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With a slew of new digital banking services popping up every month, we thought we’d dig into this new trend and answer your frequently asked questions.
Monzo. Starling. Revolut… The list of digital banking services seems to be growing longer by the day.
But what exactly are digital banking services? And how are they different from a normal bank? Should you switch to digital banking services?
And, most importantly, why do they all have such funny names?
We thought we’d sit down and give you the skinny on the latest exciting development in the world of personal finance and banking.
First things first, what on earth are digital banking services?
Put simply, a digital bank is a bank that allows you to do everything — send money, open an account, save money or (in some cases) budget — through an app on your phone or a website. You don’t need to visit a physical bank or fill out any paperwork the old-fashioned way.
But digital banking is also a lot more than just a slick app; it’s a completely new approach to banking that’s considered a direct challenge to the “old way” that high-street banks do things.
Which leads us onto the next question…
How are digital banks different from a normal bank?
Digital banking services aren’t radically different from traditional banks — they still help you manage your money, at the end of the day — but they are a much more modern approach. While old banks still operate with the systems and attitudes of the 20th Century, digital banks are thoroughly 21st Century.
While old banks are reliant on old systems that are slow and expensive to maintain, digital banks are built on newer systems that are faster and cheaper to run, allowing them to charge less in fees and penalties.
And while traditional banking has out-dated processes and approaches to customer service, digital banks seem to trend towards putting the customer first.
For example, most traditional banks require you to head to a branch or listen to dreadful hold music for 20 minutes before speaking to somebody. Instead, digital banks use technology (like 24/7 in-app chat functions) to allow you to speak to somebody immediately.
They also have a tonne of other features like instant spending updates (push notifications on your phone), features to help you budget and sign-up processes that take 10 minutes from your phone instead of paperwork, phone calls and head-scratching.
What do the different digital banking services offer?
Each of the different digital banks offers different features, so rather than listing them all for you in a boring paragraph, we thought we’d show you this fantastic graphic from the team at MoneySupermarket:
(Note: at the time of writing, Monzo’s pot feature — the in-app way to save money for things like holidays, etc… — was back online!)
As you can see, most of the digital banks offer things like:
- Real-time spending notifications
- 24/7 in-app support
- Ability to freeze/unfreeze cards
- Free payments abroad
In other words, these digital banks do all that normal banks do and then some. If you travel, things like free payments abroad is great and those in-app pots are fantastic for helping you budget too.
Imagine being able to tuck money away into different pots for bills, rent, food shopping and going out at the beginning of the month and to see — at a glance — how much you’ve got left in each pot. If you’re somebody who loves to budget, struggles to budget or practices a daily money minute, this feature could be a game-changer!
So, should you switch to digital banking services?
Of course, that decision is completely up to you.
Some people like the comfort and familiarity of using a high-street bank that has traditional branches and a long history. Plus, lots of these banks are adopting the features of brands like Monzo and offering them to their customers (although, admittedly, without the same level of support or flexibility) so there’s less of an incentive to switch.
On the other hand, digital banking feels like the future. These brands are addressing and getting rid of all the things about banking you hate. Things like lack of transparency, unexpected fees, unnecessarily complex application processes, poor customer support… are all becoming a thing of the past because of these brands.
So, if you want to see what the fuss is all about, why not do a bit more digging into digital banks today and see if its something that suits you?
Hold on, we forgot to answer something: why do they all have such weird names?
We really don’t know. Because they sound cool and trendy, probably. All we really know is none of them has a mascot half as adorable as Boo the Panda… 😉
- Author The Bamboo Team
- Posted 25 November 2019