Throughout the years, digital-only banks have been opening all over the world to serve customers who prefer a digital lifestyle. These banks also provide access to those who do not have the means to go to a physical branch. The use of digital-only banks depends on each country, but the existence of it cannot be ignored any longer, especially now in the time of COVID-19.
So what exactly are digital-only banks, and how exactly will they benefit both the customer and the bank? Digital-only banks, or Neobanks, are financial institutions that offer all of their banking services online or through mobile apps. These can be accessed on mobile devices and used anytime and anywhere — all at the convenience of the customer. This type of banking does not require a brick-and-mortar branch set up as it provides end-to-end banking through digital platforms.
Both the bank and its customers will benefit from digital-only banking. On the customer’s side, they no longer have to travel to a physical bank branch just to conduct simple banking transactions. This also means the customer need not wait in line and deal with bank tellers and the paperwork.
There are also greater financial returns for the customer in digital-only banking. Lower fees and higher interest rates stem from the bank’s cut-down costs. Instead of a bank paying more to maintain a brick-and-mortar branch, they can provide their customers with greater benefits — resulting in a better banking experience.
Digital Banking in a Cash Economy
There has been a lot of debate about digital-only banks in the past couple of years. Pros and cons have been weighed, and different recommendations have been made. However, it must be recognized that people in developing countries are more hesitant to transition to digital-only banks because they rely on cash. This is why cash-in and cash-out networks are important in ensuring that customers can convert e-money into cash and cash into e-money.
These networks wherein banking customers can convert their money can range from ATM kiosks to banking agents, mom-and-pop stores to convenience stores. As long as someone or someplace is a payment partner, then the customer can cash-in or cash-out with them. The wide range of options for the customers to go to make this a superior option to full-service banks as these are hard to come by in low population areas.
These cash-in and cash-out networks are also a great access point for people who are new to digital banking. These networks are important for developing countries that are still heavily reliant on cash because they can help alleviate people’s worries about the validity of digital money by providing them an easy way to convert it to cash when needed. In a cash-reliant society, these networks go hand in hand with digital financial services.
Continuous Banking Amidst COVID-19
With the ongoing pandemic, going digital seems to be the solution to ensure banking stays safe and uninterrupted in this unprecedented time. It is not only the banking sector affected because other businesses are shifting to digital as well to continue serving their customers.
Now that almost every service is shifting to digital, digital-only banks should be given the attention it deserves because it will make banking easier and much more accessible. People still living in a cash economy could start with digital banks that have reliable cash-in and cash-out networks. For traditional banks who want to transition to digital slowly, they can offer their banking services hand in hand with digital options.
Bank-Genie provides these solutions to financial institutions looking to make the switch to digital. Be it partially or fully, Bank-Genie has a suite of innovative products to support the banking industry in the time of COVID-19.