3 Reasons Why Digital Bank Is Better Than Traditional Bank
If you have ever wondered why you should choose a digital bank over a traditional bank, then please keep reading. We will look into advantages and disadvantages that will change your mind.
With rapid innovation in the digital banking sector, businesses have to carefully consider and choose between a digital bank or a traditional bank. Some prefer the stability of old banking styles, while others like to be in the trend of digitalisation thus choosing online banking. Here are the reasons why this change is happening:
1. Digital banks are gaining traction due to the high degree of internet and mobile app usage. The technology has evolved, creating the everyday convenience of banking online via user-friendly digital banking platforms. Those platforms allow users to send and receive payments as well as track their financials and get personalised insights. The latter part is powered by artificial intelligence that is embedded in today’s digital banks.
2. Another reason is that digital banking solves both the attractiveness and functionality problems at once. For example, the amount of clicks it takes to open an account with a digital bank versus a traditional bank is incomparable. The online bank simplifies the functionality of daily banking operations by minimising the steps and time spent on the banking platform.
On top of that, the digital bank offers an attractive user interface that does not scare users away but actually makes using the digital bank a fun experience. In addition, they create the comfort of using the necessary services from one's bedroom.
3. The price of services offered by a digital bank is significantly better than the ones offered by a traditional bank. The most popular consumer-focused online banks are selling their services at no cost, thus creating unprecedented price competition in the banking sector. This is not going to last for ever, but a digital bank will never be so expensive as a traditional bank is.
For example, traditional banks still charge fees for account maintenance or card servicing, even though they make money from card schemes and invest users unused money balances in government bonds.
What Is a Typical Traditional Bank?
Traditional banks have been in business for hundreds of years and are very well present in local regions. Their services are well known among people because of their long history. Traditional banks also offer personalised services via their branches and solve problems on the spot. Their service scope is not limited to only payments or currency exchange; they are also able to offer loans, leases, insurance, investment products, and more.
In other words, a traditional bank is an organisation with a local presence and a full banking service portfolio. It has less of a technological presence but a good understanding of the banking industry and lending money.
What Are The Drawbacks Of Digital Banks And Traditional Banks?
On the other hand, digital banking is a completely online service. In the event that a user has a problem that cannot be solved using standard customer support, getting help might cause headaches.
On a positive note, digital players are getting banking licenses that by default offer funds insurance up to 100k euro. Even so, some still do not have such licenses, and users' funds are unprotected (but still safeguarded).The good news is that no online banks with EMI licenses have gone bankrupt thus far.
Traditional bank clients need to go to branches, wait in lines, and deal with loads of paper work to get sometimes even the most basic services. In addition, a typical traditional bank hasn’t changed its pricing model and is often too expensive in comparison to the digital bank. Traditional banks are also slow to resolve customer issues or adapt to new trends.
How To Get A Digital Bank Account
You might be wondering how to get a digital bank account in Europe or the UK. The online registration process with a digital bank is fairly simple and straight-forward. It can be done without leaving the comfort of one's bedroom.
Finding a good one might be a bit more difficult. That’s why we recommend checking out our tips on choosing the best digital bank or payments provider.
Conclusion
All in all, it comes down to reputation and physical presence versus technology and convenience. It is important to understand your own goals to make the right choice between the two. If you wish to save costs on your transactions and your valuable time and nerve, reach out to us to get a list of the best digital banks in the market.
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