Considering a Digital-Only Bank?
- Written by Remar Sutton
- Category: Articles
What are digital-only banks? These are financial service providers that offer online-only or mobile-only accounts. These providers typically don't have branches. You manage your account online or through an app and access your money with a debit card.
This group of providers may also be described as neobanks or challenger banks.
This group of providers may also be described as neobanks or challenger banks. If you are thinking about a digital-only banking service, here are some facts to consider.
Digital-only bank is a term that covers a broad group of financial service providers. They include the following groups.
The provider is chartered as a financial institution with state or federal regulators. Examples include Ally, GoBank, and Simple. Funds at these providers are typically insured by the FDIC or NCUA.
The parent company is a chartered financial institution. Examples include BankMobile and Finn. Funds at these providers are typically insured by the FDIC or NCUA.
The provider is partnered with a chartered financial institution. Examples include Aspiration and Chime. These providers are not chartered but funds are insured through the partnership.
The provider is not chartered nor partnered. Funds in these accounts are not insured.
The Services Offered
The services offered vary from provider to provider. They may include some or all of the following.
A checking account or equivalent. The equivalent checking product may be a prepaid, reloadable debit card.
A savings account or savings component.
Typically, no monthly maintenance fees and fewer fees overall.
Fee-free ATM access usually or the fees are refunded.
Mobile check deposit.
Streamlined account management designed for mobile devices.
Interest bearing accounts may offer a higher interest rate than a traditional bank.
Possiblyeasier loan approval, because they use innovative ways to evaluate your credit.
Money management tools such as budgeting and money-tracking.
Ability to interface with existing accounts at your credit union or bank.
Do Your Research
If you are considering a digital-only bank, check it out thoroughly starting with these tips.
What services are you looking for? Payment tools, checking and savings account, money management tools?
How secure is your information? Who is the information shared with? What protections are in place to protect your account if you lose your debit card or mobile device, or if your account is compromised by phishing or hacker?
What customer support do they offer? Can you talk to a person either by phone or chat 24/7? Do you have to submit a written request?
Search for reviews, particularly those with lots of details.
How can you deposit cash? Not all providers provide a way to do so.
Are the ATM locations convenient for you?
Digital-only banks continue to evolve. So do traditional financial institutions. If you decide to use a digital-only bank, make it an addition to your financial toolkit.