3 Reasons Why Digital Bank Is Better Than Traditional Bank
If you have ever wondered why should you choose digital bank over the traditional bank, then please keep reading on. We will look into advantages and disadvantages that will change your mind.
With rapid innovation in a digital banking sector businesses have to consider carefully and choose one – digital bank or traditional bank. Some prefer stability of old banking style and others like to be in the trend of digitalization thus choose online bank. Here are the reasons why this change is happening:
⦁ Digital Banks are getting more and more traction due to high degree of internet and mobile app usage. The technology has evolved creating the everyday convenience of banking online via a user friendly digital banking platforms. Those platforms allow user to send and receive payments as well as track their financials and get personalized insights. The latter part is powered by artificial intelligence that are embedded into today’s digital banks.
⦁ Another reasons is that digital bank is solving the attractiveness and functionality problems at once. For example, the amount of clicks that take to open an account with a digital bank versus traditional bank is incomparable. The online bank simplifies the functionality of daily banking operations by minimizing the steps and time spent on the banking platform.
On top of that, the digital bank is offering an attractive user interface that does not scare away but actually makes using the digital bank a fun experience. In addition, they create a comfort of using the necessary services from ones bedroom.
⦁ The price of services offered by digital bank is significantly better than the ones offered by traditional bank. The most popular consumer focused online banks are selling their services for own-cost thus creating a unprecedent price competition in the banking sector. This is not going to last for ever but a digital bank will never be so expensive like a traditional bank is.
For example, traditional banks still charge fees for account maintenance or a card servicing even though they make profit out of the card schemes and investing users unused money balances to government bonds.
What Is A Typical Traditional Bank?
Traditional Banks are in the business for hundreds of years and are very well present in local regions. Their services are commonly understood 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 but they are also able to offer: loans, leases, insurance, investment products and more.
In other words, a traditional bank is an organization with local presence and full banking service portfolio. It has less technology presence but good understanding of the banking industry and lending money.
What Are The Drawbacks Of Digital Bank And Traditional Bank?
On the other hand, digital bank is a completely online service. In case a user has a problem that cannot be solved using standard customer support, it might create headaches while getting help.
On a positive note, digital players are getting banking licenses that by default offer funds insurance up to 100k euro. Even though, there are some that still doesn’t have such licenses and users funds are unprotected (but still safeguarded). Good news are that none of the online banks with EMI licenses have gone bankrupt so far.
Traditional bank’s clients need to go to branches, wait in lines and deal with loads of paper work to get sometimes even the basic services. In addition, a typical traditional bank haven’t changed its pricing model and is often too expensive in comparison to the digital bank. Traditional bank is also slow to solve client problems 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 UK. The online registration process with a digital bank is fairly simple and straight forward. It can be done without leaving the comfort of ones bedroom.
Finding a good one, might be a bit more difficult. That’s why we recommend to check out our tips on choosing the best digital bank or payments provider outhere. We also recommend to check our article on one digital bank here.
All in all, it goes down to the reputation, physical presence versus technology and convenience. It is important to understand your own goals to make the right selection between the two. If you wish to save costs on your transactions and your valuable time, the right option (my opinion) is to go with the digital bank.