Online banks have become very popular in recent times. The ease with which they allow us to carry out banking transactions that we would ordinarily have to go to the bank to carry out in the past after standing on queues for a very long time have made it appealing to us. There have in recent times being a battle between traditional banks and online banks. Online banks are trying to provide every service that traditional banks are also providing while traditional banks are also trying to take all of their services online and striving to see how they can provide every service online banks are providing and more. These have resulted in a very competitive environment where the fight of two elephants for once, have resulted in the grass enjoying instead of the grass suffering. The major ways online banks are influencing the financial industry are discussed subsequently.
One of the major ways online banks are influencing the finance industry today is making cheaper services possible. Traditional banks require physical presence that implies having several branches across the country. They have to either buy or rent properties around the country while staffing the branches. The implication is that they spend a lot on expansion and salary payments. The money to cover these expenses come from charges to customers and other ways they raise money. For online banks, they just need a few software developers that create online apps that make it possible for people to carry out banking services. Thus, their running cost is significantly cheaper. The implication is that they can provide cheaper services. The traditional banks knowing that the cheaper services would attract their customers are also forced to bring down their charges towards remaining competitive. Hence, online banks have made many services in the traditional banking world cheaper, and some cases free, including charges on transfers.
In the past, if you need to take a loan, you would have to go to the bank, make an application, provide collateral and wait for about 3 days for the loan to be approved for you to be able to access it. However, with online banks, it became possible to get instant loans. You could apply for a loan within minutes and you would already have the money in your account without providing collateral. Traditional banks are now following suit as well to provide a similar type of loan services and would only require you to do paperwork and collateral when you want to loan a huge amount of money that no online platform would be able to give to you.
Faster banking services
Another way online banking is influencing the financial industry is faster banking services. In the past, sending money to a different country would require days for the money to arrive in the country. However, online banks have now made it possible to send money within minutes and the traditional banks are also trying to follow suit. Transferwise is one of such online banks that allow people to instantly send money across the world at cheaper prices. You can read How does Transferwise work? to know more about online banking services and some of the innovations they have brought to the financial industry.
Fewer crowds in banks
Another way online banks have influenced the financial industry is the presence of fewer crowds in banks. It is mostly the older generation as well as few other people who want to carry out activities that they cannot carry out remotely that visit the bank. People no longer visit the bank to transfer money to their friends, families or to collect a little amount of loan. Payment of utility bills and cable bills among many others is now being remotely carried out. All of these are some of the ways that online banks have influenced the financial industry.