Fund management designed specifically for your smartphone.
Digital banks provide 100% of their products and services electronically. With no brick-and-mortar spots in sight, you can track spending and pay bills from anywhere. But if you prefer in-person support or banking at a branch, they won’t be right for you.
What are the benefits of a digital bank app?
There are several perks of using a digital bank. Among them:
- They understand your habits. Digital banking apps have spending analysis features that evaluate where your cash is going. Look for automatic spending categorization, notifications, alerts and monthly reports.
- You can sync them with your budget. Use the spending analysis to set up budgets and track progress. The app may allow you to set goals and spend limits to make veering off course more difficult.
- Traveling can be more convenient. Streamline your next vacation by holding multiple currencies at once, skipping international ATM or foreign currency fees and locking or unlocking your card if it gets lost or stolen.
- You can set up automated savings. Some digital banks prioritize stashing cash away. For instance, rounding transactions to the nearest dollar and sending the difference to your savings account.
What are the drawbacks of a digital bank app?
Digital bank apps won’t suit everyone’s tastes. Before opening an account, consider these potential pitfalls:
- No in-person help. If you’re looking to navigate a complex financial plan with the aid of a professional, you might want to stick with a more traditional setup.
- Smaller product offerings. While industry giants also offer loans, mortgages and investment accounts, digital banks tend to specialize in checking and savings.
- Compatibility may be limited. Make sure your smartphone can handle whichever digital bank you choose — not all operating systems may be supported.
- Reliance on Wi-Fi. Technical difficulties could derail your ability to access and manage personal finances, which might present too big a risk for some.
Compare digital bank apps
Digital bank apps vs transaction accounts
Not sure whether a digital bank app or a checking account is better for your financial needs? Compare both side-by-side to make the best choice.
|Feature||Digital bank apps||Transaction accounts|
|Fees||Typically low fee||Varies|
|Spending categorization and analysis||Yes||Some banks offer this|
|Payment splitting||Typically yes||Some banks offer this|
|Bill detection and automation||Typically yes||Some banks offer this|
|Automated savings||Some offer this||Some banks offer this|
|No fees for traveling||Typically yes||Some banks offer this|
|Other products||Typically no, but some do or will do so in future||Yes|
|Payment options||Generally a wide range of options||Generally a wide range of options|
|Internet banking on desktop||No||Yes|
Prepaid cards vs debit cards
When comparing your digital bank options, you may notice that some offer a prepaid card optin. Weigh the capabilities of each evenly before committing:
|Prepaid cards||Debit cards|
How do I sign up for a digital bank app?
The sign-up process varies between providers, but start by downloading the provider’s app to your smartphone. Then, verify your identity by providing an ID such as your driver’s license or passport.
You will also need to send personal details such as name, address and contact information. Some apps will send you a physical card, while others allow you to start spending instantly with a virtual debit card.
For the electronically savvy, banking apps can make managing funds quick and convenient. But if you prefer in-person support and banking at branch locations, compare other checking accounts to find the right match.