As more and more online-only, or digital, banks pop up, you may be wondering what digital banks are and how they differ from traditional brick-and-mortar financial institutions. Keep reading to learn more about digital banks, digital banking, and the important distinctions between traditional and digital banks.
What are Digital Banks?
Digital banks are a type of financial technology (fintech) entity. They offer many of the same banking services as a traditional bank, but the main difference is that digital banks don’t have physical branches. All transactions, from opening an account to transferring money, paying bills, and more are done online or in the mobile app.
Because digital banks have lower overhead costs, they are able to offer competitive rates and fees. Many “digital natives,” such as today’s college students, are drawn to online banks because they are already used to doing everything on the Internet. However, if you want or need face-to-face service, you won’t get that with a digital bank.
Digital banks may also appeal to people who travel frequently and are comfortable with managing online bank accounts without much assistance. If your banking needs are fairly simple, such as a basic checking or savings account, you may be fine without in-person or human assistance.
What is Digital Banking?
While digital banks are a specific type of financial institution, digital banking services are a suite of banking products and services offered by all types of financial institutions, including traditional banks with physical branch locations. There are two ways to access digital banking:
Originally called “internet banking,” this service has been around since the mid-1990s. To use online banking, all you have to do is enroll and create a login. You can access your bank’s online banking platform from the bank website.
From your online banking dashboard, you can complete a variety of transactions such as:
- Transfer funds between checking and savings accounts
- Check the balance on your deposit and loan accounts
- Review recent account transactions
- Access online statements and check images
- Schedule a one-time or recurring bill payment
While online banking is usually accessed from a desktop or laptop computer, mobile banking is available through an app on your iPad, iPhone and Android devices. Mobile banking offers the same features as online banking, but you can do your mobile banking from anywhere you have an Internet connection. One feature that is unique to mobile banking is remote check deposit. Easily deposit any paper checks you receive in a matter of minutes using your mobile banking app and the camera on your device.
As you can see, digital banking from a traditional bank offers “the best of both worlds” in which you can access your bank accounts and perform transactions from your computer or mobile device. And when you want to speak to a person, you can call customer service or visit your nearest branch location. Moody Bank is proud to be among the banks in Texas with mobile banking.
8 Differences Between Digital Banks and Traditional Banks
While there is some overlap between digital and traditional banks, there are also important differences. Compare the following:
- Account Opening: Digital banks have a 100% online process for account opening and loan applications. Some traditional banks also offer full or partial online account openings and loan applications.
- Ease of access: Digital bank customers can access services and make transactions 24/7 with no need to worry about operating hours. However, traditional banks also offer mobile and online banking services which perform the same functions you’d need to access outside of normal banking hours such as mobile deposit, transactions, etc.
- ATM Network: A traditional bank’s ATMs are easy to identify because they are branded with the bank’s name and logo. You can get cash from your local branch as well as ATMs. Digital banks are usually part of an ATM network, too, but it may be harder to find a free ATM to use.
- Cost: Digital banks compete by offering accounts with no or low fees, as well as by offering higher-than-average rates on savings accounts. Moody Bank also has four checking account options with no minimum balance requirement or monthly service charge. Interest rates have been rising lately, so you can also expect a higher return on your savings with both a traditional or digital bank.
- Security: Both digital and traditional banks have high standards for security. From debit and credit card technology to cybersecurity, you can expect that whichever bank you choose will use cutting-edge security measures to protect your information. You also want to be sure that the bank you choose is protected by the FDIC, which provides up to $250,000 in insurance on deposit accounts.
- Customer Service – With digital banks, you have to rely on customer service help-lines or chat bots that may not be as responsive or helpful as speaking with a real person at a physical bank branch.
- Selection of Products and Investment Opportunities: Traditional banks typically offer a wider range of banking products to choose from than digital banks do. If you’re looking for more than a checking or savings account, it can be easier to get exactly what you need with a traditional bank. Most digital banks offer little to no investment or wealth management types of services, so a traditional bank would be your best option if you’re seeking those services.
- Specialty Services: Traditional banks offer specialty services that most digital banks do not such as safe deposit boxes, wire transfers, or fraud and identity protection.
- Efficiency: With remote check deposit and electronic funds transfer, you can expect about the same processing time for transactions regardless of whether you choose a traditional or digital bank.
Open a Personal Checking Account or Savings Account Today with Moody Bank!
If you’re looking for a new checking or savings account from banks with online banking in Texas, we have several great options to meet a variety of needs. Browse our personal checking and savings accounts and choose the one that is right for you. Need help deciding? Contact us or visit one of our Banking Center locations in Austin, Galveston, or Houston, Texas. Already have a bank account with us? Register for online and mobile banking!