Thursday 5th Dec 2019
There’s an app for everything these days, and banking is certainly no different. But while it’s no surprise that the major banks have launched digital services to make life easier, there are an increasing number of new banks that are built entirely around their app and digital offering. But are these digital banks better than traditional ones? And are they more business or consumer focused?
It’s easy to see why banks are moving further into the digital space. Demand for physical outlets is dropping rapidly, as people conduct their financial life online. Banks like TSB are dramatically reducing the number of branches that they operate, simply because they’re discovering that consumers want something else.
The clearest benefit of digital banks is the convenience of being able to do everything from a smartphone. Where once you might have had to go into branch to set something up, there’s now the ability to instantly do what you need, whenever and wherever you are. This goes for businesses that need to pay a bill, to consumers that like to keep track of their spending.
And the digital banks are often amongst the best when it comes to really committing to the digital approach, with excellent apps that offer features not always found elsewhere. Real-time updates when money goes in and comes out of the account, and in-depth analysis into spending trends are just some of the major benefits they bring. 21st century businesses and individuals would certainly be wise to investigate the offering.
So what’s missing from the digital offering?
While digital banks are certainly bringing a huge amount to the table - both new and existing - they don’t all offer everything. This means that one single digital bank might not give you everything you might normally expect. Overdrafts for example are hugely useful for businesses that need to maintain cash flow, and they can be lifesavers for consumers too. But not all digital banks offer them, which might mean that businesses need to use additional facilities from other banking and finance providers. An invoice finance facility for example could get round this.
For individuals, digital banks are often a great use for the everyday, but few of them offer mortgages and large loans, which means that again, multiple finance providers will need to be used. And there’s also the fact that sometimes we feel that we just need to speak to a person - this isn’t always as easy with a digital bank as it is a traditional one with giant call centre's and branches.
So, as with most financial products, digital banking with digital banks is not a one-size-fits-all solution. Many individuals and businesses will find them to be hugely beneficial for keeping up with the modern world, while others will feel they aren’t quite comprehensive enough yet. It’s all about individual or business circumstances, which is why thorough research - and potentially input from a financial adviser - is always recommended.