The main idea of digital banking was to provide customers with a way to access and manage their bank accounts and finances through the internet. And it is excellent to avoid going to the nearest ATM to check your balance every time you plan your spending.
Thankfully, most established banking institutions have implemented internet banking to some degree. But when you still must go to an office to sign some papers for an operation, you realize that the company’s digital banking ecosystem still has a long way to go.
But again, for better or worse, we still have an option.
With the digital disruption in banking, you would think using your money as you wish is easier.
Considering that we are specialized in cryptocurrencies and usually tackle financial matters, we can tell you that is not the case. The bank is still in total control of your money.
As we all know, traditional banks are not big fans of cryptocurrencies. So, using your bank account to finance cryptocurrency transactions may result in it being frozen. But why?
Well, that can happen under the assumption that cryptocurrency is used for illegal transactions or violates the Anti Money Laundering policy. At this point, banking on Bitcoin looks like a near-impossible thing to do.
So, without further ado, let’s dig in and see what digital banking is, where it is going, and what are some digital banking solutions that can work even for customers dealing with cryptos.
What Is Digital Banking
Digital banking is a service that allows customers to use banking capabilities usually only available inside a bank branch. This includes activities like:
- Money Deposits;
- Transfers and payments;
- Checking balances;
- Opening and managing accounts;
- Applying for financial products, etc.
The earliest forms of banking were placed in antiquity in Asia and Mesopotamia, as well as in the Greek and Roman world.
Thus, you could say that bank statements were literally set in stone.
As paper began to be widely used, the banking ledgers started to move on to scrolls and books.
Until the ’50s, when ERMA and mainframes were introduced, people still had to go to the bank to fill out a card with their names. That card represented the account record and customer record.
SIDENOTE. ERMA – Electronic Recording Machine Accounting was a pioneering computer technology that automated bank bookkeeping and check processing.
But technology started to change the banking system. So, in the ’50s, banks introduced unique bank account numbers so ERMA could sort customers in the computer system. Why numbers? That’s because the early computers weren’t performant so ERMA couldn’t sort customers by their names.
Although computers got more intelligent and thoughtful, you would still have to go to the bank every time you wanted to get money out or buy something with a large amount of money.
However, ATMs and the widespread use of the internet allowed people to bank 24/7, reducing the reliance on the bank as a building. But as the world kept digitizing (and keeps digitizing), banks saw an opportunity to introduce internet banking.
“Wow, how progressive of them,” you would say. That’s not true at all. Internet banking was introduced as an overlay to the traditional banking system. It was essentially the bank statements put online. They were slow, had confusing interfaces, and still, you had to go to the bank for most operations as they required you to sign certain papers.
And with the emergence of mobile internet, mobile banking turned into the same bank statements on a smaller screen.
The world is digitizing. We want immediate responses. We want a better connection to transfer and commerce in a comprehensive way.
Mobile isn’t an extension for banks but a technology that says, “Banking can be done wherever you are, whenever you want!”. And the fact that you don’t need the bank nowadays, but its core utility was best understood by Revolut.
Nowadays, people don’t keep their money in a bank’s vault. The brand matters less. But the utility is crucial. If the bank’s servers are hacked or shut down for a week, the brand won’t matter. Customers will look for more reliable services.
Digital banking is not just an overlay of traditional banking.
Digital Banking Trends
Fundamentals of digital banking are changing. Using e-banking as an overlay for traditional banking will soon be proved a precarious strategy. Although most traditional banks implemented a mobile banking app, many are far beyond what mobile users expect.
And for every person that has ever been given in school the argument that they won’t always have a calculator in his pocket, there is a growing number of over 6 billion smartphone users around the world that always carry a whole “computer” in their pockets.
So, app-based banking behavior is a trend that will only grow. And it won’t be just about having an app but how many things you can do with it.
Improved User Experience
In many cases, the internet banking app has the same interface as the website platform. Although the mobile-first approach started to make its presence felt in most industries, internet banking apps tend to be heavily loaded with many menus and small characters.
Although online first banks seem to have seen this trend, they designed light applications that are easy to comprehend.
Use of Data and Biometrics
Making the customer feel secure while using a banking app is critical. The intention behind tokens and various verification codes is good. However, all those security processes quickly become annoying, especially when you check your bank account daily – or even more often.
One of the approaches to decrease the friction of people interacting with their accounts used by some mobile banking apps consists of signing in with the help of data and biometrics.
As smartphones keep coming out with fingerprint readers, it’s now easier than ever for app creators to implement identity validation systems based on fingerprints.
Perhaps here are the most complaints linked to the traditional banking system. If I put my money into a bank account, I want to be able to use it now and not wait hours or days.
The more you start using banking services, the more you discover what banking needs you to have. It goes from transfers to opening (or closing) accounts, money exchange, buying stocks or even taking a loan.
And there are also operations linked to security, like freezing and unfreezing a credit card or setting various limits to your account.
Utility and Security
As aforementioned, the utility of a bank becomes more relevant. In a way, you could say a bank’s brand will be built on top of how well and securely its customers can use it to achieve their goals.
Trustworthy digital banks must be able to give their clients immediate access to their holdings and provide associated financial services like exchanges and options to invest in stocks and cryptocurrencies. Banks must stop behaving like a big brother and prevent users from acting as they will.
Moreover, the worst feeling you can have is the fear of losing your money or not being able to use it because of hacking and server errors.
5 Best Online Banking Apps
Nowadays, there are quite a few online banking apps on the market. But at the end of the day, competition brings progress, and progress brings even better products and services.
So, we’ve identified some of the best online banking apps. However, the order does not reflect which one is better.
Also, if you have encountered an even better app, feel free to let us know in the comment section.
Monzo Bank Limited is a company registered in England and Wales that provides Monzo, a digital bank based on an app. It offers its customers a platform to check where and how they spend money, making managing money quick, simple, and accessible.
It offers joint accounts, flexible savings accounts, overdrafts, salary sorters, and Bills Pots, and it can be used anywhere Mastercard is accepted.
Regarding fees, you can withdraw up to £200 from ATMs, without fee, on a rolling 30-day basis. However, the fees for overdrafts are £50 a day.
As for cryptocurrency users, Monzo started working with 3DSecure in 2018 and can transfer money to exchanges like Coinbase. However, for large amounts, it can trigger AML.
Monzo is currently available in the UK and the US.
BLOCK CODE LTD is the UK-based company behind Plutus. Plutus is a crypto-friendly finance app used by thousands of users in the UK and across all Europe. It provides its customers with a UK Sort Code and Account Number or European IBAN within minutes, together with a Visa card with either fiat or converted crypto.
The Plutus Card lets you shop at over 60 million merchants worldwide and earn 3% crypto back and up to 30% cashback at selected retailers. The app is user-friendly and can be used for general endeavors like bills and transactions anywhere in the world.
However, Plutus is still to obtain a banking license, but its services are provided under the FCA guidelines.
Chime is an online-only bank from the US that serves US customers only. The company provides free Visa cards that can be used without fee at ATMs in the Money Plus or Visa Plus networks. Also, Chime doesn’t tax adding money to your account.
They directly integrate with Paxful, so their customers can instantly trade Bitcoin within the app.
- Fidor Bank
Fidor Bank is an internet-based direct bank licensed in Germany. With the Fidor account, the bank is aimed at private and business customers. The app offers various loan offers and card products, investment options in foreign currencies, or online savings bonds – all in one account.
Fidor Bank is focused on Germany but can also be used in Europe and the US.
Regarding cryptocurrencies, Fidor works with the Kraken sand Bitcoin.de exchanges, allowing customers to withdraw and deposit funds within minutes.
Revolut is linked to Mastercard and Visa cards and can be used in the UK, the EEA (European Economic Area), Switzerland, Japan, the US, Australia, and Singapore.
The app offers domestic and international payments through both SWIFT and SEPA, supports almost 150 currencies, bank transfers (even through SMS), split bills, and advanced control over your credit card (including freezing and shutting down some of its capabilities without making a single phone call to the bank).
You can access cryptocurrency and commission-free stock trading, invest in commodities, and put money in vaults. Furthermore, you can earn cryptocurrency by completing some quick and simple quizzes on the app.
Revolut offers a standard version with extensive capabilities, but also a Premium and a Metal to fit more needs.
Banking on Bitcoin – app-based banking and cryptocurrency
App-based banking offered by progressive fintech companies allows users to take power over their finances and improve the utility of the banking services. With little to no paperwork, and no need to visit an office branch, they truly bring the banking system into the digital era.
Although they still have to prove themselves to the general public, they give their clients control over accounts and allow operations that traditional banks wouldn’t allow without consulting.
More importantly, online-first banks offer new ways for tech-savvies to make transfers and access financial products that are not always available at traditional banks.
And with the growing interest in cryptocurrencies, these financial instruments started to give access and integrate more and more with cryptocurrencies and exchanges, going beyond just banking on Bitcoin.
Using traditional banking accounts to finance cryptocurrency-related transactions can result in you getting your account frozen, motivated with various Anti Money Laundry policies.
Digital banking is a service that allows customers to use banking capabilities that are historically only available physically inside a bank branch.
As the world is today, digital banking trends are storming towards improved user experience, data and biometrics, agility, utility, and security.
Revolut, Fidor Bank, Chime, Plutus, and Monzo are some of the best online banking solutions.
The evolution and advancements of app-based banking brought by progressive fintech companies will bring capabilities beyond banking on Bitcoin to the crypto world.