What is digital banking
Recent times have seen a dramatic increase in start-up activity in Brazil’s financial sector, with many fintech start-ups growing into fully-serving banks. This follows the trend that continues to grow in the rest of the world, with many new banks forming in Europe and the US that offer entirely digital service. These new banks’ entirely digital nature means that they do not have physical bank branches, which previously were an expected part of banking service. Digital banks offer a whole host of automated features designed to guide customers through their own banking and 24/7 in-app customer support, almost eliminating the need for physical branches. In Brazil and the rest of the world, digital banks’ aims have been to challenge many aspects of traditional banks’ service, earning them the name ‘challenger banks.’
What are the benefits of a digital bank
Digital banks offer several key benefits to their users. Although these may differ from bank-to-bank, all-digital banks generally agree on providing their customers with more convenience, transparency, and insight into their finances.
The convenience of digital banking begins with the sign-up, which usually starts with downloading an app. Unlike the traditional bank application process, users can apply for a digital bank account within minutes and get approved within minutes too. This does not make the banks any less secure, as the quick sign-up involves sophisticated automated identity authentication processes. This sign-up process is also more accessible to many applicants that historically have found it harder to get accepted at traditional banks.
In Brazil alone, banks earned around R$30-35 billion from charging customers account fees in 2018. Brazilians are paying a lot in account fees and other hidden fees applied by their bank, and digital banks are setting out to offer a more honest and transparent service. Many digital banks claim to be “fee-free” or have “no hidden fees,” which in some cases also applies to international transactions. Digital banks offering no fees on international transactions and ATM withdrawals abroad are especially appealing to frequent travelers, as bank fees are known to rack up while abroad.
A huge benefit of digital banks is the money management tools they offer. Each digital bank offers its own ways to help customers manage their personal finances, but users can expect monthly reports, real-time spending notifications, spending categorization, and more. These features are designed to help customers stay on top of their finances, even letting them know how much they can afford to spend and save.
How safe is digital banking
Digital banks take customer security seriously, existing at the forefront of technological innovation to provide users with the latest methods to keep their finances safe. The authentication methods alone utilize voice recognition, facial recognition, and fingerprint scanning technology. The younger nature of digital banks may lead some to be cautious, especially when it comes to safety. However, recent years have seen digital banks lead the way for traditional banks, with many traditional banks being fast to adopt the technology first introduced by challengers. The most popular digital banks hold full banking licenses or restricted banking licenses that allow them to guarantee deposits up to a certain limit.
What features do Brazil’s digital banks have that traditional banks don’t
- In-app application process, no paperwork is required and takes minutes
- 24/7 in-app customer service
- Monthly reports, insights, categorization, and forecasting help customers stay in control of their finances
- Bill-splitting features
- Saving options with good interest rates
- No hidden fees
One of the biggest perks of digital banking is that they are continually working to improve the customer experience and rolling out new innovative features, products, and services designed to enhance how they manage their personal finances. Being a customer at a digital bank means that you can be one of the first to try some of the newest fintech technology and see how it helps your finances.