Digital Bank

By: EconomyWatch Content   Date: 6 November 2009

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Digital bank has been a buzzword in the banking industry since early 1990s. Simply put, digital banking is the fusion between core banking services and digital technology. This conversion from brick-to-click banking has revolutionized economies worldwide.

Digital Bank Products and Services

The concept of digital bank allows customer to enjoy banking sitting in the comfort of their home or office. Thus, digital bank is also referred as convenience banking solutions.

 

The products and services available worldwide as digital banking solutions include:

  • Online account management
  • Debit card and credit card transactions
  • Electronic bill payments
  • Funds transfer
  • Loan applications
  • Investment banking
  • Online shopping

 

Mobile banking, also called as SMS banking, is an added advantage to digital banking and a very rapidly growing segment as well.

Digital Bank: Origin of Virtual Banks

Fully virtual banks have 100% internet-based operations. They offer high interest rates due to reduced operating costs and less investment on physical infrastructure. Thus, virtual banks are steadily eating into the market share of brick and mortar banks. Some of the most popular virtual banks are:

 

  • Egg.com: Established in 1998 in UK, Egg has emerged as one of the largest online bank in the world. It offers loans, accounts, cards and insurance products.
  • Ally Bank: It is the online banking subsidiary of General Motors Ltd. With a view to offer modern banking products to US customers, Ally Bank has savings accounts and certificate of deposits (CDs).
  • Smile.co.uk: Smile online bank is the initiative of Co-operative Financial Services (CFS), UK. The product palette of the bank includes accounts, loans, deposits and investment.

 

Digital bank scores over brick and mortar banks due to the advantages the offer. They provide 24x7 banking facilities that can be accessed from anywhere in the world. This saves time for both the banker and customer. Such banking can be easily integrated with smart money management tools online, such as Microsoft Money.

 

However, digital bank solutions suffer from security threats such as online money frauds, identity theft and credit card scams. Thus, an individual should select from a physical or digital bank based on their need for distance or remote banking, as opposed to greater security and ignorance of how technology can be used.

 

 

 

 

 


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