Like in the UK and US, digital banking is on the rise in Australia, with many challenger banks emerging to improve upon the traditional approach we take to banking while making the most of the digital technology that has become so integrated into our lives. These banks, often referred to as digital banks, challenger banks, and neobanks, are entirely digital and offer no physical branches. However, the well-rounded service they offer, with 24/7 in-app customer support, automated financial advice, and instant security features, means that physical branches are not necessary for this kind of service. Unlike traditional banks, digital banks don’t have huge decades-old infrastructures that would take years to update to new technology, meaning digital banks are updating their service and rolling out new features all of the time for the benefit of their users.
The benefits of digital banking usually include convenience, increased transparency, easier travel, and no hidden fees. Still, there are plenty more benefits exclusive to each digital bank, which may help you decide which is the right bank for you.
The benefits of digital banking often begin with the signup, which takes place online or on an app. The process involves entering some personal details before authenticating your identity, this usually takes a few minutes before your account is approved, and your bank account is open. This online, no paperwork process is far more convenient than most traditional banks are capable of and equally secure.
It is also a common theme across digital banks to provide customers with real-time spending notifications which help them stay up-to-the-minute on their spending, along with spending categorization allowing customers to get a closer look at where their money is going. For many of Australia’s digital banks, these features also come hand in hand with innovative budgeting features that work automatically to help save money or calculate what is safe to spend.
Another benefit of digital banking and the reason these banks attract frequent travelers is that many offer low-fees on travel money. Many digital banks place low to no fees on transactions abroad or overseas ATM withdrawals, allowing their customers to not return home from their travels to a long list of unexpected bank fees. Digital banks are also at the cutting edge of fintech, allowing them to test and roll out updates and new features continually.
Each of Australia’s digital banks offers a different service that will suit different personal finance needs and goals. The available banks either hold an Authorised Deposit-Taking (ADI) licence or a restricted ADI license, meaning some offer a fully-functioning current account and debit card with deposits of up to $250,000 guaranteed by the Australian government, while others are still on their way to offering a fully licensed and guaranteed account.
Many of the current accounts on offer, from Xinja, Up, and 86 400, come with little to no fees to create more transparency between the bank and the customer. Their current accounts also come with a range of tools and features that help customers understand their finances better and make more informed decisions. This includes monthly spending reports and spending categorization that allows customers to gain more in-depth insight into their finances. 86 400 is one of the banks that offers bill detection and reminders, so their customers never miss a payment. Some banks also provide future projections that help you plan for spending and saving.
Some of Australia’s digital banks, including Up, 86 400, and Volt, also offer their customers innovative saving solutions. There are options for savings accounts with good interest rates, 86 400 is offering withdrawals without losing interest, and Volt is offering to provide particularly high rates on interest on customer savings. Up also features a round-up feature that allows customers the chance to turn their spare change into savings.
So far, digital banks have primarily appealed to millennials whose lives are already largely integrated with technology; however, many people may still be slightly skeptical about the security of newer services. Digital banks are at the forefront of security technology, and in many cases, they are leading the way for traditional banks to follow. Digital banks’ hi-tech security methods can be seen in the signup process where fingerprint scanning, voice recognition, and facial recognition are used to authenticate customer identities before approval. They also offer instant freeze and unfreeze features that provide customers with peace of mind about their money security.
Whichever digital bank you choose, they will continuously be working on updating their products, features, and services in line with the latest fintech innovations, allowing their users to be the first to benefit from them.