Managing money is a reality of life for all of us, whether it’s planning for rising interest rates, retirement, or just day-to-day budgeting and smart spending. Until recently, banking options for consumers were limited. Enter technology, which has a habit of changing everything, and you’ve got online banking becoming a legitimate competitor when it comes to how consumers are managing money.
Local banks and credit unions traditionally have offered better customer service and better customer experiences over all, but often haven’t been able to match the convenient features big banks offer. As I mentioned, technology is changing every industry, but it’s changing banking and financial services in a big way. Improvements in offerings including things like mobile deposit capabilities, access to credit or loans, short-term business loans, savings and investments, combined with convenience and competitive rates mean that online banks are gaining traction.
Considering a bank switch—keep reading! We’ll walk through some of the benefits and drawbacks of online banking that will help you assess if online banking fits your needs.
Managing Money: Online Banking Benefits
Many national banks tout their apps, mobile deposits, etc. as cutting edge technology, when online banks have offered these for years. USAA was the first online bank to offer mobile check deposits—years ahead of the traditional competition. If having the flexibility to manage your money on-the-go is an important feature, online banks are built to make banking as flexible and convenient as possible.
A continual issue with big banks is the lack of competitive rates for consumers. A traditional savings account offering will have a .01% return, which doesn’t do a whole lot to offset the myriad of fees consumers are charged to maintain the account. In the end, it’s not unusual that customers lose money because of poor returns and high fees. The good news? Online banks can offer savings returns of .75 – 1%, which is much more competitive. Also, online banks often charge smaller minimum monthly fees, so meaning that you get to keep more of your hard-earned dollars.
When it comes to money management, being able to connect with an actual human to discuss account issues or questions is an essential. Big banks like Wells Fargo and Bank of America (Hh, did I name names there? Oops!) have consistently received poor ratings on their efforts at customer service. A simple way online banks have differentiated themselves is to offer easy ways to either talk via phone or chat with a representative so consumer issues can get resolved immediately.
In focusing on these three areas, ease of use, lower cost/bigger financial benefit, and adding the human touch to the banking experience, online banking is changing the game. However, while online banking has many benefits, there are downsides as well. Let’s take a look.
The Drawbacks to Online Banking
Consumers who frequently use cash and who don’t want to pay fees at ATMs might not find managing money by using an online bank convenient. However, using a credit union or local bank to manage cash and an online bank to manage savings and investments can be a powerful money management mix.
In-Person Customer Service
While the customer service for online banks is top-notch and accessible 24/7, consumers will be frustrated in those moments when they want to speak face-to-face with a person to resolve an issue. If you’re like me, that won’t be an issue. Face-to-face doesn’t matter nearly as much to me as getting my questions answered and my problems solved. How about you?
Online banks are trying to bolster their customer support services, so consumers get the instant support they need. For instance, Discover Bank offers 24/7 customer service from a live person who can walk consumers through the banking platform and app features to address questions. While consumers may not get to look a person in the eyes, online banks are working to make their support more robust so customers get real-time, personal assistance. The integration of chatbots into the online experience is likely to be changing that for the better as well.
Online banks have shaken up traditional banking and offer a lot of benefits to consumers who are tired of the shortcomings of big banks. If managing money by way of online banking might be for you, check out this list of the top banks. You might just find one that you can make beautiful … money with!