5 Ways Digital Banking Improves Your Experience and Saves You Money
Written by
Heather Altamirano
Edited by
Nicholas Morine
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Banks are ditching their branches. Between bank failures and traditional brick-and-mortar closing up shops, more people are moving towards digital banking, which has gained enormous momentum in the last few years. According to Statista, “The number of digital banking users in the country is forecasted to reach almost 217 million by 2025,” and with good reason. Besides convenience, you can save money — even if traditional banks offer digital banking services, online-only banks obviously rely entirely on them.
Here’s how you can save by adopting digital banking practices.
No or Fewer Fees
With less overhead, many online-only banks don’t charge a monthly fee. Checking and savings account fees are almost always eliminated as well.
Automatic Payments
Online banking allows you to set up and schedule automatic payments for bills, so you’ll always pay on time, which means you’ll avoid late fees.
Keep Track of Your Spending More Easily
Balancing a checkbook can lead to discrepancies if you forget to log a transaction, but with digital banking, your finances are always at your fingertips. You can see all your expenses at any time, so it’s easier to manage your budget. With online banking, you can deposit a check from your phone and transfer funds between checking and savings, which saves time when compared to doing those transactions from an ATM or via a teller.
Contactless Payments Are Convenient
With digital banking, you have the option of adding your debit and credit cards to a digital wallet, which means you can easily purchase things with your smartphone. It’s a secure and contactless way to pay as long as you have your phone.
Higher Interest Rates on High-Yield Savings Accounts
The current average interest rate for saving accounts is 0.46% APY, according to the Federal Deposit Insurance Corporation. But when dealing with online-only banks, the rate is often much higher. “Online banks frequently offer APYs that are 10 times higher than these national averages — the best online-only high-yield savings accounts pay APYs above 4%. Recent research also shows that online banks increase APYs by a greater amount when the Fed hikes rates compared to their brick-and-mortar peers,” per CNET.
While traditional banks have faced a tough time as of late, don’t rule them out just yet. Banks are investing in technology, including fintech applications, real-time payments, and advanced APIs to improve customer service.
“2023 was a difficult year for bankers, and as they are now looking to come out strong in 2024, they are facing a complex environment with economic uncertainty, introduction of new payments, modernization of old payments, and customer adoption of APIs and embedded banking,” said Jim Gillespie, chief product officer of Dragonfly Financial Technologies, per PR Newswire.
“Prioritization of tech debt will be key in 2024, and the Dragonfly survey identified some near-term winners and losers as banks look to make the most of tight budgets,” he said.
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