certain banks offer access to cash deposit networks. These networks are usually made up of retail locations, like grocery stores or pharmacies, where you can deposit cash into your virtual bank account at the counter.
Here are a few examples of the most well-known online banks from around the world:
Ally Bank is a popular virtual bank based in the United States. It offers a wide range of banking services, including a savings and checking accounts, car loans, mortgages, and investment options. It's best known for its competitive interest rates, fee transparency, and user-friendly online banking platform.
N26 is a German virtual bank that operates across Europe and the United States. It offers mobile banking solutions, including checking and savings accounts, personal loans, and investment tools. It even has a crypto wallet! N26 is best known for its sleek design, intuitive user experience, and advanced security features.
WeBank is a Chinese institution for banking online, launched by Tencent Holdings. It offers online banking services, including deposits, loans, investment products, and wealth management solutions. WeBank is one of the first fully digital banks in China and has played a key role in shaping the virtual banking landscape in the country.
With Union Bank, there aren't minimum deposit requirements. You can open an account with a zero balance. You can make cash deposits at participating stores, manage your financial accounts, and do everything else from your phone.
Discover bank is fully digital and FDIC insured to the legal maximum. With Discover, you can use your debit card as you normally would but make other transactions digitally.
TIAA bank is a digital bank that also offers investment and financial services and operates in the US. Aside from offering online services, it is also one of the most charitable banks donating millions to social causes each year.
These are just a few of the digital banks you can choose from globally.
Photo by Monstera
Most people with digital checking and savings accounts get their money into their accounts and can then use that money to pay different bills and even set up a direct deposit or a once-off payment. This is usually done via an app and sometimes these accounts are linked to mobile wallets.
One of the most well-known wallet services is PayPal. So, if you already have a PayPal account you will have a good idea of how these services work. However, most banks have their own mobile wallets or recommended providers they have a relationship with. You can use your account or your mobile wallet to make transactions online and even to transfer money.
Your digital checking and savings accounts still come with overdraft fees - but they are often up to as much as 15% less than with regular banks, helping them compete with credit unions. Before digital banks, credit unions were seen as more customer-centric than traditional banks and lenders. Now you have even more options for good deals.
ATM rebates, also known as ATM fee reimbursements, are an exciting feature offered by some digital banks. They're here to help you save money when you use ATMs that aren't part of your bank's network.
Out-of-Network ATM Fees: If you use an ATM that doesn't belong to your bank, they might charge you a fee. It's separate from any fees your bank may charge for using out-of-network ATMs.
But banks offering ATM rebates will give you back the money you paid in out-of-network fees. The amount they reimburse can vary, but some banks are generous enough to cover the full amount for unlimited ATM fee rebates.
E-banking has completely revolutionised the banking world, offering a modern and convenient alternative to traditional banks. It is time to embrace the digital era and enjoy the advantages digital banking brings. Accessibility, lower fees, personalised experiences, and greater security make it a great option for almost anyone.
So, if you're moving to a new country and looking for a quick and hassle-free way to open checking and savings accounts, digital banking could be perfect for you.
At the end of the day, the choice is yours. Embrace the digital revolution or stick with the tried-and-true. Whatever you decide, make sure it aligns with your banking needs and helps you achieve your financial goals. Happy banking!
At Rebtel, we are always working on bringing you a good user experience and plenty of ways to stay connected to home.
We want to make sure you can use our services easily and securely, which is why we are always up-to-date with the latest innovations in the ever-changing world of online banking.
We offer you the option of transferring money to bank accounts and mobile wallets in more than 140 countries that are a part of our network. And, in case you want to reach back home and share the latest news or simply catch up, we also offer international calling and Top Up services with a variety of payment options!