Digital Bank

[nngella]

Anyone who is familiar with digital bank?  All I know is that, unlike traditional bank, they do not have the bank building hence saving them from all costs related to it.  In my country, they are offering higher interest rates returns compare to their traditional bank counterpart.  Anyone knows the reason why they can do that?  Also, what is the pros and cons of using digital bank instead of traditional bank?

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[NeuroticFish]

Anyone who is familiar with digital bank?  All I know is that, unlike traditional bank, they do not have the bank building hence saving them from all costs related to it.  In my country, they are offering higher interest rates returns compare to their traditional bank counterpart.  Anyone knows the reason why they can do that?

I am not thank knowledgeable on the matter, but especially if they are new on the market, they have to do something to attract customers, don't they?
Plus, not having to have offices all over the place will save them quite some costs. Win-win, at least on the paper.

Also, what is the pros and cons of using digital bank instead of traditional bank?

I can't say for sure, but one thing I'd expect is not-too-great customer support. I mean that if the number of customers increases their call center may get a bit busy and you don't have the chance to go to the office and yell to an employee.
Maybe I'm thinking too far, but another thing may be their actual residence / the country under which laws they operate - which may or may not be the same as yours.


Maybe you could ask in your own country's topics, specifically about the bank you are interested in. Some may give more spot-on answers.

[Apocollapse]

Are you sure they don't have building in your country? try to search the bank in google maps, you might find it in the other city because that's what happen in my country.

Also, what is the pros and cons of using digital bank instead of traditional bank?

Pros:
Easy to access.
High interest rates.
Many promotions.

Cons:
Mostly not insured.
Hard to find the ATM and branch/building.
Higher chance to bankrupt.
Probably bad and slow customer service.

[Spaceman1000$]

Anyone who is familiar with digital bank?  All I know is that, unlike traditional bank, they do not have the bank building hence saving them from all costs related to it.  In my country, they are offering higher interest rates returns compare to their traditional bank counterpart.  Anyone knows the reason why they can do that?  Also, what is the pros and cons of using digital bank instead of traditional bank?

I don't know for your country but in my country, digital Banks offer low interest rate returns compared to the traditional banks, and the reason why they do that is because they have low operational cost and more money in their coffers, unlike the traditional banks that runs high operational cost, because they have their branches spread around the country with staffs working everyday day.

In terms of the pros and cons of using digital Banking. I think one of the disadvantage of a digital Bank is the absence of physical office in most locations, so if you have any issues with your account, you have to get across their customer service, which most time don't respond on time. I believe most digital Banks are not allowed to receive tax payment in my country, they are not allowed to operate or open business and cooperation account for any customer.

[Fivestar4everMVP]

There are actually a lot of digital banks in my country, and to be honest, many of them are currently doing very well, much more than their physical banks counterpart, for example, we have one called Opay, we have Kuda bank, Palmpay and so many others - this digital banks are doing very well for themselves because on like the physical banks, this digital banks not only provide a higher APR when it comes to fixed deposits, they also provided users with better network services for easier and much faster transactions, like for example, I've personally being using opay for some years now and never any issue with not getting refunded a failed transaction within 24 hours, meanwhile in a physical bank, the failed transaction can last up to 2 weeks to get resolved, and this also depend on how frequently you are visiting the bank.

The only downside of digital banks is that, some of them lack good customer support, but opay for example have started opening offices here in my country where customers can walk in to make complains just incase they don't get a timely response online.
And again is on the issue of trust, digital banks are risker to use than physical banks, and to reduce the risk, only use ones that are issued and given license to operate by the Central Bank.

[Nwada001]

Anyone who is familiar with digital bank?  All I know is that, unlike traditional bank, they do not have the bank building hence saving them from all costs related to it.  In my country, they are offering higher interest rates returns compare to their traditional bank counterpart.  Anyone knows the reason why they can do that?  Also, what is the pros and cons of using digital bank instead of traditional bank?

Some of the digital banks that are operational in my country currently mostly started with loan service; they started by giving out loans to people, and from there they built a little, which they then moved ahead to start a banking system. 
 
And one of the reasons I believe they have a higher interest rate is the fact that they are more accessible than the traditional banks, and their loan terms are very low compared to commercial banks, but when it comes to the interest they attach to the loan repayment, they always have higher interest than the way the normal banks charge.
 
Once you fail to repay on the agreed deadline, interest is immediately attached to it, so there are other means they are using to make quick money compared to the traditional banks.

[franky1]

Anyone who is familiar with digital bank?  All I know is that, unlike traditional bank, they do not have the bank building hence saving them from all costs related to it.  In my country, they are offering higher interest rates returns compare to their traditional bank counterpart.  Anyone knows the reason why they can do that?  Also, what is the pros and cons of using digital bank instead of traditional bank?

these are usually savings accounts not ones that come with debit cards. in short you wire transfer funds in and out of them to then get higher rates than a debit card account would

here in the UK having a debit(visacard) account only gets you 1.5% where as if you use a banks "online" account you can save at 4-6%
they can do it because they are not paying visa/mastercard. plus savers keep value for a year rather than raiding the account every month on bills/daily living costs so the money stays in the account for the banks to invest and use as a base point for other activities that earn bank money and thus pay their customers money

also yes a physical bank branch might only have 20k customers per branch(particular sort-code/routing number(small town for that bank brand) meaning if someones average savings is $12k then those 20k customers of $12k is $240m total holding. but the buildings physical costs and labour of staff and other costs can be 1% of a banks customers total holdings. so by having it "online account" they can save 1% but also have access to more then just 20k small town branch managing a particular sort-code/routing branch allotment of customers, which further dilutes costs on the bank

pro:
by not having physical branch costs can save(and pass on) 1% to the customer
by not having visa debit card costs can save(and pass on) 1-2% to the customer
by having money saved more then a months length generates more profits, to pass onto the customer

con:
reliance on online service and their online customer support
may not get a debit card as most are savings accounts
requesting money in-out is reliant on wire transfer not ATM
bank runs. though bank branches have duties to allow withdrawals(at limits)
online accounts can have different conditions and due to lack of physical branch its not like you can complain or demand anything face to face

my bank brand does have branches and online accounts. but the online accounts can only be managed via the online portal as the (in uk) sortcode is not the physical branch sort code

super-con

digital payment services, can act like a bank without a banking charter and thus not be insured by a banking rules of a government compensation plan. so be sure the online account is an actual bank and not a payment service

[moneystery]

as far as i know, digital banks have head offices and branches, but only in certain cities and with fewer personnel compared to traditional banking, because all activities, complaints, requests, etc., are carried out through the application, only in cases certain customers need to go to the head office/representative. and because the number of offices and personnel is much smaller, they can reduce operational costs to the maximum in order to achieve efficiency and the best offers to their customers.

and due to their lower operational costs and better management of customer funds, digital banks are successful in making profits and offering higher interest rates to their customers compared to traditional banking (but not exceeding the interest rates set by the central bank).

so if you find a digital bank that offers interest above the interest rate set by your country's central bank and does not have an umbrella for protecting customer funds, you should be wary of that digital bank, because it is very possible that the bank will scam its customers.

[Republikcoin.com]

Anyone who is familiar with digital bank?  All I know is that, unlike traditional bank, they do not have the bank building hence saving them from all costs related to it.  In my country, they are offering higher interest rates returns compare to their traditional bank counterpart.  Anyone knows the reason why they can do that?  Also, what is the pros and cons of using digital bank instead of traditional bank?

I have never used a digital bank even though it is also very familiar in my country under several different names at the moment. However, for now I still use a traditional bank with very ordinary services even though I don't save more money there, except when I need more money to send to businesses. So I don't know what the advantages and disadvantages are in digital banks in my country so far even though I also have the intention to use them someday.

[electronicash]

well, you said it yourself they save more money than traditional banks because they don't have physical infrastructure. so they can afford to offer higher interest rates but it could also mean it's just a matter of time before the digital bank becomes a scam.  real banks can't even offer 3% interest rate. it always comes with a warning sign you won't even know who to look for if you want to complain.

one good reason for using them is that you can offer from an e-commerce site stress-free. i just keep clicking when ordering a product from an online store.

[Zlantann]

Anyone who is familiar with digital bank?  All I know is that, unlike traditional bank, they do not have the bank building hence saving them from all costs related to it.  In my country, they are offering higher interest rates returns compare to their traditional bank counterpart.  

You have mentioned that because they don't have a physical presence they would spend less on rent and other property payments. I also think they save money by paying fewer workers since they can run the bank's services with the help of technological tools. Some of them might not also pay a high licence that these traditional banks pay which might reduce their operating cost. Some of them might not be some of these statutory fees because they don't have any physical presence in the country.

Anyone knows the reason why they can do that?  Also, what is the pros and cons of using digital bank instead of traditional bank?

Reduced cost of operation is one of th reason why they give high-interest rates. And many of them also engage in more risky but profitable Investment than traditional banks. One of the advantage of these digital banks is fast services and less complicated registration process. They also offer more innovative services than these traditional banks. I am not comfortable with them because many of them turn out to be failed and scam banks. They can easily defraud depositors because they don't have a physical presence and might not be tract easily.

[uneng]

In my country, they are offering higher interest rates returns compare to their traditional bank counterpart.  Anyone knows the reason why they can do that?

Well, haven't you already replied your own question in your post?

All I know is that, unlike traditional bank, they do not have the bank building hence saving them from all costs related to it.

Therefore, they can offer better rates than traditional banks... That is the most reasonable hypothesis for that question.

Also, what is the pros and cons of using digital bank instead of traditional bank?

As you have already mentioned, they offer higher interest rates. That is one of the pros. Furthermore, I also prefer digital banks because they are practical and accessible for me. The one I use has a very complete app's platform, where I have access to every features, including several categories of investments, varying from saving account to international stocks' market, and of course, cryptocurrencies.

On the other hand, there are also cons. First and foremost it's the difficult to talk to support in real time, anytime you want. You have to wait several hours to get replied sometimes... Meanwhile, through a physical agency, you could just call the manager and talk to him directly. Another cons is when investing in cryptocurrencies, as you can't cashout your coins and tokens from the bank to a private and personal wallet, as they are mandatorily held in custody, similar to an ETF.

[Bitcoin Smith]

Anyone who is familiar with digital bank?  All I know is that, unlike traditional bank, they do not have the bank building hence saving them from all costs related to it.  In my country, they are offering higher interest rates returns compare to their traditional bank counterpart.  Anyone knows the reason why they can do that?  Also, what is the pros and cons of using digital bank instead of traditional bank?

There are few banks in my country that only focus on digital banking but it doesn't mean they even don't have an office, probably they have few branches and let all the work done via online from account registration, KYC verification, deposits via machines from their own or from many other third party service providers.

So cutting the expenses can give some leverage to offer better internet rates.

[dothebeats]

We've got quite a handful of these digital banks in the Philippines, and as some have pointed, they are able to give out more generous interest rates than physical banks due to decreased operating costs by not having to pay for lease on buildings/office spaces. Plus, since the said interest rates can only be had if the money stayed in on an account for a certain period of time, users are usually just leaving their money there for extended periods of time to accrue said interest. This gives the bank ample time to make money off of these deposits and in turn, giving out the crumbs to their depositors to attract them to deposit more.

Other have pointed out that they're having a hard time reaching out to customer support for these digital banks. Here in our country, you can get connected to a real human in a matter of minutes. Don't get your hopes up though, because even though you can get a live representative over the phone, there is a high chance that you'll get passed on to several people before they can address your questions properly.  

[aylabadia05]

Anyone who is familiar with digital bank?  All I know is that, unlike traditional bank, they do not have the bank building hence saving them from all costs related to it.  In my country, they are offering higher interest rates returns compare to their traditional bank counterpart.  Anyone knows the reason why they can do that?  Also, what is the pros and cons of using digital bank instead of traditional bank?

Never mind digital banks, traditional banks are not very familiar because they are in contact with them or only go to big buildings with guards when there is a need.

I'm not familiar with digital banks. In my country, around 10 digital banks are operating, but I don't know all of them are still actively operating.
But for me digital banks have unreliable doubts because not all areas in the country they operate in have representation like in the area where I live.

[Raflesia]

I know about this and I even use some of the same or close to what is called a digital bank but i think it would be very funny if they dont have a bank building or office that is not used as an operational because it will obviously raise the question of where we will complain about the problems we have if we have problems that cant be resolved because after all an agency can be recognized if they have a place to be used as an operational office in the end .As for the usefulness of digital banks like this it is clear that this is an option for me at least for now because ill continue to live within the scope of the bank so indeed for the same thing or close to dealing with fiat it will still be very influential and with something like this .

[Cryptomultiplier]

Are you sure they don't have building in your country? try to search the bank in google maps, you might find it in the other city because that's what happen in my country.

Also, what is the pros and cons of using digital bank instead of traditional bank?

Pros:
Easy to access.
High interest rates.
Many promotions.

Cons:
Mostly not insured.
Hard to find the ATM and branch/building.
Higher chance to bankrupt.
Probably bad and slow customer service.

Besides stating the obvious, digital banks these days have begun working hand in hand with the central banks of the countries they operate in and have also started issuing out credit and debit cards as well as have at least an operating headquarters they work from.
I also believe digital banks have a better customer service delivery system that is both automated and also offer live discussions with online customer service representatives.

One other thing is that digital banks has more options for funding wallets for gambling or betting or paying bills and other services that many offline banks would deem necessary to fit in their online apps.

[Egii Nna]

Anyone who is familiar with digital bank?  All I know is that, unlike traditional bank, they do not have the bank building hence saving them from all costs related to it.

I don’t think they didn’t have a building or a place where they will be operating the activity of their project, because online banking are like a project or a micro finance bank, which most be registered with the central bank of the country. So I don’t think the center bank can give them a complete License without seeing where they will be operating from. So I think they most have a place or building that will be the headquarter of their banking service, which after they have gotten lost of costumers they will start creating some agents for some locations around the country. for easy access of the costumers, which as you mentioned this will cost the a lot of savings from tax and other expenses that will sustain the bank a lot because they will also have lost of reductions like the staff and and other things that you can think of compare to the traditional banks.

In my country, they are offering higher interest rates returns compare to their traditional bank counterpart.  Anyone knows the reason why they can do that?  Also, what is the pros and cons of using digital bank instead of traditional bank?

You have two important questions here, which I can answer a bit, but I would also like you to go and do your research.
Firstly, for the speed of connection, online banking has to be competitive compared to traditional banking because they will like to have more customers that will patronise their service, which will encourage them to try their possible best in order to make their customers feel like they are the best, which the online banking will give the customers unnecessary rewards, and the fast connection that will persuade the customers and make them even recommend it to their family and friends. From there, the project (online banking) has started getting what they wanted. 

Secondly, there are several advantages and disadvantages to online or digital banking, of which, like you mentioned, one of the advantages is a fast network connection, low expenses, low tax, intermediate relationships, and many more. For the disadvantages, we have a lack of trust from most of the customers, find it hard to make a complaint to the bank service, and many other factors, so if you do your own research, you will find out more about that.

[boyptc]

Anyone who is familiar with digital bank?  All I know is that, unlike traditional bank, they do not have the bank building hence saving them from all costs related to it.  In my country, they are offering higher interest rates returns compare to their traditional bank counterpart.  Anyone knows the reason why they can do that?

They offer higher interest rates because their cost of operation is lower than the typical bank. That means that those rental expenses and other expenses from the branch is easily diverted to the depositors interest and that's why they can afford to pay depositrs higher interest rates.

Also, what is the pros and cons of using digital bank instead of traditional bank?

Pros: convenient

Cons: you as a depositor, you don't feel that you've deposited in the bank because their operations are digital and you have no physical location to complain with if ever you are in trouble.

[Iroh]

Also, what is the pros and cons of using digital bank instead of traditional bank?

Personally, I’m inclined to think there are more cons than pros when it comes to digital banking. Don’t get me wrong; there are some lovely advantages that digital banking provides that has and probably would continue to attract new and keep old customers.

I think these are some disadvantages that I think could and do hurt digital banking.

. Lack of physical presence: They lack physical offices and halls like traditional banking do. You can’t easily walk in to lay whatever complaints to an actual human that would readily solve or try to solve your problems. There wouldn’t be any physical nor close relationship with the bank and it’s customers.

. Internet connection: You need an internet connection to access the bank and your funds. Today, access to the internet is easier but In the unlikely scenario where there isn’t an internet connection, you’re literally fucked.
Also, there could be outages or “upgrades” that could hinder transactions.

They do try to make up for their shortcomings with some good and much needed services and I guess that’s why their services are still being sought after and utilized.