Why choose a digital-only bank?
23 Jul 2021
More and more of us are using digital-only banks. It’s become a major global phenomenon in recent years, with it now the norm for a growing number of people to carry out most banking activities via mobile apps and websites.
In the UK, for example, according to official stats, over a quarter of adults have an account with a digital-only bank – and this growth trend is only set to gain momentum. By the end of this year, 38% of Brits either will have or intend to have a digital-only bank, as the move to ditch physical banks altogether picks up pace.
What is a digital-only bank?
A digital-only bank, sometimes called a challenger bank, e-bank, online bank, online-only bank or virtual bank, is one that offers all its banking facilities online and/or through apps.
These banks, such as deVere Vault, have no requirement for physical branches. Their services – including transfers, bill payments and deposits - are provided using automated processes and real-time updates - offering client support through in-app chat or by phone or email.
Advocates for digital-only banks also typically provide features and benefits to their users that are especially appealing to millennials and Gen Z and the intuitive ways they save and spend.
Digital banking survey
More than half of millennials are happy to switch to, or have already switched, to a digital-only bank, according to the latest data from deVere Group.
The results from the poll, which quizzed 550+ clients born between 1980 and 1996, highlighted how 59% of those surveyed already exclusively use digital banking services, or are planning to make the switch to do so within the next year.
The respondents are clients who currently reside in North America, the UK, Asia, Africa, the Middle East, East Asia, Australasia, and Latin America.
Of the poll’s findings, Nigel Green, deVere Group CEO and founder, said: “This is more bad news for traditional banks, which seem to have been in a perpetual game of ‘catch-up’ in recent years amid evolving customer expectations, regulatory requirements and tech advances.
“The poll’s findings are a big deal for old-school banks. Why? Two reasons: first, millennials because they’re the fastest-growing cohort of clients; and second, because they are becoming the beneficiaries of the Greatest Transfer of Wealth in history.”
What are the pros of using a digital-only bank?
Due to them functioning via an app, challenger banks give clients enhanced speed, ease-of use, flexibility and control over their money.
The advantages of an online-only bank are likely to include:
- Real-time spending notifications
- On-the-go, 24/7 in-app support
- Ability to freeze/unfreeze cards
- Instant PIN changes
- Free overseas payments
- Separate savings sections
- Companion cards for friends and family
- Spending reports
- Budgeting tools
- Future spending projections
- Alliances with other financial apps –including cryptocurrency and investment platforms
In addition, if you decide to go to a digital-only bank, it’s probable that you’ll be amongst the first to have access to and benefit from the latest personal finance innovations because the banks know they need to stay ahead of the curve to attract their core market clients.
Are they safe?
The security of digital-only banks is carried out in two primary ways: first, access and authentication; and second protection given by regulatory authorities.
By their very nature, these banks are always in front when it comes to advancing developments, meaning they will often have the most hi-tech methods of in-app authentication. This could include fingerprint scans, and facial and voice recognition.
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