9 min read 14.07.2021 1422
Mobile-Only Banks vs. Traditional Banks: Which is better for you?
For a long time, customers accepted traditional banks' lack of technology. However, with the development of mobile banks, traditional banks are trying to stay up and provide clients with the innovation they desire. The question is whether it will be mobile banking vs traditional banks. Or will they be able to work together to create the financial services that modern customers require?
9 min read 14.07.2021 1422
In our day and age, a large number of people do most of their banking online. This is definitely a radical change as just 5 years ago we all still had to stand in line to get any banking operation done. Now people have banking on their mobile phones, tablets, computers and can get transactions made in a matter of seconds.
Online banking has always been around however thanks to the boom in the fintech industry the number of online and mobile banking users have doubled since 2012, according to recent data. The impact of the industry is so large that many traditional banks also created a mobile and online version for their users.
However, mobile and online banking were first to provide their consumers with many online features such as same day transfers, low fees on international transfer and many more! Traditional banks were very slow in adopting the online and mobile format of banking that seemed to be taking over the financial system.
Early fintech companies such as Paypal have established themselves as not only a good way for individual transactions but also a viable way for small, medium and large businesses to receive payments for their goods and services.
Though traditional banks also provide their versions of online and mobile banking, Still, there are some big differences between traditional brick and mortar banks who offer online banking options and banks that are entirely web-based. Before we get into the differences between online banking and traditional banking. We have to explain some of the terminology: What is online banking? What is Mobile banking? Are they the same or two different things? Read on to get it all explained.
What is Online Banking?
Online banking means managing your bank accounts with a computer or mobile device. This includes transferring funds, depositing checks and paying bills electronically.
Traditional banks and credit unions with branches typically let customers access their accounts via the internet, too. But online banks and providers offer primarily mobile access. You won’t meet a banker face to face, but with a mobile device or computer, you can reach your account anytime. Here's a closer look at online banks.
How Online Banking Works
Online banking is designed to be convenient, saving you time and letting you do banking on your own schedule rather than only during the hours your local bank branch is open. Almost anything you can do at a traditional bank or credit union location you can accomplish online, starting with opening an account.
You can open checking, savings, and other types of accounts online, often without the hassle of printing or physically signing anything. With electronic signature capability, the entire process might now take less than 10 minutes.
If you're a customer of a financial institution that offers online banking, you can register for online access through that institution's website. At a minimum, you'll usually need the following items to get started online.
Personal information, such as your birth date, is used to authenticate your identity.
To create an account with an online-only bank or credit union with which you do not already have a relationship, you will need the same information, with the exception of the bank account number. Additional ID verification, such as a driver's license, may be required.
Registration entails creating a log-in (often your email address) and password. After completing registration, you will be able to log in to your account and begin banking online using simply your internet-enabled device.
Instead of writing checks to pay bills, your bank can print and mail them for you on a monthly basis. However, for more convenience, you can send money to a payee online, even if the amount you owe varies every month.
If you need to transfer funds from your checking account to your savings account , you can do it online. You may even link your accounts at various banks or send money to friends and family virtually quickly using your bank's person-to-person services.
Applying for Loans
Obtaining a loan is typically a time-consuming and paper-intensive procedure, but it does not have to be. Filling out your application online expedites the credit-check process, allowing your bank or credit union to react more promptly. Some financial institutions with online loan applications make cash available the same day you are accepted for a loan. Other lenders that operate solely online can make lending judgments in less than a second.
When someone pays you with a check, it's easy to deposit the check from home if you have a smartphone. Using a mobile check deposit, you snap a photo of the check through the mobile app of your bank and submit it for payment. There’s no need to mail the check.
Viewing Current and Past Transactions
Most credit unions and banks make it simple to check your available balance, confirm that your most recent transactions were successful, and examine prior monthly statements online. You should be able to search for transactions based on their time range and kind, such as a bank card payment.
Another significant advantage of internet banking is the option to set up notifications. When your bank detects potentially fraudulent activity or your balance falls below a specific threshold, you can be notified by text or email. You can be alerted when deposited funds become accessible or when a check clears.
These notifications are useful for information, but they can also help you immediately halt illegal activity. For example, if you are alerted of a password change and you did not make that change, you may call your bank immediately and urge them to block the culprit from emptying your account.
What Is Mobile Banking?
Mobile banking is the act of making financial transactions on a mobile device (cell phone, tablet, etc.). This activity can be as simple as a bank sending fraud or usage activity to a client’s cell phone or as complex as a client paying bills or sending money abroad. Advantages to mobile banking include the ability to bank anywhere and at any time. Disadvantages include security concerns and a limited range of capabilities when compared to banking in person or on a computer.
Best Mobile banks of 2021
Understanding Mobile Banking
Mobile banking is very convenient in today’s digital age with many banks offering impressive apps. The ability to deposit a check, to pay for merchandise, to transfer money to a friend or to find an ATM instantly are reasons why people choose to use mobile banking. However, establishing a secure connection before logging into a mobile banking app is important or else a client might risk personal information being compromised.
Mobile banking allows consumers to be able to access banking services from anywhere. Businesses and business owners are now able to save time by making use of mobile applications to process their payments or even receive funds from clients directly to their phone numbers. It is particularly popular among small to medium-sized enterprises (SMEs).
With mobile technology, banks are able to cut down on operational costs while still maintaining client satisfaction. The fact that any client of a bank can make use of their app to request a service, such as opening an account or even the ability to schedule debit orders or other payments from an application, allows for larger transactional volumes, eventually driving business growth.
Types of Mobile Banking Services
Mobile banking services can be categorized into the following
Account information access
Account information access allows clients to view their account balances and statements by requesting a mini account statement, review transactional and account history, keep track of their term deposits, review and view loan or card statements, access investment statements (equity or mutual funds), and for some institutions, management of insurance policies.
Transactional services enable clients to transfer funds to accounts at the same institution or other institutions, perform self-account transfers, pay third parties (such as bill payments), and make purchases in collaboration with other applications or prepaid service providers.
Investment management services enable clients to manage their portfolios or get a real-time view of their investment portfolios (term-deposits, etc.)
Support services enable clients to check on the status of their requests for loan or credit facilities, follow up on their card requests, and locate ATMs.
Advantages of mobile banking
Ask anyone, and they'll tell you how much they despise going to the bank to do something as simple as sending money to someone. Going to the bank isn't the issue here; it's the fact that it takes time to get there, then you have to wait in line.
Busy schedules and a hectic lifestyle may not always allow for this. And the last thing you want to do in the midst of a COVID-19 epidemic is stand in line. As a result, more and more individuals are realizing the benefits of mobile banking.
Here are some of the greatest benefits of mobile banking you should know:
- Easy to use
- Accessibility i.e., ability to access your account on a mobile device whenever you want/need
- Saves time
- Higher security
Downsides of Mobile Banks
Deposits Can Be a Hassle
Adding money to your account without a physical location might be difficult. Depending on the bank, you may be able to mail deposits, wire transfers, or make deposits using your card. It appears straightforward enough, but if you prefer to deposit your check in person, internet banking may not be the ideal option.
Online banks build their websites to make navigating as simple as possible for their clients, but if you're not used to virtual banking, it may take some time to acclimate. If your bank decides to change or revamp their website, you may find yourself starting again the next time you log in.
Online banking has some distinct advantages over traditional banking, but it all boils down to your level of familiarity with the process. If you know your way around a computer and don't mind not being able to visit your local branch, it's time to make the move.
Mobile Bank vs Online Banks — What's the difference?
The use of a smartphone or tablet instead of a desktop computer to execute financial transactions, check balances, and access other services is referred to as mobile banking.
On the other hand, online banking refers to any banking transaction that may be completed via the internet. This is usually done using a desktop or laptop computer on the bank's official website under a private account.
Although they are not the same, internet and mobile banking allow you to access your account and utilize numerous services without having to visit the bank.
Another distinction between online and mobile banking is functionality. An internet connection is required to utilize online banking. Mobile banking does not necessarily necessitate an internet connection, since many banks allow customers to access certain services through text messaging.
Mobile banks vs Traditional banks
In our time, we can see that many traditional banks provide a mobile app but when we say mobile banks we are talking about mobile only banks with no physical locations. So, which is better you might ask? Well that's a difficult question to answer as it heavily depends on what your needs are.
So with that in mind let's look at some of the differences between mobile banks and traditional banks. If you are looking for a one stop shop for the best mobile banks and their reviews check AskWallet.io
One of the biggest arguments for choosing a mobile bank over a traditional one is convenience. Take N26 for example, which has become a popular mobile bank for EU residents and citizens of the EEA. N26 provides its users with all the functions of a traditional bank all at the tip of their fingers and skip the hassle of waiting in line at a bank. With mobile banks like N26, users can get a virtual or physical card, there are no monthly fees and mid-market currency exchange rates.
Being able to have your bank in your pocket at any time is definitely a luxury that we have all come to expect from mobile banks. Another thing that makes mobile banks convenient is their person-2-person transactions. Imagine you are at a bar or dinner with friends, the bill comes and you all have to get each other's details to pay each other back. With mobile banks this process is made easier and quicker with services like cash app, paypal and venmo.
Every financial institution is regulated in some way or another to make it safe for people to use. But fintech is generally more lenient and flexible and banks are stricter.
Mobile banks don’t have one particular regulator. This is one reason why so many fintech startups have appeared. Without strict regulation, these companies can make changes to their business and do what they want without strict guidelines. While this makes it easier for fintech startups to work faster and adapt to their users’ needs, some consider it a risky industry. Depending on the country, authorities do regulate fintech businesses. And some companies choose to be more regulated or compliant, so their customers feel safer.
Banks are regulated by national or central banks in their country of origin. The regulating bodies require banks to adhere to legal requirements, restrictions, and guidelines that are put in place to safeguard their people’s money. Banking regulations are used to ensure transparency between financial institutions and their customers.
Setting up an account
To open an account with one of the major high-street banks, you may need to schedule an appointment. You may also apply online by filling out a form. You will also need to supply verification, such as proof of address and your passport.
To open an account with a mobile-only bank, you'll nearly always need to download the company's smartphone app. You will usually be asked to prove your identification, which will entail producing your passport or driving license, as well as evidence of address. This makes opening an account with mobile banks a quicker and more streamlined process. You can apply from anywhere in the world as long as you have a mobile connection. However, with some mobile banks the verification process might take a while but usually it takes 1-2 business days.
Our world is more connected than it has ever been. Many of us have family and friends scattered all around the world. Sending money abroad should be a headache when the only option was traditional banking options. With traditional banking, you would have to wait in line, pay exuberant fees and do not forget about the exchange rates.
However, with mobile banks making international transfers has been made accessible to anyone. With quick transfer, low fees and mid-market exchange rates, users can send money to any corner of the world. Many mobile banks support international transfers to many countries however some countries do not have support. There are not a lot of countries that are not supported by mobile banks. But in such a case, traditional banks might be the only way you can get money to those countries.
One of the biggest downsides of traditional banking is all the different types of ways the banks charge you. At traditional banks there is a fee for almost every transaction and they are significantly high. However, mobile banks provide the lowest fees you can find at any financial institution. Whether it is international transfers, monthly service fees, card fees, mobile banks either have no fees or very low fees. That's one of the reasons why mobile banks and the fintech industry have gained popularity in recent years.
One of the most significant benefits of internet banking is a small increase in interest rates on both checking and savings accounts. While most traditional banks now provide rates ranging from 0.10 percent to 0.50 percent, you may discover online checking and savings accounts with somewhat higher rates ranging from 0.9 percent to 1%. While it may not appear to be much, the rates provided by some of the best savings accounts may add up over time, especially if you have a large amount of money in your account.
While fintech is riskier, the rewards far exceed the dangers. The industry is regarded as risky because of the flexible nature of fintech laws. However, people continue to use it because it provides a quicker, less costly, more inventive, and user-friendly experience. As well as other services not available at regular banks.
Stricter restrictions, of course, result in lesser risk, making conventional banks the safer alternative. However, leveraging financial technology is critical if you want to stay competitive, reach more people, and deliver a better customer experience. Just make sure you're utilizing a well-known and, if required, compatible software or service. For example, to guarantee that both merchant and customer data is securely handled in credit card transactions, our payment gateway must be PCI DSS certified.
Banking online is easier than ever at an age when nearly everyone has access to the Internet, even when on the go. You may now access your account at any time, making money management a breeze, which is especially useful if you own a business.
The new generation of fintech businesses has made it simpler to connect and manage your financial life on additional platforms, such as mobile devices and custom-built applications, allowing you to communicate with clients around the clock. Nowadays, internet banking is more than just monitoring your balance and paying bills; you may also receive payments from clients. And, thanks to Open Banking, you can do it all while maintaining your regular bank account.