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Considering Switching to Digital Banking? Here’s What You Need to Know

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Written by

Melody Wright is a Canadian business writer living the dream in South America. After almost 3 decades of training professionals in the finance industry, she semi-retired (early) to rescue dogs and enjoy life with no winters. She lives with her husband and 70 (or so) dogs, 3 horses, ducks, and chickens on 25 gorgeous tropical acres. She writes articles on personal finance to help others retire earlier and enjoy life to the fullest.

Melody Wright
What are the pros and cons of switching to a digital bank?

Online banks (AKA neobanks) are quickly gaining in popularity. If you can’t remember the last time you visited your bank in person, you might consider digital banking.

Online banks offer convenience and cost-saving, often with low (or no) fees and better interest rates. More than one in five people have already switched to online banks. Should you make the switch?

Online vs Mobile Banking

With online banking, you can use your computer to access your bank account online. This allows you to handle your personal banking needs from the comfort of your own home. Most banks give you access to more banking features through your online banking portal. For example, applying for a credit card or loan.

Most digital banks also allow access to their services by way of apps on mobile devices to access many of those same features. These apps typically use the same login information as your online banking portal.

Mobile banking apps are perfect for people who are always on the move. They usually include the most commonly used features like mobile check deposits, money transfers, and bill pay. They may also alert customers to fraud detection and low balances.

What is a Neobank?

Neo means fresh. These are new online banks with no physical location. Instead, their digital solutions make payments, transfers, lending, and other services possible.

Customers can deposit and withdraw funds. They also offer debit cards, investment options, and more. They even have credit and loan services.

Many neobanks don’t have a banking license, which means they cannot operate alone. Most work with a licensed bank to provide financial services.

Regular Banks vs Neobanks

Although not all neobanks are the same, they usually differ from brick-and-mortar banks in the following ways:

  • They aren’t regulated by federal authorities like banks.
  • No physical location
  • Might offer fewer items
  • Offer a digital-first user interface
  • Most are not insured by the Canadian Deposit Insurance Corporation (CDIC) and must partner with a licensed bank

What to Consider Before Switching to a Neobank

Thinking about switching from a traditional bank? You should consider the following:

  • The products being offered
  • ATM accessibility
  • Any existing fees, especially for overdrafts
  • Rates available for interest-bearing accounts
  • The financial education or budgeting features offered

You should also decide how comfortable you are with using the platforms. Can you talk to a chatbot? Would you prefer face-to-face customer service or digital? Can you mostly bank on a mobile app?

How to Bank Online Safely

You can take steps on your own to protect your personal and financial details from hackers. Here are a few:

  • Create unique and strong passwords. Use a combination of upper and lower case letters, numbers, and symbols. The longer it is, the better. Don’t use the same password for everything.
  • Use two-factor authentication.
  • Avoid public Wi-Fi while doing your online banking. Hackers can easily infiltrate public Wi-Fi to steal your information.
  • Say yes to receiving banking alerts. They can alert you to fraudulent or suspicious activity.
  • Watch out for phishing emails that ask for personal information. These emails usually contain malware. Malware can target your computer or mobile device if you open any links in the text. Make sure the message or text you are opening is actually from your bank.
  • Make sure you use your bank’s official website and app.

If you’re considering one of the many online banks look into whether they are insured. You need to know which licensed bank they work with to protect your money. If this information is not easily found, consider looking for a different online bank.

Pros of Digital Banking

Digital banking has many perks. Here are a few:

  • Banking online lets you manage your finances anytime because you can access your accounts from a desktop or mobile device.
  • Better rates and lower fees are the results of lower overhead costs. It takes a lot of money to keep physical branches open. Online banks can give back the money they pass on to their customers.
  • Online banks removed the charges and fees that traditional banks are famous for.
  • Technology and tools are better at online banks. Online banks had to find ways to include everything from branch drop boxes to tellers in their apps. As a result, they tend to have digital infrastructures that are more dependable and easier to use than those in traditional banks.
  • Savings account interest rates tend to be higher with an online bank allowing your balance to grow faster. This is because online banks do not have a lot of infrastructure or overhead costs.

Cons of Digital Banking

Although digital banking is extremely convenient and simple to use, it comes with difficulties. It’s essential to know the downsides of digital banking before making the switch.

  • If you only bank online, you might have trouble accessing your accounts if your bank goes down online and you can’t make it to a branch.
  • Online banking and mobile banking apps may be too much for people who need to be tech-savvy.
  • There is always the possibility of a hack on your username and password. That being said, online banks use the same security measures as traditional banks, including multi-factor authentication.


Digital banking gives people better access to the tools they need to manage their finances. Online-only banks are still a new form of banking, but many people prefer their digital-first approach. Their lower charges and fees make them an appealing option.

Digital banking is convenient and easy. To find the online-only bank that best suits your needs, it is essential to research the various options. Find a bank with a good reputation, good customer service, and a wide range of financial products and services that meet your needs.

When you are looking for ways to stabilize your finances, it helps to get advice from experts. Reach out to us to talk to a credit counsellor if you’re finding it hard to keep up with bills. They can find the right plan for you to get on the road to being debt free.

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