Digital banking is changing the way people approach money management. In a 2021 State of Consumer Banking and Money survey, 61% of U.S. adults revealed they were prepared to switch to a digital-only provider, even if they were totally satisfied with traditional banks.
Today, financial platforms and products are meeting you on your digital device, making it easier to manage your money than ever. Here’s how.
Online Savings Account
Traditional savings accounts offer paltry interest rates on your deposits. The national average yield for a basic savings account is 0.22% APY.
Compare this to the national inflation rate, which is increasing the cost of everything by roughly 6–7% depending on the day. No matter how you crunch the numbers, your APY isn’t keeping up with the cost of living, so your savings will lose value over time.
FinTech services give you a better chance of protecting your purchasing power over time. They offer high-yield savings accounts with APYs as high as 5%.
That’s because the companies offering online savings accounts have fewer overheads than traditional banks. Since they have no brick-and-mortar location, they can pass those savings on to customers.
Online Line of Credit
Savings help you make big purchases and patch holes in your budget with equal aplomb. But sometimes, they fall short of what you need when you have to pay something unexpectedly — even if you managed to snag a high APY.
In these emergencies, many people reach for a line of credit. A line of credit acts like cash in standby — you can withdraw against your approved funds only when or if you need it.
Online options include a CC Flow Line of Credit, a line of credit that you apply for, withdraw against, and pay off entirely online. This digital setup offers a simple and quick application available 24/7, making it an option any time your emergency strikes.
If approved, FinTech makes it possible to access and repay your line of credit without delay or needing to speak with anyone in person. Instead, you can use a phone or computer. As a result, you’ll have greater agency over your money through convenient access to your line of credit.
Investing Tools
Many years ago, investing was something you did through a bank or broker, usually face-to-face or over the phone. Now, many people trade or purchase bonds with a click of their mouse or tap of their finger against their phone screens.
Robo-investors and Exchange Traded Funds (ETF) apps have streamlined the investment world, bringing the bustling stock exchanges to your device. In doing so, they’ve eliminated many of the traditional barriers stopping people from investing, including access and cost.
Most apps are free to start. Like traditional brokers, they charge management fees to make it worthwhile from their perspective. But unlike traditional brokers, you don’t need large amounts of funds to invest. You can start investing with as little as $1,000.
These apps also don’t require a meeting. You can make investing decisions at any time without the need for calling or meeting in person.
The Takeaway
Online savings accounts, lines of credit, and investing tools offer a digital alternative to existing financial platforms and products. While they may never replace their in-person counterparts, they will provide additional options to people online.