There is a vast difference between online banks and online banking. Online Banking is your traditional bank’s effort to give you access to your account and services via the internet. Online banks do the same, but without the physical building to go along.
To be clear, online banks do have physical locations most of the time, but it is usually just a single location to hold a handful of staff, and you will most likely find more computer geeks there than you would find accountants and cashiers.
Online banks are great and arguably better than traditional banks that offer online banking services. The lack of physical structures in strategic locations translates to the absence of people working in these physical structures, which further translates to a massive cut in operating costs. The cut in operating cost makes it possible to offer you their services at cheaper rates.
Online Banks and International Business Transfer
Do you find yourself needing to send money from your business to pay for another business’s service to yours overseas? While your traditional bank is a great idea, you should consider using an online bank’s service. The first thing to do if you are already sold on online banks is choosing an online bank. Instead of reading a company’s ad board and deciding they are right for you, go by online reviews. For example, if you read through a third party review site like uk collected reviews, you will definitely find WorldRemit reviews, and make a decision if that is an online bank you would be interested in trying out.
If you are still unsure if online banks are better than brick and mortar banks, there are benefits we think will change your mind. We mentioned one early-on in this article; lower fees. Most traditional banks charge up to $10 as a service fee sometimes. At large banks, the overdraft fee on an average is up to $35. Whatever you have in your account reduces every month to pay for the survival of the bank. Although banks sometimes offer charge-free services if you have a certain amount of money in your account. This still pales in comparison to online banks, which in some cases, do not charge you a cent for keeping your money with them. It is also commonplace to find them not charging overdraft fees either.
A facet to keeping your money in a bank is the interests it yields. Because of the operating costs of banks, the interest yield is low. This shows just how big a game-changer the difference in operating cost is to these two financial institutions. Traditional banks have to pay staff and rent; this takes a toll on the interest they can pay out to customers. Online banks usually only have to employ a handful of finance-savvy people. They also have to employ computer-savvy people, but put together, and it is still lesser than traditional banks have to cater for. This translates to better interest rates for you, and lower transfer charges when you make international bank transfers.
Online banks are great, and as technology improves and the cost of running an online business reduces, they will only get better. FinTech companies are springing up all over the world, which should see moving money between countries easier.