Digital-only Banks: Creating a Niche in the Banking Sector

Posted by Krati Dubey on / October 14, 2019
Digital-only Banks: Creating a Niche in the Banking Sector

On hearing the word ‘bank’, the picture that usually materializes in our minds is that of a branch, a long queue and lots of paper work. While most banks have taken the digital approach already, they are not quite ready to wholeheartedly let go of the physical aspect. Dedicated applications are increasingly becoming the norm across banks which allow customers to make transactions, check their account balances, and give standing instructions among other things, but they have their limitations.

Digital-only banks, aka branchless banks, are customer-centric institutions that are nothing but virtual counterparts of the traditional high street banks. These banks bring all their services to your fingertips, literally, by making them available on your phones or tablets. They make use of automated processes to provide services and offer real-time updates, allowing customers to stay on top of their transactions. Digital-only banks also provide customer support to the clients using in-app chat, doing away with all the hassles of standing in a queue at the bank during designated hours.

What sets digital-only banks apart from traditional banks?

Traditional banks have their advantages, but the millennial generation is placing more importance in a bank’s capabilities to offer digital services. A digital-only or a branchless bank is essentially a full-fledged bank that operates digitally, making it a tad more convenient for people who expect instant banking services at all times of the day, from anywhere in the world. Some of the major differences between the two types of bank systems are elaborated below.

  • No Geographical Constraints

The most important aspect of going digital is the freedom from being tied to a physical bank branch. A lot of traditional banks stress on the need to visit the branch to carry out multiple operations, despite having a dedicated application, a web portal and a customer care network. Not only is the procedure time-consuming, but it also doesn’t agree with the thought process of millennials who believe in getting things done from their smartphones.

  • Lower Charges

The prospect of digital-only banks is quite lucrative, considering they are devoid of an expensive branch system. They are also unencumbered by a legacy IT infrastructure that is an inevitable part of traditional banks. Besides reducing the operating costs of the banks, these advantages also improve the operating efficiency leading to competitive pricing. The lower costs of operations tend to be passed on to the customers in the form of lower charges and subsequently, higher interest rates.

  • Convenient for Cryptocurrency

Digital-only banks are more in sync with the latest technologies, making them well-equipped to handle upcoming innovations. Their advanced IT infrastructure is more inclined towards supporting cryptocurrencies and facilitate their exchange.

  • Bill Payments Made Simpler

Digital-only banks are a step ahead of traditional banks when it comes to simplifying bill payments. Photo bill payment is a feature offered by digital-only banks to its customers, allowing end users to pay their bills by simply uploading a picture of their bills on dedicated applications. This highly convenient method of bill payment also offers real-time notifications.

  • Higher Accessibility

Considering the major USP of digital-only banks is their ability to become an alternative to branch-based banking, they are inclined to be more accessible. They offer flexible services like in-app chat, on-call support as well as customer self-services, making them accessible at all times of the day, unlike their traditional counterparts which offer grievance redressal at specific hours at their branches.

  • Advanced Financial Management

Digital-only banks are making the most of newer techniques to make finances simple for millennials. They offer features like hashtagging expenses, quick balance check and real-time data analytics on the application to ensure better tracking as well as management of everyday expenses.

Unique services offered by Digital-only banks

Digital-only banks have already cropped up in multiple regions around the world and are offering a variety of features to facilitate online transactions and payments. Some of their unique services are especially designed to appeal to millennials. These services include:

  • Account opening through mobile phones
  • Next-gen core banking
  • Mobile cheque deposit
  • eWallet
  • P2P mobile payments
  • Real-time alerts
  • Daily balance updates
  • Mobile investments
  • Online cheque book
  • PFM tools and saving goals
  • Budgeting tools
  • Multi-currency support
  • Biometric security

The digital-only banks are gradually getting a foothold around the world due to their advanced transaction techniques and forward-looking features that also have the capability to drive financial inclusion. A highly secured and cutting-edge digital financial ecosystem is a pre-requisite for setting up a digital bank and Panamax’s MobiFin fulfils these requirements. The true microservice architecture based digital financial solution offers support to a range of financial services including Mobile Wallet, international remittance, top-up & bill payment, microfinance, agency banking, internet banking and much more.

Krati Dubey

Krati Dubey

Krati is a content creator at Panamax Inc and has over 6 years of experience in the digital domain. She holds a degree in Journalism and enjoys writing about everything tech. Krati can be found binge-watching TV shows, reading chick-lit novels and running after her toddler over the weekends.