Mobile Banks VS. Traditional Banks
What Is Mobile Banking And How Is It Different From Traditional Banking?
Online Banks, Mobile Banks, Challenger Banks — all those are different names for the same concept and it is the single hottest world trend in banking and finance in 2019.
Don’t confuse it for online or mobile access to your regular bank account though: what we are looking at now are mobile ONLY banks which have their own features and bonuses. The registration, sign-up, opening an account, followed by the day-to-day money, card, and account management is made through your smartphone app: fast, paperless, and available 24/7.
So what is online banking anyway?
Mobile banking means that customers get to have all the usual features, safety, regulation and service of a regular bank, but in a modern, lightweight, and handy digital mobile app, or a website link. You open an account, receive salary, pay for products and services, collect cash from ATMs, transfer money, save for your goal — all that with no branches, no queues, no stacks of paper to open an account, no “closed” signs.
Too good to be true? Well, there are always advantages and disadvantages to anything, so let us break it down and compare mobile banks vs traditional old-school banks.
What are the main advantages of Mobile Banks Vs Traditional Banks?
1. Quick set-up/ fast approval
No lengthy paper contracts signing, no extensive security checks, and a much quicker onboarding, so the account registration, authorization, and funding are all remote and instant and made from within the mobile app or a website page.
Sometimes there are some really unique features: for example with Monese account you wouldn’t even need any proof of address or local credit history to open an account, the stuff almost any other bank (offline or mobile) requires.
To learn more, read our full Monese Review.
All procedure is reduced to minutes, rather than days and consists of a few simple steps:
- Download a mobile app
- Register an account and prove your identity. (Usually upload a photograph of the national ID and a selfie, all through the app, no paperwork involved).
- If everything is good, your application will be approved in no time and your new bank debit card will be sent to your address by mail. It usually takes a week or two, depending on your location, to be delivered right to you.
That is all. No minimum deposit is required for registration.
2. Lower fees
Having a fully online business model means operating at a much lower cost than classic “brick and mortar” banks. Not having the physical branches saves a lot of money for the company and they manage to pass on those savings onto their customers by offering much more profitable rates and lower fees.
Paper statement fees, card issue fee, account maintenance fees, teller fees, minimum balance fees and so on — all those are pretty common for a classic old-school bank, but you can forget about them in a mobile bank.
For example, N26 mobile bank account comes with a free MasterCard, allowing you up to 5 free local ATM withdrawals, and a €2 withdrawal fee after that, with just a 1.7% withdrawal fee in foreign ATMs and foreign currencies.
To learn more, read our full N26 Review.
An average European high street bank still charges about 3-3.5% for the same operation and doesn’t offer any free withdrawals whatsoever.
There are also no processing fees for using the N26 debit card to make purchases in foreign currencies, again unlike the old school banks. And this list can go on and on.
3. Control & Efficiency with Real-Time Banking
Another bonus is most Online Banks are available 24/7 and you can forget about “business hours”.
With mobile banks, you finally get to have full unlimited control over your finances:
- Instant alerts and push notifications will help you monitor all your transactions and keep you up-to-date
- In-app card lock/unlock will give you extra protection and peace of mind in case anything goes wrong
- Saving sub-accounts will help you reach your targets faster
- Instant transfers to fellow app users or even people from your phonebook will let you call it square with your friends or colleagues after a shared lunch or taxi ride
4. Borderless Banking
Most online banks will provide you with a truly international debit card, erasing the borders.
- Free (up to some limit) ATM withdrawals worldwide or a small fixed fee at any ATM — no more looking for a specific bank or an exchange booth.
- Quick International transfers, significantly cheaper than those of the classic banks.
- Some mobile banks, like N26, will even include travel insurance in the package, making it a great solution for mobile life.
- Monese is one of the best mobile banks for travelers. Once opened, your bank account will follow you to any of the 20 supported countries, perfectly fitting the “digital nomad” way of life.
Top mobile banks don’t try to be good at everything. Instead, they engage trusted experts in different areas to offer an efficient and sensible solution. For example, being a relatively new service itself, N26 online bank managed to arrange partnerships with the best Fintech companies such as Clark and Allianz (Insurance), Auxmoney (credit), Raisin (savings), and TransferWise (foreign exchange), in order to offer the customers the optimal service in every way possible.
What are the disadvantages of a mobile bank vs traditional banks?
1. Limited services / Account types
Many online banks focus on millennials as their target audience and day-to-day needs as their core product. For many of those guys, their online current account is their first-ever and the only one bank account. They don’t need deposits, loans, savings, and many other complex financial instruments. Which means, that at the beginning, those online banks products were very minimalistic and limited. Another limitation is that a bank card you will be getting with such account is a Debit, rather than a Credit card, so no Overdraft is available.
However, with the growing trust more and more people are considering moving their banking to online completely, so the features & products are growing along.
2. Sometimes you just need to talk to someone
Some people just prefer having someone they can speak to face-to-face, others have more significant banking needs that require ongoing support from a physical banker.
While nearly all mobile banks have phone lines & online chats, in cases like the above-mentioned, a traditional bank may better serve those customer’s needs.
3. Safety concerns
Is it safe to use a mobile bank for everyday banking? Many people just have a hard time believing they can rely on a company with no offices, but that’s a myth.
In reality though, despite operating fully online, most of the players in this niche are fully licensed and authorized as banks or financial institutions, meaning they meet the same requirements and fulfill the same highest standards as classic banks. Including the mandatory funds’ insurance. Always make sure the service is authorized and regulated. Top10MobileBanks only reviews and recommends regulated mobile banks to ensure your funds are secure.
However scary and remarkable it may look for many, the fact is this: the days of stately, massive, pillared buildings with the “BANK” signs, that used to symbolize security and prosperity, are far gone.
The major “high street” banks also understand and admit that, and pouring billions in developing their own digital solutions, trying to catch up with the disruptors. The point they are missing is that the main reason online banks are able to offer much better prices — is they are spending less, keeping the operations frugal and efficient. Thus, you can save money with a mobile bank and use it in a better way.
Although the two banking worlds will definitely coexist for years to come, we think it is the time for everyone to consider opening an account in one of the online banks, and explore what they have to offer.
That’s why our Fintech experts have created the best mobile banks comparison table to help you make your choice.
Compare the best mobile banks and find the best bank for you.