What is digital banking: types and services it offers
The concept of banking is extremely broad nowadays, encompassing multiple types of financial institutions and various services for individuals, companies, and merchants. And digital banking has become a big part of it, as the industry has been undergoing significant transformation.
Thus, diving into the digital banking topic is important, and that’s what Genome’s team is doing today! Find out more about digital banking services and how to start using them in this article. We also explain the difference between online, mobile, and digital banking.
Digital banking: meaning of the term
The name of the term “digital banking” says it all. Digital banking refers to types of financial institutions that operate and distribute their features, tools, and services online with the help of technology.
Financial providers offer digital banking services by combining necessary internet and technology tools. It allows clients to access digital financial services via the provider’s website or mobile app. Naturally, account opening, including identity verification, work with documentation, and all subsequent services, are carried out online.
It is the main difference between them and traditional banks, which usually require the client’s presence in the bank branch during the account opening. During this, clients usually have to wait in queues and fill out documentation manually. It is why some may find digital banking more convenient – they don’t even need to leave their house or office to open an account and can access digital banking solutions whenever needed.
There are a bunch of financial institutions which fully meet the digital banking criteria, e.i., operate completely online. These are:
Type of financial institution
Challenger bank
New bank
Neobank
Nonbank
Description
It is a technologically advanced digital banking institution, the name of which originated in the UK. As their name suggests, such digital financial services started emerging to challenge brick-and-mortar banks. They do so by introducing new services that clients need. They do so by introducing new services that clients need.
This type of digital banking company is very similar to traditional banks, providing similar services, such as current accounts, savings accounts, etc. The difference – new banks operate completely online. Such institutions must have banking licenses to service clients.
These financial institutions also provide digital banking services and don’t have physical branches. However, neobanks often don’t have a bank license, that’s why they have to cooperate with traditional banks to deliver their digital banking solutions.
Such companies don’t provide traditional banking services such as account opening, card issuing, lending, deposits, etc. Instead, they operate on a smaller scale, offering other financial services, like mortgages and loans. All because these companies don’t have bank licenses.
What are digital banking services?
It is an amalgamation of digital banking products and features that individuals and businesses can access and use online. Any financial service or product you can think of can be classified as digital if the financial institution or company distributes it with the help of the internet – via PCs, laptops, tablets, or phones. From mundane operations such as money transfers to digital banking apps for investment management.
Digital banking services: the list
There are many types of digital banking solutions. As a rule, most are created so clients can directly interact with them and use them to perform finance-related operations. However, there are also digital banking solutions that are active behind the scenes, so to speak, as they support the core features and work of the digital banking space. For the purpose of this article, our team will only describe the most common digital banking services.
Internet banking services. These are all of the mainstream banking tools you can come up with – from money transfers and account opening to lending, investments, and merchant tools. It is everything that brick-and-mortar banks offer but it is all available online – through the financial provider’s website.
Mobile banking services. These are similar to the internet digital banking services, but the main difference is that they come in the form of digital banking apps. Some financial institutions provide both internet and mobile banking options. However, there are digital banking apps on a smaller scale that provide one or two particular features. For instance, tax calculators, lending, investment management, etc.
Digital payments. Last but not least, digital technology enables people to pay for goods and services online using their debit and credit cards.
Is there a difference between digital, online, mobile, and electronic banks?
When looking at all these terms, one can probably think that they are all synonyms. On the one hand – yes, they share many similarities. However, there are distinctions between these types of financial providers.
Digital banks are institutions that operate solely through digital platforms and do not have physical branches. They offer a wide range of banking services and products through their website. Digital banking services are usually more client-oriented and technologically advanced financial tools to clients.
Online banks, at first glance, are the same as digital banks, as they also offer their services online. But, unlike digital banks, some online banks can still have physical branches for certain services. And, if we speak on a broader scale, digital banking is a term that encompasses all other types of online/mobile banking. That’s because digital banking implies that all the financial operations that take place can only be used with the help of appropriate technology.
Mobile banks are a subset of digital banks that specifically emphasize banking services through mobile applications. Thus, they primarily operate through digital banking apps, and their entire banking experience is optimized for smartphones and tablets.
Electronic banks are synonymous with online banks, as they primarily rely on electronic channels and digital technology to provide banking services to their customers. These banks encompass a broader category that includes any bank using electronic means, such as internet banking portals, mobile apps, ATMs, and electronic fund transfers.
How to open digital bank accounts:
To get an online digital bank account, you need access to the internet and your PC/laptop/phone. It is a digital banking service, after all. But before doing so, you first need to ensure that you have selected a reliable digital financial service that is up to your expectations. Here’s how you determine the best digital bank for you:
Read carefully through the provider’s website and make sure it complies with major regulations, is licensed, and has security tools in place to prevent data breaches;
The digital banking institution must operate within your country. If you are looking for a business account, check if it offers services to companies from your industry;
Ensure that the business digital banking institution has all the essential services you will need to run the financial side of your company. If you are looking for a personal current or savings account – do the same.
Check the fees page and compare the pricing listings between different digital banking solutions to find an affordable yet dependable provider.
Once you have selected a financial institution you want to open an account at, start the onboarding process.
To describe the account opening in more detail, let’s take a look at Genome as an example. We are an electronic money institution licensed and supervised by the Bank of Lithuania. We offer services for individuals and companies, providing access to them via both our website and mobile app.
As with everything else within Genome, the onboarding process is carried out entirely online. Here are its steps:
Go to my.genome.eu and sign into Genome – use either your email or phone number;
Next, select the type of wallet you require: a personal wallet for your day-to-day individual needs or a business one – for your company;
Then, depending on which option you have chosen, you will undergo a personal or business verification;
In both cases, you first need to fill out basic information about yourself (such as your first and last name, date of birth, address, etc.), provide documents that verify your identity, and then record a video-selfie;
In case of business verification, you are also required to fill out the information about your document, upload documents to confirm the company’s legitimacy, and describe the ownership structure.
This is the basic gist of what you have to do – the process is quick, simple, and straightforward. For more detailed information, check out Genome’s guide on how to start an account.
The digital banking definition is the following: it is a type of banking that enables the provision of financial services through digital channels and electronic devices. Digital banking institutions don’t have physical branches and offer all their instruments online.
What are digital banking services?
These are services that individuals and companies alike can access online – through their PCs, laptops, or phones. Among such services are savings and current accounts, money transfers, loans, payments, investment management, and many more.
What do digital banks offer?
Digital banks usually offer the same features and tools as traditional banks. However, some digital banks can cater to more niche features or to particular businesses or individual groups.
What are the examples of digital banking?
There are many examples. In terms of services, it can be anything from online payments and current account openings to merchant analytics. If we are talking about institutions, some examples of digital banks are N26 and Revolut.
How does digital banking work?
The services themselves usually work the same as those of brick-and-mortar banks. But, to access them, you need to create an account on the digital bank’s platform online. Usually, the registration takes place on the website or via the digital banking app.
What’s the difference between digital banking and online banking?
Online banking is a sub-type of digital banking. While the latter refers to any kind of financial operation enabled with the help of technology, online banking is more about the provision of traditional banking features via the internet, where clients can access these services via their laptops or phones.
What are some examples of electronic banking services?
Some of the examples are the basic services that online and mobile banking provides, money transfers, debit and credit cards, P2P and online payments, loans, etc.
What are the components of digital banking?
The main components of digital banking are the digital technology itself, the availability of the internet connection, the means for clients to interact with services (websites and mobile apps), and clients’ gadgets (personal computers, tablets, phones, and laptops).
Is digital banking safe?
Digital banking is considered safe thanks to multiple security measures implemented by financial institutions to protect customer data and money. Most institutions comply with security regulations and use encryption, two-factor authentication, SSL certificates, fraud prevention tools, and constant system monitoring.
