3 Digital Alternatives to the Mainstream Bank Branch
For years, you only had one way to bank. Whether it was with Chase, Wells Fargo, or Bank of America, you would walk through the doors and arrive at a counter where a teller helped you manage your money.
Traditional bank branches still offer a wide range of services and products today — from basic checking accounts to more elaborate personal loans. But as some of the biggest retail banks shut down a record-breaking number of locations, they’re not always a convenient option in the modern world.
Luckily, there are digital alternatives that can help the underserved take control of their finances. Let’s take a look at three of them today:
1. Mobile Banks
In many ways, mobile banks function similarly to the typical brick-and-mortar branch. In fact, some of the biggest banks offer e-banking and mobile services in addition to their physical locations.
However, true mobile banks are an entirely different thing. It’s not an additional service or app complementing an existing bank. It’s the full extent of the mobile bank’s services.
These companies are completely mobile, so they don’t have any physical bank branches at all. This allows them to focus all their resources on the online experience.
Without the overhead of maintaining a storefront, many of them offer basic checking and savings accounts with zero fees or account minimums. This is a welcome alternative if you live paycheck-to-paycheck and don’t have the money you need to keep a specific account balance or pay banking fees.
2. Online Lenders
Many traditional banks have strict policies regulating the way they let you borrow or invest money. In terms of borrowing, most require a minimum credit score before they’re willing to help.
The underserved often have subprime credit or low income that makes it impossible to meet these standards. As a result, they can’t get essential financial products from mainstream retail banks.
You may have better luck with online lenders that have softer restrictions. Lenders offering short terms loans online have cut away much of the red tape that complicates the borrowing experience — like what credit score you need to be approved.
It’s important to note that not all short term loans are the same, so double check to see if you need a specific credit score before you apply for an installment loan or line of credit online.
3. Investment Apps
Besides underserved people who can’t participate with retail banks, there’s a growing number of people who choose not to. Many of them are Millennials.
Although they meet the eligibility requirements, they choose not to deal with financial advisors or stockbrokers.
There are plenty of reasons why. Some think they don’t know enough about stocks to get started. Others don’t trust the old guard of banks that were involved in the latest recession.
Online investing apps give them a new way to invest passively without interacting with these institutions. They offer automatic saving services that sync with checking accounts and robo-advisors that build investment portfolios.
All users have to do is set their interests, financial capabilities, and risk tolerance, and these apps will fill in the rest.
Online alternatives give you another option
Change isn’t always easy, so the shuttering of bank branches may come as a shock. But as we learned today, you don’t need a branch to manage your money. Digital services are making it possible to move, borrow, and invest cash without the old-fashioned branch.