In response to increased demand for traditional retail services and transactions to move online, digital banking is set to expand and develop rapidly in the coming years.
For many people, being able to do all their financial management via app-based banking is a logical and welcome step forward. This includes the growing numbers of business travelers and the lucky few who explore the world for pleasure!
This article explores how digital banking supports and streamlines money management across borders and the best options for regular travelers.
Business travel boom
Digital workplaces and the global market have resulted in a massive upsurge in remote working. This includes highly mobile workforces, who operate across different areas, or even other countries and continents.
There are believed to be around 445 million business journeys annually. According to the Global Business Travel Association, the market grew by a substantial 5.8% between 2016 and 2018.
World explorers are on the increase
Apart from the growth in business tourism, the global travel sector is also supported by younger generations determined to make the most of their leisure time.
Exploration of remote parts of the world has passed from wish lists to a reality. In particular, Millennials like to make holidays an ‘experience’, including traveling from country to country without a second thought.
Business or pleasure travelers rely on technology
93% of Millennials and 90% of Gen X own smartphones
Naturally, they are increasingly using their devices – tablets, mobiles, and even wearables – to manage travel arrangements for work or pleasure.
To such an extent that by the end of 2020, online travel bookings could hit the $817 billion mark!
Their devices are their ‘go-to’ for booking tickets, researching destination details, and connecting to foreign contacts. This is why by 2023, it’s estimated that 700 million people will be booking hotel bedrooms via the internet.
So, it makes perfect sense that they will also want to use devices for other financial aspects of traveling.
The benefits of digital banks for travelers
Having access to digital banks can add a significant convenience for anyone who travels extensively for work or fun.
It keeps all your arrangements and transactions at your fingertips, with your entire itinerary, money management, and ticketing contained online and accessible 24 hours a day.
Digital banking can also save considerable time, as you can switch between your travel bookings, budget controls, and bill paying seamlessly.
Using application-based banking means many of the cross-border complications are taken care of too. Your digital bank calculates exchange rates as you move around, taking much of the leg work away from financial accounting overseas. Digital banks can also offer favorable exchange rates on currency compared to traditional high street travel money companies.
It is also attractive to growing numbers of travelers who put sustainability high up on their list of priorities, as it offers entirely paperless and carbon-neutral banking services.
Which digital bank is best for travellers?
Frequent travelers prefer to rely on the more established players in this financial services sector or those backed by financial institutions.
Knowing the different terminology can help you choose the right digital bank for international transactions and money management.
First, it’s worth reiterating that digital banks are not the same as traditional lending and savings organizations that offer online banking. A digital bank is an entity that is entirely application-based.
The term ‘Neo Banks’ is often applied to the established versions, direct competitors to traditional high street banks. For example, Monzo, N26, MyBank, Starling Bank, and Revolut. They are fully licensed in their own right.
UK-based Monzo and Atom Bank were among the first digital banks to be set up, and Monzo has already reached the one million customer mark.
You may also come across Neo Banks. These are entities that don’t have banking licenses in their own right, but which partner with financial institutions to validate their bank-licensed services. Examples include Moven, WeBank by Tencent, and Yolt.
As you would expect, traditional banking organizations are keen to keep hold of their market share. This gives rise to Beta Banks, joint ventures or subsidiaries covered by their licenses, such as AiBank and Simple.
Lastly, there are ‘Non Banks’, digital financial service providers – like Monese – who operate using an electronic money license rather than via bank license arrangements.
Choosing between digital banks comes down to the same factors as traditional lending and investment companies. Which one appears to offer you the services and advantages you need?
Steps to open a digital bank account
If you’re facing a period of extensive travel, a digital bank is a great way to make your financial dealings more portable and responsive. Setting up an account with a digital bank is extremely easy. Remember, it’s paperless and all done on your device, wherever you are in the world.
As digital banks have far fewer overheads, they can keep business account fees to an absolute minimum.
Digital bank account options for travelers include sorting money into different virtual ‘pots’ for clarity and control. You can also pay bills, invest money into savings accounts, and apply for lending, just as you would with high street banks.
All ‘on the go’ with the minimum of fuss!