5 Ways Digital Banks Are Attracting Middle-Class Savers
Written by
Ashley Donohoe
Edited by
Daria Uhlig
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More than 25% of respondents to a recent GOBankingRates survey said they did all their banking online. While some use the digital tools that brick-and-mortar banks provide, others choose accounts at digital banks. Despite not having physical branches, the best online banks offer features that increasingly appeal to middle-class customers who want a convenient way to save money at little cost. Here are five ways digital banks are attracting these savers.
1. Superior Interest Rates
Digital banks tend to offer more competitive rates on their accounts than brick-and-mortar banks do. This helps digital banks attract everyday savers seeking high returns.
It’s not uncommon to find high-yield savings accounts and money market accounts paying several times the national averages reported by the Federal Deposit Insurance Corporation. Certificates of deposit through digital banks such as Marcus by Goldman Sachs can pay around three times the average rates.
2. Lower Banking Fees
Regular banks may charge a monthly maintenance fee just to have a checking, money market or savings account. If there’s a waiver, qualifying isn’t always easy when it requires a large balance.
Since their expenses are lower, online banks can appeal to budget-minded customers by not charging such fees. They may also waive other fees, such as overdraft charges, and reimburse you for some ATM charges. The fees that you might pay could still be less than what your local bank charges.
3. Convenient Account Access
While some customers feel put off by not having a bank to physically visit, digital banks often offer convenient access options to offset that drawback. For example, Ally Bank and Discover advertise very large ATM networks that customers with bank cards can use for withdrawals, while SoFi has partnered with retailers to allow customers to deposit cash into their online bank accounts, albeit for a fee.
Plus, digital banks usually provide ways to deposit checks, transfer money between people and accounts and pay bills from home. And they often have high-end security features to reduce concerns you might have about doing these transactions through an app or website.
4. Helpful Savings Features
Digital banks can attract middle-class customers who want features for saving money. Mobile apps and online banking sites can provide interactive tools for setting multiple savings goals, making budgets and automating savings transfers.
There may be additional options, such as debit card purchase round-ups and spending analysis, for savers with a linked checking account. It’s also common for online banks to provide financial education resources for savers.
5. Strong Customer Support
Since face-to-face meetings aren’t available, digital banks usually offer multiple ways for customers to get quick help with their accounts. Online chat and phone are popular live support options that may be available 24/7. Many digital banks also offer email support that is convenient for customers who don’t need help right away. Compared to driving to a local bank and waiting your turn to talk to a banker, these digital options can be more attractive.
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