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Digital Banks vs Normal Banks

The modernization of technology has led to the emergence of digital banks. It no longer requires an individual to visit the bank premises to transfer funds, open an account, or submit an application for a loan. Instead, digital banks have made banking services easily accessible to customers with their cloud computing technology. Let us proceed to see how digital banks differ from normal banks.

Digital banks have made the banks thrive for customer satisfaction and have given the monopolistic banks a tough run. So let us compare the two based on different criteria.

Services & Products

Banking Services-Digital banks offer different products to customers, from opening an account to transferring funds. But, often, bigger loans and larger credit facilities which require a lot of documentation compel the customers to visit the bank. On the other hand, normal banks offer every banking service ranging from cash deposit and withdrawal to sanction of different loans.

Access to Cash Transactions- Unlike normal banks, digital banks provide limited access to physical cash as they don't provide cash withdrawal facilities and often seek collaboration with other parties.

Debit Cards- Normal banks only offer physical debit cards in contrast to digital banks, which offer both physical and virtual debit cards. The virtual card stored on the digital bank account can be used for various online transactions.

Besides that, both digital and normal banks provide money transfers, credit facilities, and savings accounts facilities. However, the aforesaid services take much less time via the digital banks as it is accessible by the customer at their fingertips.

Fees

Digital banks usually have lower fees as compared to normal banks. This is because digital banks do not have physical offices like normal banks; hence they don't incur any indirect administrative costs like rent, electricity, staff welfare, etc. Thus, for example, opening and maintaining an account is free with the digital bank Revolut. Even the top-up of the Revolut card with another bank card is free.

Customer Support

Both the digital and traditional banks have 24/7 chat support to address the complaints of the customers. In addition, 24/7 email support is also available to digital bank customers, though only some traditional banks offer such facilities. 

Thus, the digital banks address all the issues in real-time, and even critical issues take only a few hours to be resolved. On the other hand, as far as traditional banks are concerned, some complex issues like wrongful debit or unauthorized transactions require the customers to visit the branch the next day to resolve.

Lower Fees- Digital banks offer services at a lower cost than traditional banks as they don't have to bear administrative expenses like rent and electricity.

Robust Technology- The digital banks have access to extensive data that helps understand the demographic behavior and provide better customer services. Further, digital banks perform various banking tasks through cloud computing which makes their services accessible in real-time.

Higher Interest on Savings- Due to their lower costs, digital banks also offer a higher interest rate for savings and deposit accounts.

Better transaction managing services- Digital banks offer various account managing services like setting the card usage limits, setting the automatic recurring payments, and even blocking the card transactions.

Money Laundering Detection- The advanced and robust technology of digital banks using complex algorithms plays an essential role in detecting money laundering activities and thus, in turn, helps the nation from tax evasion.

Provides financial aid to SMEs- Small and Medium Enterprises (SMEs) play a vital role in developing the nation's economy. Still, they tend to suffer due to no financial assistance from traditional banks. However, the emergence of digital banks has catered to the needs of such SMEs.

No Technological Issues- Traditional banks are more reliable as digital banks are occasionally prone to system glitches, which frustrate the business firms waiting to make essential payments. 

Cash Withdrawal Facilities- Traditional banks offer independent cash withdrawal facilities, unlike digital banks seeking collaboration with third parties.

Brick and mortar presence- Traditional banks, with their physical presence, offer face-to-face interaction with the customers, which helps the banks strengthen their customer relationship and build an element of trust.

Safety and security- Many consider that traditional banks are safer and more secure than digital banks as the digital banks' systems are prone to hacking attacks, putting the customers' funds in danger. Hence, customers consider traditional banks to be more trustworthy. The truth is that digital banks are just as safe as traditional ones. 

Digital banks have made life easier with their real-time services. But, often, the customers tend to wonder while selecting the digital bank. The selection of the digital bank can be made based on different parameters like fees, security, support, and products/services availability. Hence, to ensure that you choose the best one for yourself, we have built a digital bank comparison tool, which helps you compare and find the best digital bank for your needs.

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