The Best Digital Banking Solutions
When you choose a digital money transfer service (which we’ll also call internet bank or digital bank in this article), most or all of your banking is done through an app on your smartphone, or, if you prefer, through your browser on your laptop.
Such “smartphone accounts” come with features that traditional banks don’t always offer.
However, digital money transfer services also mean you don’t need some of the features you’ve come to expect from normal accounts and banks.
Traditional and direct banks do not want to lose the connection and either rebuild the app accounts or further develop their own apps for banking.
If you want to try out a digital money transfer service account, consider which of the app functions are interesting for you and open the account with the appropriate digital banking service.
Make sure that the terminals for your digital banking transactions are secure – whether laptop, tablet or smartphone.
Years ago, direct banks turned the everyday financial life of people upside down with their online accounts. Now new providers are trying again: they are transferring their current accounts to smartphones. To do this, they are developing service offerings and modernizing the banking business itself.
What digital Banking Services / Smartphone Accounts are there?
Here we’re listing the best Virtual Banks 2019.
What can such international Internet Bank Accounts do?
Smartphone banks have adapted their accounts to the desire of their customers to use the smartphone to do their banking. Almost completely. Reason enough for the Fintechs to develop new functions and move away from banking with a laptop or PC.
Whether smartphone and checking account are firmly linked with each other depends on the respective provider. N26 and 1822mobile, for example, rely on so-called device binding. This means that the account is permanently linked to the smartphone you used to open the account.
However, this link between smartphone and checking account does not mean that banking only works via the app with every provider. With N26, for example, there is access via a web browser; even with Bankomo, customers are not completely dependent on their smartphone. The providers behind 1822mobile and Yomo are pursuing a different strategy: without a smartphone, banking transactions can hardly or not at all be handled.
What you have to do if you change your mobile phone or lose it is also regulated differently.
Typical App Account Functions
Smartphone accounts can differ a lot from each other. Providers have different features built into their account apps. This is also due to the fact that banks do not always provide these functions themselves, but work together with other companies, such as Fintechs, but also with larger companies such as Google.
Push messages in transactions – money withdrawn or debt paid by bank transfer? Then you can get push messages from some providers. Fraud cases will notice you faster.
Sending money with your smartphone – With some smartphone accounts, you can send money to other customers even though you don’t have the other’s account number. Such peer-to-peer transfers then work through the phone number. The money goes into the other’s checking account in a matter of seconds. For this to work quickly and easily, the recipient must usually have an account with the same bank.
Blocking credit cards by app – If you lose your bank cards, you need to block them. You can do this by calling the bank or using the general emergency service (telephone number 116 166). With some smartphone accounts, however, it also works directly via the app. However, you should still report the loss to the police.
Setting limits in the app – With some apps you can set the limits for transfers and card payments yourself.
Cheap transfers in other currencies – your account is denominated in euros, but the hotel you want to pay for is in Poland? With a normal bank transfer, many banks charge quite high fees for the currency exchange, which are also not very transparent. Some smartphone banks offer a function for transferring money between different currencies, which is supposed to be cheaper than transferring money at traditional banks. They also show the exact costs directly at the transfer in the app.
Withdraw money at the supermarket – With the Girocard you can withdraw money at the cash desks of supermarkets for a long time, but you usually have to buy for a minimum amount. Some smartphone banks rely solely on smartphones for withdrawals in supermarkets, not least because they often do not offer any Girocard at all.
Mobile Payment – Mobile phone payment at the supermarket checkout has not yet established itself in Germany. There are too many systems, and the benefits are not clear to many customers. Nevertheless, smartphone banks are also working on corresponding functions, for example with the American company Google (Google Pay at N26).
Managing expenses – household books have been around for ages; smartphone banks are not completely abandoning this idea either. Categorizing expenses should help keep an eye on transactions.
Functions for Smartphone Accounts
Additional Products at Smartphone Banks
In addition to the current account with app functions, some smartphone banks also offer additional products. As a result, providers are increasingly moving in the direction of traditional banks, even if they choose a “Fintech” approach.
Fixed-term deposits – For many people, fixed-term deposits are part of their financial portfolio. Such offers are still seldom found in smartphone banks. N26, for example, cooperates with Weltsparen to this end.
Investing money – stocks, bonds, ETFs: there are numerous ways for consumers to invest money. N26 works with Robo-Advisor-Fintech Vaamo to help its customers do the same.
Cryptocurrency – At the turn of the year 2017/2018 Bitcoins made it into almost all media and at Revolut also into banking. You can buy and sell the cryptocurrency at this smartphone bank.
Managing insurance – The annual cancellation option for liability insurance will soon expire and you actually wanted to take care of your household insurance as well? Insuretechs, the siblings of the Fintechs from the insurance industry, take care of these issues. N26 works with such a Fintech (Clark) to make insurance administration easier. 1822mobile wants to follow suit.
What can Smartphone Accounts not do?
There are some services and features that smartphone banks consciously or inevitably do without.
For most consumers, the Girocard (formerly: EC card) is simply part of their current account. This does not apply to smartphone banks, which often do not have a corresponding card in their program. Exceptions are the app accounts of the savings banks: a Girocard belongs to both Yomo and 1822mobile. N26 comes up with a pure Maestro card, so there is no cooperation with the German system Girocard. For customers, this can lead to problems with cashless payments if merchants do not accept the cards belonging to the account.
As a rule, smartphone bank cards are debit cards, i.e. cards with which money is debited promptly, as is the case with Girocard. These cards are not considered real credit cards. When booking hotels and cars, problems can arise because the providers do not always accept these cards. The big exception so far is 1822mobile. This account includes a charge card, i.e. a credit card with which the sales are debited monthly.
A dispo credit is a common banking product. However, Transferwise, Revolut and Bankomo do not grant their customers this overdraft facility.
Many people still prefer to pay with cash, even if the proportion is declining. Cash supply must also work for smartphone accounts. And it does – with some reservations. Some smartphone banks restrict free withdrawals via a fair-use policy. This means that customers can only withdraw money free of charge a few times a month. If they withdraw too often or too much, they pay a fee for each withdrawal.
In addition to withdrawing money at ATMs, there is sometimes another way to get cash: in some supermarkets with a smartphone and a barcode. You show this at the checkout to get money. For this purpose, the providers work together with Fintech Barzahlen.
Smartphone banks struggle with similar problems to normal direct banks. For example, they lack branches or their own ATMs where customers can deposit cash. With N26, Bankomo and O2 Banking, customers can deposit money in participating supermarkets – even in such cases, this is possible via the smartphone and with Fintech cash payments. Bankomo customers can also make deposits and withdrawals at Reisebank’s 90 branches, albeit for a fee. Yomo uses the connection to the savings banks: To make deposits, customers can use the machines of the Yomo savings bank they have selected free of charge.
Cash with Smartphone Accounts