Should You Switch to a Digital Bank?

Switch to a digital bank

When was the last time you went to an actual physical bank? If you’re like many of us, it has likely been some time. This has caused many to give pause and consider the question, should I switch to a digital bank? The lower fees and higher annual percentage yield do make them attractive. In addition, the convenience of being able to take care of all your banking business completely online, eliminating the need to stand in line at a branch, is alluring to many, especially now. 

Just since January 2020, the number of people in the U.S. with a bank account who consider a digital bank their primary bank has increased by 67%. In fact, Chime is now considered a top 10 bank in the U.S. While the overall percentage of people who use a digital bank as their primary bank is relatively low at 6%, there is no denying the accelerated use of digital banks over the past several months. 

If you’re feeling a little cautious about using a digital bank, there are various ways you can evaluate a company to ensure they are legit. This information is readily available and can easily be accessed online. First, make sure the bank is FDIC insured. Or, if it is a credit union, use the NCUA search to look them up. Read through their reviews. Great places to look would be the Better Business Bureau and Trustpilot. Use internet resources to research the company and ensure they have not been a part of any lawsuits or fraudulent behavior. 

Besides making cash deposits, a digital bank offers most of the same services as a physical bank. Some of them may not offer as many products, like credit cards and loans, but many are quickly catching up. Another concern for some is security and fear of being hacked. However, even your traditional bank does business online and has your data stored in a data center that could fall prey to hackers. There isn’t much a consumer can do about that. Unfortunately, in the world we live in, the risk of being hacked is simply a fact of life. However, there are things we can do to to protect our data and also things we should do when that happens.

Alas, like many things in life, this decision will most likely come down to personal preference. If you are happy with your bank, no need to rush out and make drastic changes. However, if you feel as though your current banking situation could use some improvement, you may want to weigh out the pros and cons of switching to a digital bank for your personal banking needs.